“The paper explores the determinants of land value and rent level in a large cross-section of German municipalities, controlling for several amenities, disamenities, the local structure of land, and for economic and fiscal conditions. The effective land tax rate is measured from the statutory tax rate and a location-specific indicator of the assessment rate. Using an instrumental variable (GMM) approach the results show that land taxes do capitalize into land values, whereas the monthly rent level remains unaffected by the land tax. In addition, the results point to significant spillovers from amenities and the provision of public goods across municipalities.”