A new study is out that looks at how tax burdens are distributed racially, and comes to a discouraging conclusion:
In the United States, the residential property tax is an ad valorem tax. The amount levied should be proportional to the value of the home. Authorizing legislation regularly makes explicit that the relevant concept of value is the market price of the property in a fair transaction. Property tax bills, however, are generated by applying the locally determined rate of taxation to an assessed value, which is a local official’s projection of market price. Any wedge between market values and assessed values, therefore, generates some deviation from the intended rate of taxation. Equitable property tax administration requires the ratio of assessed value to market value to be the same for all residents within any particular taxing jurisdiction. This paper documents the existence of a widespread and large racial assessment gap: relative to market value, assessed values are significantly higher for minority residents. This assessment gap places a disproportionate fiscal burden on minority residents: within the same tax jurisdiction, black and Hispanic residents bear a 10–13% higher property tax burden than white residents. …
We show the assessment gap cannot be explained by racial or ethnic differences in realized market prices, nor is it simply a byproduct of racial wealth differences and the previously documented propensity for assessment ratios to be regressive (Baar 1981, Black 1977, Engle 1975, McMillen and Weber 2008, Paglin and Fogarty 1972). As a result of the assessment gap, minority residents are therefore paying a significantly larger effective property tax rate for the same bundle of public services. For the median minority homeowner, the differential burden is an extra $300–390 annually. This finding is strongly robust across most states in the U.S. We produce county-level estimates to characterize the distribution of this assessment gap. The average black homeowner in a county at the 90th percentile of the assessment gap distribution has a 27% higher assessment ratio, and would pay an extra $790 annually in property tax.
Researchers Avenancio-León and Howard go on to explain that this is a problem with assessors – not that they’re racist, but that the assumptions they work off of only applies to predominantly white communities, or so how I read this; the assessed values for housing in black communities appears to be consistently higher than they should be, and so taxes based on such assessments – which I think is virtually universal – come in too high.
Kevin Drum characterizes the situation:
This is a good example of structural racism. The mechanisms at work here are not necessarily due to personal racism since, as the authors note, “most assessors likely neither know, nor observe, homeowner race.” Rather, it’s been built into the property tax system for decades and has become nearly invisible. But invisible doesn’t mean nonexistent. Even if it’s not easy to see, it’s still there.
And, because something like this requires careful data collection and analysis, any fool barroom blowhard will simply deny its existence. That’s the result of having a disdain for scholarship and science, and a touch of arrogance.
But the racism, whether low-level, and thus in doubt for those who aren’t paying attention, or the overt, such as this young lady so vividly enumerates, serves to beat down the black community when it comes to redress:
The second mechanism is more speculative, but the authors suggest that it has to do with appeals: Black families are less likely to appeal their assessments, and less likely to win an appeal if they do. [Drum]
So if you’re not a minority and you’ve been whining that your taxes are too high, consider A) the minority community taxes, just across town, are probably even higher for comparable services, and B) the GOP just lowered the corporate tax rates substantially a couple of years ago in their hunt for the fabled Laffer Curve effect.
I’m was on 4 hours sleep yesterday, when I wrote this, and this is all feeling pernicious.
