Assessment Growth Limits and Mobility: Evidence From Home Sale Data in Detroit, Michigan

Timothy R. Hodge, Gary Sands and Mark Skidmore

National Tax Journal, 2015, vol. 68, issue 3, 573-600

Abstract: In 1994 the State of Michigan imposed a limit on the growth of property values for tax purposes. The assessment growth cap resulted in the emergence of a differential in effective tax rates between new and long-time property owners. This article examines the degree to which this differential creates a lock-in effect. Using parcel-level data from the City of Detroit, we find that homeowners who have lower effective tax rates are less likely to sell their properties; the average duration of property ownership is 7.5 years longer as a result of the assessment growth cap.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ntj:journl:v:68:y:2015:i:3:p:573-600

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