In most Western countries, income and wealth inequality have increased during the last decades. We study the impact of increased inequality on property tax receipts and housing outlays by Norwegian local governments. In Norway, both income inequality and housing wealth inequality have increased between 2010 and 2017. Our main findings are: (i) increased income inequality does not affect property tax receipts, nor local public spending on housing, (ii) housing wealth inequality increases the level of the property tax and (iii) housing wealth inequality increases housing-related spending. Interestingly, the two types of inequality have different effects. Compared to earlier studies, which find that income inequality increases property tax receipts, we only find an effect of housing wealth inequality. Surprisingly, we also find that neither income nor housing wealth inequality has any impact on the distributional effects of the property tax measured by the size of the basic deduction.