TY  - JOUR
AU  - Holtz-Eakin,Douglas
AU  - Rosen,Harvey S.
TI  - Federal Deductibility and Local Property Tax Rates
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 2427
PY  - 1990
Y2  - December 1990
UR  - http://www.nber.org/papers/w2427
L1  - http://www.nber.org/papers/w2427.pdf
N1  - Author contact info:
Douglas Holtz-Eakin
American Action Forum
1401 New York Ave, NW
Suite 1200
Washington, DC 20005
E-Mail: dholtzeakin@americanactionforum.org

Harvey S. Rosen
Department of Economics
Fisher Hall
Princeton University
Princeton, NJ 08544-1021
Tel: 609/258-4022
Fax: 609/258-6419
E-Mail: HSR@princeton.edu
AB  - In current discussions of tax reform in the United States, there is considerable controversy concerning the effects of allowing individuals to deduct state and local taxes when calculating their federal income tax liability. Recent econometric work has suggested that federal deductibility of state and local taxes has raised the proportion of these taxes -- especially property taxes -- in local budgets. This paper lends additional support to these earlier findings by showing that one channel through which deductibility leads to higher local property tax revenues is by increasing the rate of local property taxation. Specifically, we find that if deductibility were eliminated, the mean property tax rate in our sample of 82 communities would fall by 0.00715 ($7.15 per thousand dollars of assessed property), or 21.1 percent of the mean tax rate.
ER  -