| People choose a domicile based upon many factors. Two considerations for the prospective resident are the level of taxes and the amount of goods and services provided by local government. For many years, economists have debated about the ability of the public market to provide an efficient level of public goods and charge a competitive tax price.; One theory suggests that individuals choose their ideal domicile from among a market of communities. Given such opportunity for choice of living space, people with similar demand for public goods at a tax price are hypothesized to congregate in communities of homogeneous residents. Researchers have also maintained that home prices within a community are bid up or down according to the level of taxes and public good supply.; A descriptive statistical analysis is used to test the degree to which residents are sorted by demand for public goods. A descriptive evaluation is performed on such variables as school-related taxes, family income, and school children population. An ordinary least squares regression equation is then estimated to provide evidence about the extent to which housing prices fluctuate based upon the level of taxation within communities.; Results of the statistical analysis reveal that individuals may self-sort by income and family status, but no evidence suggests that school taxes are a criterion by which segregation occurs. Regression results indicate that property taxes affect property values, though the use of tax funds may matter. Evidence is adduced that school-related taxes do not depress property values to the same extent as other taxes. |
