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Property tax and property values: Evidence from the 2012 Italian tax reform

Authors :
Annalisa Scognamiglio
Tommaso Oliviero
Oliviero, T.
Scognamiglio, A.
Source :
European Economic Review. 118:227-251
Publication Year :
2019
Publisher :
Elsevier BV, 2019.

Abstract

This paper assesses the extent to which property taxes are capitalized into property values, exploiting the 2012 Italian tax reform. Municipal-level variation in the level of the property tax rates is instrumented using the exogenous staggered timing of local elections. We show that the incumbent local governments with upcoming elections in 2013 shifted the composition of fiscal revenues towards lower property tax. Our 2SLS estimate shows that a one standard deviation increase in municipal-level property tax intensity leads to a 2.7% reduction of municipal property values in the year of the reform. We elicit information on the characteristics of the compliers and show that these municipalities feature inefficient public spending and low social capital.

Details

ISSN :
00142921
Volume :
118
Database :
OpenAIRE
Journal :
European Economic Review
Accession number :
edsair.doi.dedup.....521606cfb7d553b6c4287806224a75e6
Full Text :
https://doi.org/10.1016/j.euroecorev.2019.05.015