The Effect of Property Taxes on Businesses: Evidence from a Dynamic Regression Discontinuity Approach

Abstract

We employ a dynamic regression discontinuity design comparing business outcomes in areas that passed additional school property taxes to business outcomes in areas that failed to do so. We find little evidence that passage of a property tax referendum has an effect on the total number of establishments in the district in the following years. Further, there is little evidence that property taxes affect total firm births or deaths. However, there is some evidence that more capital-intensive industries and/or those with 10 or more employees may be more impacted than less capital-intensive industries and/or those with less than 10 employees. Additionally, we find evidence that some older establishments may relocate to new areas.

Keywords: L20, H25, R33