Distributional Considerations of Property Tax Exemption: an Analytical Framework

The paper outlines a methodology for examining gains and losses from exempting nonprofit land users from the local property tax, Gainers and losers are identified by geographic areas (i.e., resident versus nonresident of the exemption-granting community), by income group, and by race. Gains and losses are calculated by comparing exemption against taxation of existing land users. Costs considered are tax revenues foregone and negative externalities. Benefits considered are price effects, direct and indirect employment effects, and positive externalities. The methodology is applied to the case of a large university in Boston: results are presented and the implications discussed.