The Impact of Non-Domestic Property Taxes on Employment: A Comment

Abstract

This paper attempts to assess the existing empirical work on the impact of non-domestic property taxes (or business rates), on the regional distribution of employment in England and Wales. It is argued that these statistical investigations are based on theoretically misspecified and econometrically deficient models. Consequently, conflicting results are obtained, and these studies do little to dispel doubts about the effects of property taxation. In particular, it is suggested that the econometric tests employed are statistically unreliable, and the conclusions implied by some of these models are shown to be both theoretically untenable and implausible.