The term is a measure of the degree of fiscal illusion associated with
intergovernmental transfers. I deviate from their approach, in which government aid is a
lump-sum transfer, by adapting it to the case of a state-funded homestead exemption. In
this case, the taxpayer will respond to a tax price based on her perception of the
exemption amount. I follow the notation of Filimon et al. by denoting the perceived