Property Taxes to Fund Schools: Households With Enrolled Children Protest Levies Less Often

When people learn the actual portion of taxes spent on schools, tax protests by parents fall, but protests by nonparents rise

Taxes have long been framed as the price we pay for a civil society, but lately many Americans are saying that price is too high. In 2018, more than 60% of people polled by Gallup said their tax burden was fair; today that figure is down to 47%. Pew finds a similar shift, with those saying they pay more than their fair share rising from about half in 2021 to more than 60% in 2026.

Those shifting attitudes are often explained as frustration over what the wealthy and corporations don’t pay. But research published in American Economic Journal: Applied Economics suggests another factor: Beyond civic duty, households’ willingness to pay taxes also seems shaped by whether they perceive a direct personal benefit from the service funded by a tax.

In a randomized field experiment in Dallas County, Texas, VATT Institute for Economic Research’s Matias Giaccobasso, Rutgers’ Brad Nathan, UCLA Anderson’s Ricardo Perez-Truglia and the University of Texas at Dallas’ Alejandro Zentner document that homeowners with children in public schools became less inclined to challenge their property tax bill once they understood how much of that tax funded the school system. Notably, homeowners without kids in the public school system were more likely to legally challenge their bill once they understood how much went to schools.

As the researchers explain, there seems to be a “reciprocal motivation” when it comes to paying our taxes. We may be obligated to pay tax, but our acceptance of a given tax’s worth is not simply about civic responsibility. It also seems to depend on whether we believe we are getting something in return.

The researchers also found that households badly misread where their tax dollars go, including underestimating the share going to schools. The average guess was 37%, when the actual share of Dallas County property tax used for schools is 50%. That presents a challenge for policymakers: Increasing taxpayers’ understanding of how their tax dollars are allocated may increase the sense of moral obligation felt by households deriving a direct benefit from the tax, but those gains could be wiped out by taxpayers who learn they are paying more for services they don’t use.

How Much to Pay, Not Whether to Pay

The study examines homeowner motivations to challenge how much they are being told to pay. Tax evasion is a different issue, and in Texas — and the U.S. more broadly — compliance with property taxes is very high. The researchers are instead interested in how a personal stake plays into a moral willingness to pay the full amount, versus using a legal mechanism to pay less.

Texas is a compelling lab. Because there is no state income tax, public services such as schools rely more on property tax. In 2021, the focus of this research, the typical property tax bill in Dallas County was around $6,400 on an average home value of around $325,000. About 16% of homeowners challenge their property tax assessment in a given year, and around two-thirds of challenges result in a lower bill.

The researchers recruited homeowners who had filed a protest before, or whose 2021 tax bill had been raised, betting they might be more engaged with the topic. They ended up with 2,110 participants, a group that skewed more protest-prone than the typical Dallas County homeowner by design. The average home value among participants was around $350,000, with a typical tax bill of roughly $7,700.

To explore a causal link between personal benefit and willingness to challenge, the researchers first established existing perceptions of how much of a property tax bill is earmarked for public schools.

In Dallas County, the correct answer is right at 50%. Less than one-third of participants were within 5 percentage points of that. The researchers told half the participants the correct answer and then tracked all participants’ decisions to challenge — or not — their upcoming property tax bill.

What’s in It for Me?

Whether participants were deriving a direct benefit materially impacted the probability of challenging a property tax assessment.

Among participants with kids in school, about 34% of the control group challenged their bill. But among those who learned the actual share of school funding only 30% did. That is, the households using the public schools seemed to have a higher likelihood of seeing the benefit they were getting from that levy and thus were less likely than the control group to want to try and get their tax bill reduced. The researchers estimate that the typical household in this group effectively passed up a potential average $191 reduction if they had challenged their bill and won a reduction.

The opposite played out among participants without kids: Around 29% of the control group challenged their bill, versus 32% of those who learned how much went to schools. Without a direct benefit, knowing the true amount of property tax earmarked for schools propelled more challenges.

The researchers are careful to note that the generally high quality of the county’s public schools may be a factor in their findings; in areas with a less well-regarded school system, households with school-age children might react differently than in this experiment.

A separate thought experiment solidified the main finding that personal benefit plays into attitudes about paying tax. The same participants were told about two households with similar properties — but one household has kids enrolled in the public school system and the other doesn’t. When asked how to split an $8,000 property tax bill between the two households, nearly 60% of participants said the family with kids in school should pay more.

Taxes may be a civic duty, but they also seem to have a strong “what’s in it for me?” component.