A Double Negative: Capitalizing on Assessment Regressivity

Timothy R. Hodge, Timothy M. Komarek and Andrew McAllister

Public Finance Review, 2025, vol. 53, issue 6, 752-785

Abstract: We estimate the degree to which tax inequity generated through property tax assessment practices are capitalized into residential property values. Our analysis not only evaluates whether property buyers understand the tax obligations they are likely to face at the purchase of their property, we also document varying effects based on assessment status. Overassessed, lower-valued property sell for a discount and underassessed, higher-valued property sell for a premium. Specifically, overassessed property sells for an undercapitalized discount of 13%, while underassessed property sells for overcapitalized premiums equal more than 10%. Together, our results imply assessment practices impact wealth both during and after property ownership, potentially widening the wealth gap between high- and low-income homeowners.

Keywords: property tax; assessment; regressive; public finance (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:53:y:2025:i:6:p:752-785

DOI: 10.1177/10911421241280456

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