Who Supports Portable Assessment Caps?: The Role of Lock-Ins, Tax Share, and Mobility
Ron Cheung and Chris Cunningham
Working Paper 2009-19a
Revised October 2010
We examine voter support in 2008 for Constitutional Amendment 1 in Florida, which modifies a Proposition 13–like property assessment growth cap by allowing homeowners to port their exempted value to a new home. Despite claims by amendment proponents that it would lower property taxes, we do not find that support was higher in precincts with a greater share of eligible property owners. Nor was support explained by the average size of existing exemptions. Instead, we find that precincts with more mobile households supported Amendment 1. In addition, we find evidence that voters understood how changing assessment methodology could affect their tax share. Under a conventional assessment cap, a homeowner who moves resets the assessed value to the market price, lowering the share of assessed value for remaining homeowners. Remarkably, we find that support for Amendment 1 falls as mobility in other parts of the city increases. This finding suggests that Amendment 1 was viewed as a way for high-mobility voters to shift the tax burden back to low-mobility homeowners. In addition, support is higher when a city has a high number of out-of-state immigrants, who have no tax exemption to port into the city, but support is lower when the city has high rates of in-state immigration. These findings suggest that voters are fairly tax savvy and as concerned with shifting the tax burden as they are with curbing absolute expenditures.
JEL classification: H71, R23
Key words: property tax, voting, assessment cap, lock-in, mobility, local public finance, political economy
The authors are grateful to Brad Huff at Florida State University for GIS assistance. This paper has benefited from comments from participants at seminars at the Federal Reserve Board of Governors, Georgia State University, the University of Melbourne, the University of Adelaide, and Florida State University and session participants at the Annual National Tax Association and the North American Regional Science Association meetings. The views expressed here are the authors' and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors' responsibility.
Please address questions regarding content to Ron Cheung (corresponding author), Department of Economics, Oberlin College, 233 Rice Hall, 10 N. Professor Street, Oberlin, OH 44074, 440-775-8971, 440-775-6978 (fax), firstname.lastname@example.org, or Chris Cunningham, Research Department, Federal Reserve Bank of Atlanta, 1000 Peachtree Street, Atlanta, GA 30309, 404-498-8977, email@example.com.
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