Unfortunately, there is no short answer to the question "Who bears the burden of the property tax?" The reason lies in the complex nature of the institution itself. Consider the following complications. First, the tax applies to property in all its variety of forms, and there is every reason to believe that the tax on land has a different incidence from the tax on housing, which in turn has a different incidence from the tax on commercial or industrial property. Second, the tax is a local one. Although it is levied everywhere, the rate of taxation varies across jurisdictions. This variation has consequences that would not occur under a uniform national tax. Third, the tax, at least in the United States, is levied on an administratively determined tax base, namely assessed value. Its incidence within a locality therefore depends importantly on how the assessment function is carried out. No other tax varies along so many significant dimensions.
The incidence of any tax is said to be on those persons who bear its burden. At the outset one must distinguish between legal incidence and economic incidence. For example, the city of Boston levies a tax of so many dollars per hundred on the assessed value of real property and sends each property owner an appropriate bill. The legal incidence is on the owner, who is required to remit payment. But if, after the tax is imposed, property owners can raise the rent they charge to occupants, they will have shifted some or all of the burden "forward" to users of property. Or, if imposition of the tax leads eventually to lower wages or lower land prices in Boston, then some or all of the burden will have been shifted "backward" to suppliers of those inputs. Since some form of shifting is highly probable in the case of the property tax, it is obvious that one cannot "observe" its economic incidence simply by seeing who remits payments. Instead, one must rely on insights provided by tax incidence theory.
In the case of the property tax, the task of incidence theory is, first, to explain how the burden of the tax is divided among such functional economic classes as