Do political parties matter for property taxes?

We evaluate whether political partisanship affects local taxes in an emerging economy. Using detailed residential property-level data in Chile, we study whether mayor’s political leanings affect the reassessment process and thus the taxes paid by home owners. In Chile, this type of tax is especially relevant since it is one of the largest sources of municipal income. To address endogeneity concerns, we use a regression discontinuity design, exploiting the quasi-experimental variation provided by close municipal elections. Our main results show that after a right-wing mayor is elected, property assessments increase 35% to 40% more than in a similar municipality where a left-wing mayor was elected. Using a limited sample of commercial property values, we provide suggestive evidence that only part of this effect is related to an increase in commercial prices.