Abstract
Since a large reform in 2006, the real estate transfer tax has played a central role in the fiscal policies of the German states. The states can independently set their tax rates since. Initially fixed uniformly at 3.5 %, the rates now range from 3.5 % to 6.5 %. We examine how successive tax increases affect property prices and the supply of houses at the regional level. Our empirical analysis shows that the mere announcement of reforms can have real effects, and that the tax burden is not necessarily borne by the taxpayer. Instead, the responses and the distribution of burdens vary between different regions. These heterogeneous effects should be considered when designing tax policies.