Effects of public policy at the local level: A study of policy feedback from property taxation

Research on policy feedbacks has gained momentum in recent years. Policy feedback indicates that policies shape political behavior and attitudes, both among citizens and elite groupings. Public policies have the potential to mobilize social groups differentially as well as realign existing political identities. Much of the literature has focused on social policies and welfare programs. Because these policy areas are of particular salience to citizens, there is reason to expect feedback effects. Moreover, effects are expected to be discriminate in the sense that some groups stand out as target populations (in a positive or negative sense) whereas others do not. Taxation is another highly salient policy area, although it has not been subject to an equal number of studies. In this paper, we aim to study local residential property tax; a policy field that we find instructive for several reasons: It is a form of taxation that a) is very much visible to taxpayers, b) is highly controversial, and c) has differential effects on various groups. In our case country, Norway, residential property taxation is in practice the only form of taxation that is the domain of local politicians since income tax does not vary between municipalities. Studying the feedback effects of local property tax policies therefore provides a valuable opportunity to investigate variation in policies and its effect. In particular, we are interested in the degree to which changes in property tax affects citizens trust in government. We employ a very extensive dataset that combines individual-level data from five waves of the Norwegian Citizens Survey (2010, 2013, 2015, 2016 and 2019) with a panel data set containing a wide number of variables on the municipal level, 428 municipal units in all. Our main explanatory variable at municipal level is residential property taxation. Hence, our dataset allows us to study effects of changes in local authorities’ tax policies - across municipalities and over time – to citizens’ trust in government. By using a combination of multilevel and longitudinal data we will be better equipped to confront some of the causal challenges that most other studies of policy feedback have been unable to address properly. Changes to the local property tax will represent a “treatment” from which we expect an effect that will not occur in municipalities with no corresponding change in policy.