This paper presents an empirical study of office rents and property taxes for individual buildings in downtown Chicago in 1991. The results show that 45 percent of property tax differentials are shifted forward to tenants as higher gross rents. Application of the Hausman (1978) test for specification error reveals that assessed value per square foot (the base for the property tax) is exogenous with respect to gross rent per square foot.
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John F. McDonald (1993) studied this question.