Assessing Assessors
Huaizhi Chen and
Lauren Cohen
No 33238, NBER Working Papers from National Bureau of Economic Research, Inc
Abstract:
Property tax revenues – the largest discretionary source of revenue for local governments - adjust at a pace that is inconsistent with property values in the US. We show that this form of revenue smoothing may be rooted in the political economy of municipalities. Measures of local budget stressors are positively related to upward assessments of a property’s value. Moreover, municipalities are significantly more likely to reassess in up markets as opposed to down – consistent with maximizing tax base and revenue collected. Using micro-level evidence from just-passing school referenda in Illinois, these shocks to municipal liabilities lead to significant increases in property assessments without any associated increases in market values or transactions. Passing a referendum over the prior 3 years increases the probability that a house is reassessed upward by 23%. This flexible form of revenue smoothing creates avenues for personal rent extraction. We find that local tax assessors: 1) have tax assessments on their own properties significantly lower than neighboring properties; and 2) these tax assessments grow significantly slower than neighbors – lowering their tax bills. We further document a significant connection between the underassessment of tax assessors’ own properties and the tax-maximizing assessment gaps documented in the districts they operate.
JEL-codes: G12 G18 H20 H23 H71 R38 (search for similar items in EconPapers)
Date: 2024-12
New Economics Papers: this item is included in nep-ure
Note: AP LE PE POL
References: Add references at CitEc
Citations:
Downloads: (external link)
http://www.nber.org/papers/w33238.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:33238
Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w33238
The price is Paper copy available by mail.
Access Statistics for this paper
More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by (wpc@nber.org).