The effects of local taxes on economic behavior in the housing market

The concept of government federalism in the United States places the responsibility for providing many goods and services upon local governmental entities. The manner in which local governments produce these services and obtain revenue to pay for them may have a dramatic impact on the citizenry and on the government unit itself. In particular, economic theory suggests that the type of resident attracted to a particular jurisdiction and the economic well being of existing residents may depend upon these factors. This research investigates the extent to which local taxes affect residential choice and residential house value.

A review of Tiebout hypothesis and tax capitalization literature is presented in Chapter II. A theoretical foundation for the specific hypotheses tested is developed in Chapter III. Tiebout's theory and capitalization theory are explained separately and then the nature of their interrelationship is proffered. Chapter IV contains a more detailed description of the research design and the statistical methods used in making inferences about the hypotheses. Finally, results from the empirical tests of hypotheses are interpreted in Chapter V.