The incidence of metropolitan property tax base sharing and rate equalization

The incidence of metropolitan property tax base sharing and rate equalization is analyzed in a two-jurisdiction model of a metropolitan economy. Analytical results indicate how the effects of this reform proposal can be separated into efficiency gains, redistributions among metropolitan residents, and redistributions among residents and nonresidents of the metropolitan area; the effects of enactment on suburban housing prices are also analyzed. Numerical results suggest that enactment of metropolitan base sharing and rate equalization would result in fairly small efficiency gains even with significant factor reallocations and would be accompanied by sizable income redistributions among city and suburban landowners.