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Are Property Taxes Forcing the Elderly Out of Their Homes?

Are Property Taxes Forcing the Elderly Out of Their Homes?
Author: Rebecca Boldt
Publisher:
Total Pages: 30
Release: 2010
Genre:
ISBN:
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An often-heard justifications state policymakers give for enacting property tax limitations is the assertion that without such limits rising property taxes would force many elderly homeowners to sell their homes. Surprisingly, there has been relatively little empirical research aimed at determining whether the property tax does in fact drive elderly homeowners from their homes. In this paper, we estimate a probit model of the decision to move using a large panel data set that includes data on annual changes in property tax liabilities of all homeowners in Wisconsin. We find that for homeowners under the age of 80, increases in the property tax have almost no impact on decisions to move. Only for homeowners above the age of 79, do large increases in property taxes increase the probability of moving. Even for this group of old elderly, the impact of increases in property taxes on decisions to move is small. We estimate that in 2005, only 1 in 600 Wisconsin homeowners over the age of 79 moved because their property taxes grew at an above-median rate.

Property Taxes and Elderly Labor Supply

Property Taxes and Elderly Labor Supply
Author: Hui Shan
Publisher:
Total Pages: 0
Release: 2010
Genre:
ISBN:
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The recent housing market boom in the U.S. has caused sharp increases in residential property taxes. Anecdotal evidence suggests that rising property taxes have induced elderly homeowners to increase their labor supply. This paper uses 1992-2004 panel data from the Health and Retirement Study (HRS) as well as a newly collected dataset on state-provided property tax relief programs to investigate the effect of property taxes on the labor supply of elderly homeowners. It is the first rigorous study on the link between property taxes and elderly labor supply. I examine both the extensive margin - whether elderly homeowners delay retirement or reenter the labor market in the face of rising property taxes, and the intensive margin - whether elderly homeowners work longer hours when property taxes increase. A simulated IV approach is used to address the potential endogeneity problem associated with property taxes. I find little evidence that property taxes have a significant impact on elderly homeowners' decisions to retire, to re-enter the labor force, or to increase working hours.