The effect of property taxes on vacation home growth rates: Evidence from Michigan

Erik Johnson () and Randall Walsh

Regional Science and Urban Economics, 2013, vol. 43, issue 5, 740-750

Abstract: The Tiebout model assumes that individuals sort to the jurisdiction which best matches their fiscal preferences. However, there is a paucity of reliable estimates for the impact of tax changes on household mobility. We utilize a state mandated school finance reform and temporal differences in vacation home densities to provide a unique test of this fundamental Tiebout assumption. The results show that changes in property taxes explain a significant amount of the variation in vacation home growth; a 3–4mil decrease in property tax rates is associated with an increase of approximately one vacation home per square kilometer.

Keywords: Tiebout sorting; Property taxation (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:regeco:v:43:y:2013:i:5:p:740-750

DOI: 10.1016/j.regsciurbeco.2013.06.001

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