The Effect of Property Assessment Reductions on Homeownership: A Quasi-Dynamic Economic Analysis

Fernanda Alfaro, Dusan Paredes and Mark Skidmore

Public Finance Review, 2022, vol. 50, issue 6, 704-731

Abstract: This article evaluates the impacts of reductions in residential effective tax rates on homeownership in Detroit, Michigan. The decline in effective tax rates was driven by a citywide reassessment that significantly reduced effective tax rates. These estimates are used to infer the potential impacts of moving from a traditional property tax to a split-rate tax in which the tax rate applied to land is higher than the tax rate applied to structures. Using Detroit parcel-level data over the years 2012–2019, we find that tax reductions resulting from property reassessment generated a very small net decrease in homeownership. Our evaluation suggests that moving to a split rate tax would likely result in a minimal change in the homeownership rate in Detroit.

Keywords: property tax; land tax; split-rate tax; Detroit; homeownership (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:50:y:2022:i:6:p:704-731

DOI: 10.1177/10911421221129309

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