Center for Policy Research
Property Tax Web Series
The Assessment Gap: Racial Inequalities in Property Taxation
Carlos F. Avenancio-Leon, Troup Howard
October 2021
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Abstract
We document a nationwide “assessment gap” which leads local governments to place a dispropor- tionate fiscal burden on racial and ethnic minorities. We show that holding taxing jurisdictions and property tax rates fixed, black and Hispanic residents face a 10-13% higher tax burden for the same bundle of public services.
We decompose this inequality into between- and within- neighborhood components and find just over half of the inequality arises between neighborhoods. We then present evidence on mechanisms.
Property assessments are less sensitive to neighborhood attributes than market prices are. This generates spatial variation in tax burden within jurisdiction, and leads to over-taxation of highly minority communities. We also find appeals behavior and appeals outcomes differ by race.
Inequality does not arise from either (i) racial differences in transaction prices or (ii) price-regressivity in assessment ratios stemming from location-neutral features of the housing stock.
This paper was presented by Troup Howard on October 8, 2021 as part of the 2021-2022 Syracuse Webinar Series on Property Tax Administration and Design.
This Syracuse-Chicago Webinar Series on Property Tax Administration and Design aims to gather insight and scholarship through domestic and international comparative studies with common threads to help reform and improve property tax administration and design in the U.S. and other countries facing similar problems.
For questions about the webinars, please contact Alyssa Kirk. For questions about this paper, please contact the author or authors.