| The "new view" of the incidence of the property tax, introduced by Mieszkowski, explicitly identified the different effects of local versus nationwide imposition of a property tax. Mieszkowski's analysis (1972), however, dealt with a model of an economy containing only one sector and three factors, in which labor was immobile. On the other hand, Brueckner (1981) incorporated an equal utility condition into his general equilibrium analysis of property tax incidence to take worker mobility into account. His model, however, did not have capital as an input factor and the benefits of public expenditure were ignored.; This thesis developes a general equilibrium model of an economy with two sectors (housing and non-housing), three factors (capital, labor, and land), and multiple jurisdictions. Both capital and labor are assumed to be mobile and Brueckner's labor mobility condition is modified to include public expenditure effects. While the results of the analysis support the "new view" (tax rate differentials lead to excise tax effects and the local property tax decreases the overall return to capital by the economy-wide average rate of the tax), they suggest that the impact of a property tax on factor returns and production behavior will be different from that of the original Mieszkowski study.; An empirical test of both forward and backward shifting effects of local property tax is conducted with models modified from Ozanne and Thibodeau. The result confirms the existence of the excise tax effect. |
