Homevoters, Municipal Corporate Governance, and the Benefit View of the Property Tax

Tiebout's "vote with your feet" model dispensed with political behavior in local government. The present article offers a political model borrowed from corporate finance. Local governments are viewed as municipal corporations whose shareholders are homeowners and whose collective property rights are protected by zoning. Homeowners are motivated to control local government because its services and taxes affect the value of their largest asset, their homes. The homevoter model implies that local property taxes are benefit taxes, that locally-funded schools are more efficient than state-funded systems, and that home-conscious "NIMBYs" forestall an environmentally destructive ''race to the bottom" in taxbase competition.