Local governments in the United States are vertically differentiated. A typical location is served by multiple overlapping jurisdictions that share property tax base and specialize in the provision of one or more local public goods. This paper evaluates the implications of such vertical differentiation for the equilibrium levels of government spending, property tax rates, and household welfare. I propose a spatial theory of overlapping jurisdictions in which residents collectively determine the local mix of expenditures and taxes. Because fiscal policy capitalizes into housing prices and all jurisdictions draw revenue from housing, the cost of raising expenditures in a location is implicitly shared with other coexisting jurisdictions. In equilibrium, this induces higher levels of government spending, higher property tax rates, and lower household welfare compared to scenarios in which jurisdictions are vertically coterminous or only horizontally differentiated.

I propose a novel argument to point identify economically interpretable intertemporal treatment effects in dynamic regression discontinuity designs (RDDs). Specifically, I develop a dynamic potential outcomes model and specialize two assumptions of the difference-in-differences literature, the no anticipation and common trends restrictions, to point identify cutoff-specific impulse responses. The estimand associated with each target parameter can be expressed as the sum of two static RDD outcome contrasts, thereby allowing for estimation via standard local polynomial tools. I leverage a limited path independence assumption to reduce the dimensionality of the problem.

I construct a novel, granular georeferenced dataset on the universe of local governments in the United States and their property tax rates from the early 2000s to 2022. Using this dataset, I present new descriptive insights on the geography of the property tax. First, property tax rates exhibit substantial variation within states, surpassing that of any other local tax. Second, rates are higher in locations where a greater number of jurisdictions overlap and thus share tax base. Third, rates are higher in areas with larger dispersion in property values and greater racial and ethnic heterogeneity. Fourth, new local taxing jurisdictions are more likely to be formed in locations where the distribution of income is more even and dispersion in housing values is lower.