Property Tax Delinquency - Social Contract in Crisis: The Case of Detroit

James Alm (), Timothy R. Hodge, Gary Sands and Mark Skidmore

No 18810, Working Paper Series from Victoria University of Wellington, Chair in Public Finance

Abstract: In this paper we develop a theoretical model of the individual decision to become delinquent on one’s property tax payments. We then apply the model to the City of Detroit, Michigan, USA, where the city is in the midst of bankruptcy proceedings, and a rate of property tax delinquency of 48 percent, resulting in uncollected tax revenues of about 20 percent. We use detailed parcellevel data for Detroit to evaluate the factors that affect both the probability that a property owner is tax delinquent and, conditional upon delinquency, the magnitude of the delinquency. Our estimates show that properties that have lower value, longer police response times, are nonhomestead (non-owner occupied residential properties), have a higher statutory tax rate, have a higher assessed value relative to sales price, are owned by a financial institution or by a Detroit resident, are delinquent on water bills, and for which the probability of enforcement is low are more likely to be tax delinquent These findings can be used to inform policies targeted at improving tax compliance within the City.

Keywords: Property tax; Delinquency; Tax compliance (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://ir.wgtn.ac.nz/handle/123456789/18810

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:vuw:vuwcpf:18810

Access Statistics for this paper

More papers in Working Paper Series from Victoria University of Wellington, Chair in Public Finance School of Accounting & Commercial Law, Victoria University of Wellington, PO Box 600, Wellington, New Zealand. Contact information at EDIRC.
Bibliographic data for series maintained by Library Technology Services ().