Property Tax Web Series

This paper studies the real effects of property taxation on housing markets using variation in municipal property tax rates in Germany. I exploit a distinctive institutional feature of the German system: assessed property values were fixed at historical base years and did not adjust to current market conditions, allowing tax rate changes to be analyzed independently of reassessments. 

Using more than 20,000 municipal tax rate changes between 2004 and 2018 in a stacked event study design, I estimate the effects of property tax increases on the local tax base, housing supply, and population. Property tax increases reduce the local property tax base and population, with no evidence of differential pre-trends. A one percent increase in the tax rate lowers the tax base by 0.11 percent and population by 0.036 percent. I also document sizable spillovers: neighboring municipalities experience increases in population, housing supply, and the tax base.

The results indicate that property tax differentials induce spatial reallocation of residents and housing capital across jurisdictions.

This paper was presented by Georg Thunecke (Max Planck Institute for Tax Law and Public Finance) on March 20, 2026 as part of the 2025-2026 Syracuse-Chicago Webinar Series on Property Tax Administration and Design. Sebastien Bradley (Drexel University), Tsuyoshi Goto (Chiba University), Ross Milton (University of Wisconsin-Madison), and Lei Shao (Central University of Finance and Economic) were the discussant for this presentation.