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Fiscal Policy and the Long Shadows of History

In this paper, Kantorowicz aims to track the persistent effect of former partitioning borders on property tax rates in Poland.

Jarosław Kantorowicz
21 February 2022
Fiscal Policy and the Long Shadows of History

This paper aims to track the persistent effects of Poland's partitions on fiscal policy outcomes, in the form of property tax rates. By using spatial regression discontinuity design, the paper demonstrates that rates of property taxes levied on residential buildings are roughly 12% larger in the municipalities located just to the west of the former Prussia-Russia border. After examining various transmission channels, based on the benefit and capital view of property taxation, the paper establishes that the diverse endowment of hard infrastructure and utility services, the quality of public administration, and the extent of property rights protection might constitute plausible, yet not definitive, mechanisms driving the observed differences in property taxation.

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