BEGIN:VCALENDAR VERSION:2.0 METHOD:PUBLISH PRODID:-//Telerik Inc.//Sitefinity CMS 15.1//EN BEGIN:VTIMEZONE TZID:Eastern Standard Time BEGIN:STANDARD DTSTART:20251102T020000 RRULE:FREQ=YEARLY;BYDAY=1SU;BYHOUR=2;BYMINUTE=0;BYMONTH=11 TZNAME:Eastern Standard Time TZOFFSETFROM:-0400 TZOFFSETTO:-0500 END:STANDARD BEGIN:DAYLIGHT DTSTART:20250301T020000 RRULE:FREQ=YEARLY;BYDAY=2SU;BYHOUR=2;BYMINUTE=0;BYMONTH=3 TZNAME:Eastern Daylight Time TZOFFSETFROM:-0500 TZOFFSETTO:-0400 END:DAYLIGHT END:VTIMEZONE BEGIN:VEVENT DESCRIPTION:The goal of this webinar series is to gather insight and schola rship through domestic and international comparative studies with common t hreads to help reform and improve property tax administration and design i n the U.S. and other countries facing similar problems. \;During this webinar\, \;Francis Wong \;(Ludwig-Maximilians University of Munic h) will discuss "Taxing Homeowners Who Won't Borrow." \;The discussant will be Luke Rodgers (Florida State University). David Schwegman (America n University) will provide additional comments following the discussion.Ab stract: Since at least Smith (1776)\, economists have favored taxes on lan d and immovable property\, believing that such taxes minimally distort inc entives. Theories by George (1879) and Tiebout (1956) formalize the view t hat if homeowners do not alter their property when taxed\, property taxes resemble lump sum taxes and are therefore perfectly efficient. Yet popular narratives allege that when home prices rise\, property taxes create fina ncial hardship and can force homeowners to move out of their neighborhoods . Such narratives are difficult to reconcile with these canonical theories \, as well as contemporary models that incorporate many realistic features of homeownership.This study reconciles this disagreement through the lens of homeowner responses to housing wealth. Standard models predict that a homeowner who experiences an increase in housing wealth will dissave in or der to increase current consumption and pay property taxes\, possibly by b orrowing against their housing wealth. However\, recent findings indicate that homeowners do not dissave when a reduction in mortgage debt increases their net housing wealth (Bernstein and Koudijs 2021). Whether such devia tions from neoclassical savings behavior are empirically relevant for prop erty taxes remains an open question. If homeowners do not react to increas es in housing wealth\, the corresponding increases in property taxes may c reate financial hardship.This study is the first to document the role of n on-neoclassical savings behavior in determining homeowners' responses to p roperty taxes. Using quasi-experiments applied to merged administrative da ta\, I show that property taxes increase financial distress\, consumption volatility\, and displacement\, and decrease investment. Coupled with an a bsence of borrowing\, these patterns suggest that homeowners are unrespons ive to the accompanying increases in housing wealth. A novel household sur vey indicates that this behavior is generated by preference-based debt ave rsion\, rather than by financial or information constraints. Taken togethe r\, these findings imply that debt aversion increases wealth accumulation but prevents property taxes from attaining the level of efficiency envisag ed by standard economic theories. DTEND:20230407T161500Z DTSTAMP:20260511T111504Z DTSTART:20230407T150000Z LOCATION: SEQUENCE:0 SUMMARY:Syracuse-Chicago Webinar Series on Property Tax Administration and Design: Francis Wong UID:RFCALITEM639140805044325321 X-ALT-DESC;FMTTYPE=text/html:

The goal of this webinar series is to gathe r insight and scholarship through domestic and international comparative s tudies with common threads to help reform and improve property tax adminis tration and design in the U.S. and other countries facing similar problems . \;

During this webinar\, \;Francis Wong \;(Ludwig-Maxi milians University of Munich) will discuss "Taxing Homeowners Who Won't Bo rrow." \;The discussant will be Luke Rodgers (Florida State University ). David Schwegman (American University) will provide additional comments following the discussion.

Abstract:

Since at least Smith (177 6)\, economists have favored taxes on land and immovable property\, believ ing that such taxes minimally distort incentives. Theories by George (1879 ) and Tiebout (1956) formalize the view that if homeowners do not alter th eir property when taxed\, property taxes resemble lump sum taxes and are t herefore perfectly efficient. Yet popular narratives allege that when home prices rise\, property taxes create financial hardship and can force home owners to move out of their neighborhoods. Such narratives are difficult t o reconcile with these canonical theories\, as well as contemporary models that incorporate many realistic features of homeownership.

This st udy reconciles this disagreement through the lens of homeowner responses t o housing wealth. Standard models predict that a homeowner who experiences an increase in housing wealth will dissave in order to increase current c onsumption and pay property taxes\, possibly by borrowing against their ho using wealth. However\, recent findings indicate that homeowners do not di ssave when a reduction in mortgage debt increases their net housing wealth (Bernstein and Koudijs 2021). Whether such deviations from neoclassical s avings behavior are empirically relevant for property taxes remains an ope n question. If homeowners do not react to increases in housing wealth\, th e corresponding increases in property taxes may create financial hardship.

This study is the first to document the role of non-neoclassical s avings behavior in determining homeowners' responses to property taxes. Us ing quasi-experiments applied to merged administrative data\, I show that property taxes increase financial distress\, consumption volatility\, and displacement\, and decrease investment. Coupled with an absence of borrowi ng\, these patterns suggest that homeowners are unresponsive to the accomp anying increases in housing wealth. A novel household survey indicates tha t this behavior is generated by preference-based debt aversion\, rather th an by financial or information constraints. Taken together\, these finding s imply that debt aversion increases wealth accumulation but prevents prop erty taxes from attaining the level of efficiency envisaged by standard ec onomic theories.

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