The unintended consequences of property tax relief: New york’s star program

Tae Ho Eom, William Duncombe, Phuong Nguyen-Hoang, John Yinger

Research output: Contribution to journalArticle

10 Citations (Scopus)

Abstract

New York’s School Tax Relief Program, STAR, provides state-funded property tax relief for homeowners. Like a matching grant, STAR changes the price of education, thereby altering the incentives of voters and school officials and leading to unintended consequences. Using data for New York State school districts before and after STAR was implemented, we find that STAR increased student performance, school district inefficiency, and school spending by 2 to 4 percent in most districts, leading to an average school property tax rate increase of 14 percent. The STAR-induced tax rate increases offset about one third of the initial STAR tax savings and boosted property taxes for business property. STAR did little to offset the existing inequities in New York State’s education finance system, particularly compared to an equal-cost increase in state aid. This article should be of interest to policy makers involved in property taxes or other aspects of education finance.

Original languageEnglish
Pages (from-to)446-480
Number of pages35
JournalEducation Finance and Policy
Volume9
Issue number4
DOIs
Publication statusPublished - 2014 Oct 19

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tax relief
property tax
school
district
taxes
education
homeowner
financial system
savings
grant
finance
incentive
costs
performance

All Science Journal Classification (ASJC) codes

  • Education

Cite this

Eom, Tae Ho ; Duncombe, William ; Nguyen-Hoang, Phuong ; Yinger, John. / The unintended consequences of property tax relief : New york’s star program. In: Education Finance and Policy. 2014 ; Vol. 9, No. 4. pp. 446-480.
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The unintended consequences of property tax relief : New york’s star program. / Eom, Tae Ho; Duncombe, William; Nguyen-Hoang, Phuong; Yinger, John.

In: Education Finance and Policy, Vol. 9, No. 4, 19.10.2014, p. 446-480.

Research output: Contribution to journalArticle

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