Abstract
This paper analyzes the effect of Walmart and Target on municipal property tax rates using panel data for all New Jersey municipalities from 1998 to 2007. We analyze the impact of Walmart (30 openings) and Target (33 openings) in the host municipality and the nearest adjacent municipality. We find evidence that entry by either retailer lowers the tax rate in the host municipality. However, the estimated reduction in the tax rate is much larger for Target. Target entry reduces the equalized property tax rate by $0.38 per $100 of market value in the host municipality or about 16.8 % while Walmart reduces the equalized property tax rate in the host municipality by $0.063 per $100 of market value or about 2.8 %. The most striking result is the contrast between the positive and significant effect of Walmart entry on the equalized tax rate in the adjacent municipality and the negative and significant effect of Target entry on the equalized tax rate in the adjacent municipality. Walmart entry (in the host municipality) raises the equalized tax rate by about $0.23 per $100 of market value (about a 10 % increase). Target entry, on the other hand, reduces the equalized tax rate in the adjacent municipality by $0.14 per $100 of market value or about 6.2 %.
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Notes
Vandegrift and Loyer (2015) provides a detailed review of this literature.
For more details, see Vandegrift and Loyer (2015).
Control variables include: population, growth in population, population density, growth in the residential to total tax base ratio, ratio of the residential tax base to the total tax base, equalized tax base per acre, growth in the equalized tax base, the equalized tax rate, normalized standardized language test scores, growth in normalized standardized language test scores, distance to the Atlantic coast, the number of major intersections, and the percentage of land classified as wetlands.
See Vandegrift and Loyer (2015) for more details.
We do not report these estimates in the paper. These estimates are not informative because the first-stage fitted values are highly correlated with the independent variables.
Terza et al. (2008) show that 2SRI outperforms t (i.e., using the predicted values of the endogenous variable from the first stage in the second stage equation).
Language test scores and math test scores are highly correlated across high schools and therefore adding math test scores does not improve the quality of the estimates.
Driscoll and Kraay (1998) construct a covariance matrix estimation technique for panel data. The technique produces standard error estimates that are robust to general forms of spatial and temporal dependence.
Column 2: F = 0.04, p = 0.84; column 4: F = 0.23, p=0.63; column 6: F = 0.05, p = 0.82; column 7: F = 0.20, p = 0.65; column 8: F = 0.83, p = 0.44.
A review of newspaper articles indicates that, at times, Walmart will pay transportation impact fees for road improvements. However, it is unclear how often Walmart makes such payments.
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The author would like to thank John Loyer for compiling data in support of the analysis and two anonymous referees for helpful comments.
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Vandegrift, D. The effect of Walmart and Target on property tax rates. Lett Spat Resour Sci 9, 309–327 (2016). https://doi.org/10.1007/s12076-015-0159-x
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DOI: https://doi.org/10.1007/s12076-015-0159-x