House Price Responses to Federal Tax Changes: Evidence from the Tax Cuts and Jobs Act

• In Event: Property Tax Assessments & House Prices

Abstract

This paper investigates the impact of the Tax Cuts and Jobs Act (TCJA) of 2017
on house price growth in the United States. Exploiting cross-county variation in exposure
to TCJA-induced federal income tax cuts—measured using NBER-TAXSIM—I
estimate the causal effect of the reform using a difference-in-differences framework and
an interactive fixed effects model. The findings show that counties experiencing larger
tax cuts saw significantly slower house price growth relative to less exposed counties.
Specifically, a 1 percentage point reduction in income taxes as a share of Adjusted
Gross Income (AGI) led to a 1.7 percentage point decline in county-level house price
growth.

Author

• Anil Kumar, anil-kumar@uiowa.edu