Results are presented from a study to determine why property capitalization rates vary so widely. The theoretical model underlying the general estimation of property tax capitalization is reviewed, and an overview of the three basic empirical approaches that can be found in the literature is provided. Differences in findings are explained by the different methodologies used, and each methodology is shown to yield considerably biased results. The evidence provided from the use of micro - data for the capitalization of intrajurisdictional tax burdens is shown to be of little or no value. The strongest evidence that capitalization does occur is provided by the studies which used a first difference approach to examine the capitalization into house values of institutional changes in property taxes. However, the fact that jurisdiction - wide, well - announced, and large changes in property taxes are capitalized does not necessarily indicate the existence of capitalization or capitalization at the same rate of less obvious and frequently smaller unit specific differences in tax payments. Additional research and more complete data are called for. Thirteen tables and 22 references are included.
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