Welfare effects of property taxation

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URL:	https://madoc.bib.uni-mannheim.de/59259
URN:	urn:nbn:de:bsz:180-madoc-592590
Document Type:	Working paper
Year of publication:	2021
Volume:	21-026
Place of publication:	Mannheim
Publication language:	English
Institution:	Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung School of Law and Economics > Soziale Sicherung (Siegloch 2018-2022)
MADOC publication series:	Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject:	330 Economics
Classification:	JEL: H22 , H41 , H71 , R13 , R31 , R38,
Keywords (English):	Property taxation , welfare , tax incidence , local labor markets , rental housing
Abstract:	We analyze the welfare implications of property taxation. Using a sufficient statistics approach, we show that the tax incidence depends on how housing prices, labor and other types of incomes as well as public services respond to property tax changes. Empirically, we exploit the German institutional setting with 5,200 municipal tax reforms for identification. We find that higher taxes are fully passed on to rental prices after three years. The pass-through is lower when housing supply is inelastic. Combining reduced form estimates with our theoretical framework, we simulate the welfare effects of property taxes and show that they are regressive.