Who Pays the Property Tax?

A critical aspect of the property tax, but one that is rarely addressed in public debate, is its 'economic incidence,' or who actually bears the burden of the tax, as opposed to its statutory incidence, or who literally pays the tax.

1 minute read

April 27, 2006, 1:00 PM PDT

By Chris Steins @planetizen


"For example, a landlord might pay a property tax bill, but if some of the tax is offset with a rent increase, then the tenant bears that part of the tax burden. Not surprisingly, estimates of the economic incidence of taxes depend on the relative responsiveness of supply and demand to tax-induced price changes â€" factors that explain the extent to which consumers and businesses can change their behavior to avoid the tax.

The economic incidence of a tax is also affected by the phenomenon of “capitalization” â€" changes in asset prices that reflect the discounted present values of the economic effects of future tax and/or public expenditure changes. For example, an increase in property taxes, holding expenditures constant, might be capitalized into land or house values. The prices of these assets might fall by the present value of the projected increase in future taxes, whereas increases in expenditures, holding property taxes constant, might have offsetting effects.

...[T]he key issue is whether the zoning restrictions or other mechanisms stressed by proponents of the benefit tax view are sufficiently binding to preclude the long-run adjustments in housing capital predicted by the capital tax view. This issue promises to be a fertile topic for future research, which may help clarify the answer to the long-standing and critical question of who pays the residential property tax."

Thursday, April 20, 2006 in Lincoln Institute of Land Policy

portrait of professional woman

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching. Mary G., Urban Planner

I love the variety of courses, many practical, and all richly illustrated. They have inspired many ideas that I've applied in practice, and in my own teaching.

Mary G., Urban Planner

Get top-rated, practical training

Logo for Planetizen Federal Action Tracker with black and white image of U.S. Capitol with water ripple overlay.

Planetizen Federal Action Tracker

A weekly monitor of how Trump’s orders and actions are impacting planners and planning in America.

April 30, 2025 - Diana Ionescu

Close-up on Canadian flag with Canada Parliament building blurred in background.

Canada vs. Kamala: Whose Liberal Housing Platform Comes Out on Top?

As Canada votes for a new Prime Minister, what can America learn from the leading liberal candidate of its neighbor to the north?

April 28, 2025 - Benjamin Schneider

Hot air balloons rise over Downtown Boise with the State Capitol building visible amidst the high rises.

The Five Most-Changed American Cities

A ranking of population change, home values, and jobs highlights the nation’s most dynamic and most stagnant regions.

April 23, 2025 - GoodMigrations

A large Google data center building in the Netherlands.

Rethinking Computing: Researchers Tackle AI’s Energy Demands

USC researchers are reimagining how AI systems are trained and powered — through smarter algorithms, innovative hardware, and brain-inspired designs — to dramatically reduce computing’s energy footprint.

May 4 - USC News

Close-up of smartphone with Zoox logo and screen with blurred image of Zoox autonomous vehicle in background.

Amazon-Owned Robotaxis to Begin Testing in LA

Los Angeles will become the sixth city where Zoox is testing its autonomous vehicle technology.

May 4 - Smart Cities Dive

NYC MTA train on elevated rail with Manhattan skyline visible in background.

New York MTA Says No More Borrowing, Will Cut Costs Instead

The agency says it won’t take out any new loans to finance its planned improvements and is finding other ways to cut costs.

May 4 - Bloomberg CityLab

Urban Design for Planners 1: Software Tools

This six-course series explores essential urban design concepts using open source software and equips planners with the tools they need to participate fully in the urban design process.

Planning for Universal Design

Learn the tools for implementing Universal Design in planning regulations.

Senior Manager Operations, Urban Planning

New York City School Construction Authority

Building Inspector

Village of Glen Ellyn

Manager of Model Development

Central Transportation Planning Staff/Boston Region MPO