The Effects of Property Taxes and Public Service Benefits on Housing Values: A County-Level Analysis
ISBN: 978-1-78635-002-2, eISBN: 978-1-78635-001-5
Publication date: 18 December 2017
Abstract
This study investigates the relation between residential property values and both property taxes and public services in Georgia’s counties. Capitalization theory predicts that property values relate negatively to property taxes, and positively to public services. Palmon and Smith (1998) state that errors in public service measures create a capitalization coefficient bias that makes it difficult to isolate tax effects from public service effects. This paper is a first step in defining and quantifying public services and their marginal effect on housing values. It develops public service measures in four quality-of-life areas – economy, education, health, and public safety. The models suggest a strong negative relation between effective tax rates and property values, and a significant positive association between the public service measures and property values. Analyses indicate that property taxes are capitalized into housing prices at greater than 100%, suggesting prior underestimations based on measurement errors in public service variables.
Keywords
Citation
Key, K., Lightner, T. and Luo, B. (2017), "The Effects of Property Taxes and Public Service Benefits on Housing Values: A County-Level Analysis", Advances in Taxation (Advances in Taxation, Vol. 23), Emerald Group Publishing Limited, Leeds, pp. 1-31. https://doi.org/10.1108/S1058-749720160000023007
Publisher
:Emerald Group Publishing Limited
Copyright © 2017 Emerald Group Publishing Limited