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Local response to fiscal incentives in heterogeneous communities

Jonah E. Rockoff

Journal of Urban Economics, 2010, vol. 68, issue 2, 138-147

Abstract: I examine the impact of a property tax-relief program in New York State that lowered the marginal cost of school expenditure to homeowners. I find that a typical school district, which received 20% of its revenue through the program in the school year 2001-2002, raised expenditure by 4.1% and local property taxes by 6.8% in response to the program. I then examine how the preferences of various groups of local taxpayers affect educational spending by identifying systematic variation across districts in the response to fiscal incentives. These results support the hypothesis that homeowners are more influential on local expenditure decisions than renters, owners of second homes, or owners of non-residential property.

Keywords: Property; taxation; Fiscal; federalism; School; expenditure (search for similar items in EconPapers)
Date: 2010
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