Estimating property tax base elasticity over time: Evidence on the revenue maximizing politician

✍ Scribed by William F. Stine

• Book ID: 104654288
• Publisher: Springer US
• Year: 1988
• Tongue: English
• Weight: 569 KB
• Volume: 58
• Category: Article
• ISSN: 0048-5829
• DOI: 10.1007/bf00183327

✦ Synopsis

The Laffer curve analysis suggests a possible policy conflict between short-run revenue maximization and long-run fiscal health. This paper estimates short-run and long-run property tax base elasticity in order to test whether such a conflict exists for the property tax in central cities. A stock adjustment model is used and separate time-series estimates for four New York State central cities lend empirical support to such a conflict. The results show that while disincentive effects associated with property tax rate increases are not strong enough to reduce property tax revenue in the short-run, they are substantial enough to reduce long-run revenue in all but one city. The paper also tests for asymmetric response to property tax rate changes and finds significant results for only one city.