WILL HOMEOWNERS IMPOSE PROPERTY TAXES

This paper analyzes whether homeowners will use property taxes, as opposed to other revenue instruments, to finance local public services. The paper assumes homeowners recognize the impact of the outcomes of their voting for public services on their property values. Homeowners are modelled as endogenous in number in each community; and within each community they correspond to the ex post voter-residents of a community. Under these conditions, in a Nash equilibrium among imperfectly competitive communities, homeowners do not choose to finance with property taxes. The paper also integrates the two divergent models of community decision-making-the utility-maximizing voter model and the profit-maximizing corporation model.