The Hated Property Tax: Salience, Tax Rates, and Tax Revolts

63 Pages Posted: 3 Nov 2012 Last revised: 2 Feb 2023

See all articles by Marika Cabral

Marika Cabral

University of Texas at Austin; National Bureau of Economic Research (NBER)

Caroline M. Hoxby

Stanford University; National Bureau of Economic Research (NBER); Hoover Institution; Stanford University

Date Written: November 2012

Abstract

Because of the obtrusive manner in which they are normally paid, property taxes are likely the most salient taxes in the U.S. However, they are much less salient to homeowners with tax escrow. Exploiting geographical variation in tax escrow, we test how salience affects property tax rates and limits. We instrument for tax escrow using bank holding companies' national mortgage servicing assets, focusing on companies that have local branches but do most of their business outside the area. We find that a one standard deviation increase in tax escrow produces about a one standard deviation decrease in property tax rates.

Suggested Citation

Cabral, Marika and Hoxby, Caroline M., The Hated Property Tax: Salience, Tax Rates, and Tax Revolts (November 2012). NBER Working Paper No. w18514, Available at SSRN: https://ssrn.com/abstract=2170637

Marika Cabral (Contact Author)

University of Texas at Austin ( email )

Department of Economics
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National Bureau of Economic Research (NBER) ( email )

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Caroline M. Hoxby

Stanford University ( email )

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National Bureau of Economic Research (NBER)

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Hoover Institution ( email )

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Stanford University ( email )

Department of Economics
Stanford University
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United States
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650-725-5702 (Fax)

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