The Distributional Effects of Property Tax Constraints on School Districts

Lucy Sorensen, Youngsung Kim and Moontae Hwang

National Tax Journal, 2021, vol. 74, issue 3, 621 - 654

Abstract: Many states in recent decades enacted laws that limit the collection of property taxes. This study examines the impacts of New York State’s 2011 tax cap on education revenues and student achievement. We use an instrumental variables approach with 663 school districts from 2006 to 2016. We find that each $1,000 loss in per-pupil revenues from the tax cap leads to drops in student test performance of 0.04 standard deviation, driven by reductions in instructional expenditures, teacher hiring, and support personnel. Wealthier districts incurred more costs from the tax cap due to their higher reliance on property taxes.

Date: 2021
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