This report sulTITlarizes the effect of three recent studies in North Carolina concerning the relationship between changes in real property taxes and property values. The studies analyzed the relationship between changes in the level of property taxes and property values for owner-occupied housing, rental housing, and fann real estate. These studies indicate that much of any tax reduction on rental housing property in North Carolina will be passed on to tenants in the fonn of reduced rents but will have little effect on the value of owner-occupied homes. In the case of farm real estate, a reduction in property taxes is largely capitalized into higher property values. The conclusion in each case assumes an adjustment period sufficiently long such that full adjustments have been made to the change in the tax rate. The results of these studies suggest the difficulties in predicting the effects of general reductions in property taxes. Such reductions are likely to have a quite different impact on owners of different classes of property. Given the level of local government budgets, property tax reductions mean an increase in other taxes. Hence, reductions in property taxes are likely to be tied to proposals to replace taxes lost by increases in sales taxes, income taxes, etc. The method of replacing lost revenue will also affect various groups of taxpayers quite differently. For these reasons, simple generalizations about the effects of reductions in local property taxes on particular classes of real property cannot be made.