IS THE PROPERTY-TAX A BENEFIT TAX - THE CASE OF RENTAL HOUSING

Is the property tax a benefit tax? This paper tests the benefit-tax hy pothesis for rental housing- In the case most favorable to this hypoth esis, namely with mobile tenants, relatively high property taxes canno t be directly reflected in rents but can be indirectly reflected to th e extent that they lead to relatively high-quality public services. Th is indirect shifting equals tenants' willingness to Pay for the public service increment. Even in this case, however, the property tax is no a benefit tax unless the tax rate is set so indirect shifting equals a landlord's tax in crease. This second condition is not met in the Bo ston area in 1980; on average, indirect shifting covers only about $0. 11 of a $1.00 increase in property taxes.