The effect of property taxes on vacation home growth rates: Evidence from Michigan |
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Authors: | Erik Johnson Randall Walsh |
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Institution: | 1. Quinnipiac University, United States;2. University of Pittsburgh, United States |
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Abstract: | The Tiebout model assumes that individuals sort to the jurisdiction which best matches their fiscal preferences. However, there is a paucity of reliable estimates for the impact of tax changes on household mobility. We utilize a state mandated school finance reform and temporal differences in vacation home densities to provide a unique test of this fundamental Tiebout assumption. The results show that changes in property taxes explain a significant amount of the variation in vacation home growth; a 3–4 mil decrease in property tax rates is associated with an increase of approximately one vacation home per square kilometer. |
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Keywords: | Tiebout sorting Property taxation |
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