The Economic and Fiscal Impacts of Property Tax Abatement in a Large County

• Published in: Proceedings (Conference on Taxation) 2017-01, Vol.110, p.1-35
• Main Authors: Kenyon, Daphne A., Langley, Adam H., Paquin, Bethany P., Wassmer, Robert W.
• Format: Article
• Language: English
• Subjects: Issues in State and Local Public Finance
• ISSN: 1549-7542; 2377-5661

We analyze the economic and fiscal effects of two major property tax abatement programs – Community Reinvestment Areas (CRAs) and Enterprise Zones (EZs) – in Franklin County, Ohio. Using panel-data regression analysis, we find that a one percentage point increase in a school district’s CRA or EZ abatement intensity correlates with: (1) a 2.7 percent decrease in a school district’s mill rate for real property, (2) a 0.9 (0.7) percent decrease in effective residential (non-residential) property tax rates, and (3) a 1.6 percent increase in the total market value of property in the school district. While small, any reduction is arguably a positive outcome since tax incentives have generated enough growth in property values to offset the immediate drop in the tax base from an abatement, and thus avoid a tax shift to nonabated properties. We detail the restrictions and oversight used in these abatement programs that are greater than what used in most other places in the United States. We posit that this may be the reason for the desired outcome found.