Inattention to Deferred Increases in Tax Bases
How Michigan Home Buyers Are Paying for Assessment Limits
Bibliographic Data
| ID | 19314865 |
|---|---|
| Authors | Sebastien Bradley (0000-0002-8546-1476, Drexel University, corresponding author) |
| Year | 2017 |
| Volume | 99 |
| Issue | 1 |
| Pages | 53-66 |
| Publication date | 2017-03-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | The Review of Economics and Statistics (JOURNAL) |
| Journal identifiers | ISSN: 0034-6535 • E-ISSN: 1530-9142 |
| Publisher | MIT Press - Journals (PUBLISHER) |
| DOI | 10.1162/rest_a_00597 |
| OpenAlex | W2301042101 |
| Language | EN |
| Citations received | 2 |
| References cited | 25 |
Michigan’s implementation of assessment limits gives rise to a wide variation in taxable basis across comparable homes. Exploiting the fact that the resulting differences in property tax liability are temporarily inherited by new homebuyers, I estimate the degree of capitalization of these largely idiosyncratic tax differences to evaluate whether homebuyers understand the tax implications of their home purchases. Consistent with anecdotal evidence but in stark contrast to the traditional view of rational consumer behavior, I find that homebuyers are woefully inattentive to the temporary nature of their initial tax obligations, resulting in an overpayment of nearly $10,000 for the average home
Actuarial science · Business · Capitalization · Econometrics · Economics · Liability · Microeconomics · Monetary economics · Public economics · Taxable income · Accounting · Financial Literacy, Pension, Retirement Analysis · Fiscal Policy and Economic Growth · Housing Market and Economics
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| Unique citing works | 2 |
|---|---|
| Citations per year | 0,25 |
| Citation span | 2018 - 2021 (4) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 2 |