Property Taxes and Residential Rents

Property taxes are a fundamental source of revenue for local governments, constituting 73% of local government tax revenue in the United States. In this article, we empirically investigate the impact of residential property taxes on residential rents. Using data from the American Housing Survey and the National League of Cities, we estimate numerous specifications of a hedonic rent equation with comprehensive unit‐level, neighborhood‐level and city‐level controls. We find that a one standard deviation increase in the property tax rate raises residential rents by roughly $400 annually.