STATE-WIDE TAXATION OF COMMERCIAL AND INDUSTRIAL PROPERTY FOR EDUCATION

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Abstract
Using a behavioral model of the education expenditure decision, we simulate the education expenditure effects in the Boston SMSA of state-wide taxation of commercial and industrial property with the proceeds distributed back to school districts as state aid for education. Although this proposal has been advocated primarily on equity grounds, the simulations show that removal of business property from the local tax base available for education would have adverse distributional effects on the pattern of education expenditures across communities in the Boston SMSA. The precise effects on expenditure levels, revenue flows, and tax rates depend on the particular state aid formula employed.