Money Order
Assessing Assessors
Huaizhi Chen & Lauren Cohen
NBER Working Paper, December 2024
Abstract:
Property tax revenues -- the largest discretionary source of revenue for local governments -- adjust at a pace that is inconsistent with property values in the US. We show that this form of revenue smoothing may be rooted in the political economy of municipalities. Measures of local budget stressors are positively related to upward assessments of a property's value. Moreover, municipalities are significantly more likely to reassess in up markets as opposed to down -- consistent with maximizing tax base and revenue collected. Using micro-level evidence from just-passing school referenda in Illinois, these shocks to municipal liabilities lead to significant increases in property assessments without any associated increases in market values or transactions. Passing a referendum over the prior 3 years increases the probability that a house is reassessed upward by 23%. This flexible form of revenue smoothing creates avenues for personal rent extraction. We find that local tax assessors: 1) have tax assessments on their own properties significantly lower than neighboring properties; and 2) these tax assessments grow significantly slower than neighbors -- lowering their tax bills. We further document a significant connection between the underassessment of tax assessors' own properties and the tax-maximizing assessment gaps documented in the districts they operate.
Does giving tax debtors a break improve compliance and income? Evidence from quasi-random assignment of IRS Revenue Officers
William Boning et al.
Economic Inquiry, forthcoming
Abstract:
This paper uses the quasi-random assignment of IRS Revenue Officers to tax debtors' cases as an instrumental variable to identify the causal effects of suspending debt collection on tax compliance and future income. In contrast to uninstrumented estimates, we find no statistically significant evidence that putting off attempts to collect debt reduces compliance with future tax obligations or future reported income. Among marginal hardship cases, pausing collection instead increases future income, specifically wage earnings by the taxpayer's spouse. In addition, we address concerns about potential non-random assignment of Revenue Officers.
The Politics of Disaster Prevention
Martin Gilens, Tali Mendelberg & Nicholas Short
Journal of Politics, forthcoming
Abstract:
Despite the importance of effective disaster policy, governments typically fail to produce it. The main explanation offered by political scientists is that voters strongly support post-disaster relief but not policies that seek to prevent or prepare for disaster. This study challenges that view. We develop novel measures of preferences for disaster prevention and post-disaster relief. We find strong support for prevention policies and candidates who pursue them, even among the subgroups that are the most opposed. Support for prevention has the hallmarks of "real" attitudes: consistency across wordings and response formats, including open ended probes; steadfastness in the face of arguments; and willingness to make trade-offs against disaster relief, increased taxes, and reduced spending on other programs. Neither cognitive biases for the here and now nor partisan polarization prevent robust majority support for disaster prevention. We validate these survey findings with election results, which suggest voters act on these preferences.
Hidden Wealth and Automatic Information Sharing
Andrew Belnap, Jacob Thornock & Braden Williams
Journal of Law and Economics, November 2024, Pages 905-949
Abstract:
In recent years, governments across the globe have implemented automatic information-sharing measures as a revolutionary tool to combat offshore tax evasion. Using hand-collected and private Internal Revenue Service data on participation in the Foreign Account Tax Compliance Act, we provide some of the first evidence of the costs and quality of information shared via automatic information sharing. We estimate that the aggregate costs borne by foreign financial institutions (FFIs) were $31-$52 billion. Furthermore, although 97 percent of FFIs have committed to sharing information with US tax authorities, there is significant variation in quality. Quality is lower for accounts held by business entities and by firms with more offshore US accounts but higher for accounts in tax havens, treaty countries, and countries with a model 1 intergovernmental agreement. Our findings suggest that, despite US efforts to induce FFIs to share information, opportunities remain for hiding wealth abroad.
Unequal Responsiveness in City Service Delivery: Evidence from 42 Million 311 Calls
Brian Hamel & Derek Holliday
Quarterly Journal of Political Science, June 2024, Pages 243-274
Abstract:
We assess unequal responsiveness to citizen demands for municipal goods and services using a dataset of about 42 million 311 requests from 13 large cities between 2011 and 2019. We report three findings. First, we find no evidence that cities respond to requests from whiter and more affluent neighborhoods faster than they do the same type of request from less white and affluent neighborhoods, even after accounting for proxies of neighborhood need. On average, however, white, rich neighborhoods receive faster responses to their calls than non-white, poor neighborhoods. Additional analyses suggest that these disparities may not reflect deliberate bias on the part of cities in favor of the needs of whites and the rich, but rather that non-white and poor neighborhoods tend to ask for services that require more time and resources for the city to respond to. Our paper provides the most comprehensive and contemporary analysis to date of inequalities in U.S. city service delivery.
It's Not (Only) Personal, It's Business: Personal Bankruptcy Exemptions and Business Credit
Rebel Cole et al.
Review of Finance, forthcoming
Abstract:
In the U.S., state-level exemptions determine the amount of property that individuals can protect from creditor liquidation during the debt settlement process. We exploit within-MSA variation in personal bankruptcy exemptions created by state borders and a stacked regression approach to identify the spillover effects of these laws on business credit extended to small firms. Subsequent to exemption increases, we find a reduction of 1-2% in originations of business credit. The effect is strongest for the smallest firms, which are more financially constrained. We provide household-level evidence that both business debt and personal debt decline for borrowers whose home equity becomes covered by the exemption, suggesting an overall decrease in credit availability for small businesses. As a result, increases in exemptions lead to fewer small establishments and lower employment, especially in industries dependent on external finance, suggesting that negative real economic effects occur via a credit market channel.