The impact of local sales tax on the value of owner-occupied housing

Abstract

Local governments are under pressure to develop alternative revenue sources to their property tax bases. Among their responses has been an increased reliance on local sales taxes. This study examines the impact of local sales taxes on the value of owner-occupied housing in the Phoenix metropolitan area. The results indicate that differences in local sales tax rates across jurisdictions are capitalized into residential property values in the same way as differences in property tax rates, albeit to a lesser extent because part of the sales tax burden can be exported to nonresidents. © 1996 Academic Press, Inc.