Property Taxes and Residential Rents

Summary

"Property Taxes and Residential Rents" by Leah J. Tsoodle and Tracy M. Turner (Real Estate Economics 36(1), 2008, pp. 63–80) is one of the few modern US studies to test property-tax incidence directly in the rental market. Using hedonic rent equations on American Housing Survey data combined with National League of Cities tax data, with controls for unit, neighborhood, and city characteristics, the authors find that property taxes are partly passed through to tenants: a one standard deviation increase in the property-tax rate raises annual residential rents by roughly $400–450.[1]

The wiki carries this page as honest counter-evidence on landlords cannot pass LVT to tenants (wired as challenged_by): it shows the building-inclusive property tax can reach rents. The standard theoretical bridge (Mieszkowski; Zodrow) implies this pass-through operates through the structures component — buildings can go unbuilt, so their tax can shift — which does not transfer to a pure land tax on a fixed base. But that transfer argument is theory, not something this study tests, and the page states it as such.

Context — the older exchange it revived

The 1968–81 literature split the same way: Orr (1968, NTJ) found no shifting of Boston-area tax differentials to rents;[2] Heinberg & Oates (1970, NTJ) critiqued his method and found some partial shifting;[3] Dusansky, Ingber & Karatjas (1981, JUE, Suffolk County NY) found substantial forward shifting — Zodrow's 2023 survey puts their estimates at 62–110% of the tax, i.e., straddling full shifting, which is why secondary accounts disagree on whether it is "full."[4] Tsoodle & Turner is the modern, better-controlled member of the shifting-happens side. The modern quasi-experimental members of each side are Löffler & Siegloch (full pass-through, Germany) and Schwegman & Yinger (~14% shifting, New York).

Verification note

Bibliographic details and the magnitude are corroborated across four independent renderings. The free author-hosted PDF (k-state.edu) was fetched this session and confirms the headline magnitude verbatim: "a one standard deviation increase in the property tax rate raises residential rents by roughly $400 annually" (abstract). Scan depth Light.

Bears On

• Outcome (challenges): Landlords cannot pass LVT to tenants — for the property tax, not the land component
• Research: Löffler & Siegloch · Schwegman & Yinger

See Also

• Mieszkowski (1972) — why the structures/land split matters
• Carroll & Yinger (1994) — the low-pass-through Boston result

Sources

1. Leah J. Tsoodle & Tracy M. Turner, "Property Taxes and Residential Rents," Real Estate Economics 36(1), 2008, pp. 63–80. DOI — used for the pass-through finding and magnitude (B-claim).
2. Larry L. Orr, "The Incidence of Differential Property Taxes on Urban Housing," National Tax Journal 21(3), 1968, pp. 253–262. — no-shifting result (B-claim).
3. John D. Heinberg & Wallace E. Oates, "The Incidence of Differential Property Taxes on Urban Housing: A Comment and Some Further Evidence," National Tax Journal 23(1), 1970. — partial-shifting re-estimate (B-claim).
4. Richard Dusansky, Melvin Ingber & Nicholas Karatjas, "The Impact of Property Taxation on Housing Values and Rents," Journal of Urban Economics 10(2), 1981, pp. 240–255. Listing — forward-shifting result. Resolved: Zodrow's survey characterizes the DIK estimates as "more forward shifting of the tax, ranging between 62 and 110 percent" [George R. Zodrow, "75 Years of Research on the Property Tax," National Tax Journal Forum, 2023, n. 20; free WP] — i.e., partial-to-slightly-over-full shifting, which is why secondary accounts disagree on whether it is "full."