I am coming back today from a four day family visit to my hometown of Milwaukee. Talking with people here, it seems that a problem that is oft addressed by Yglesias is prevelant here too.
County property taxes in Milwaukee county are higher than they are in surrounding counties and areas. This is largely due to the high rate of unemployment in Milwaukee County, which has to offset higher welfare spending through higher property tax revenues.
Concievably, if more median income persons wanted to live in Milwaukee county and the taxes were less for property, the amount spent on welfare would go down because more people would want to live there, and access to property would be more available. It seems a little like a catch 22 though, because how do you maintain cash transfers to needy people while trying to lower a property tax rate that encourages growth?