County‐Level Property Tax Rate Competition

ABSTRACT This paper estimates heterogeneous strategic responses to nominal property tax rates set by contiguous counties in large U.S. cities between 2010 and 2019. Horizontal fiscal competition has been understudied in the United States due to the difficulty resolving endogeneity. This investigation adds to the empirical literature with three descriptive findings about metropolitan counties. First, suburban counties mimic property tax rates more than urban counties. Second, suburban counties are more likely to mimic regardless of where the influence comes from. Third, more competition lowers property tax rates, but suburban counties still mimic their neighbors more than urban counties.