Washington Post, Black Families Pay Significantly Higher Property Taxes Than White Families, New Analysis Shows:
State by state, neighborhood by neighborhood, black families pay 13 percent more in property taxes each year than a white family would in the same situation, a massive new data analysis shows.
Black-owned homes are consistently assessed at higher values, relative to their actual sale price, than white homes, according to a new working paper by economists Troup Howard of the University of Utah and Carlos Avenancio-León of Indiana University.
Dorothy Brown, an Emory University law professor who researches systemic racism in tax policy and was not involved in this study, sees the same pervasive effect. “The structure of the property tax system operates to disadvantage black Americans,” she said. “That’s how structural racism is. It’s built into the system. The property tax system itself discriminates against black Americans.”
Troup Howard (Utah) & Carlos Avenancio-León (Indiana), The Assessment Gap: Racial Inequalities in Property Taxation:
We use panel data covering 118 million homes in the United States, merged with geolocation detail for 75,000 taxing entities, to document a nationwide “assessment gap” which leads local governments to place a disproportionate fiscal burden on racial and ethnic minorities. We show that holding jurisdictions and property tax rates fixed, black and Hispanic residents nonetheless face a 10–13% higher tax burden for the same bundle of public services.
This assessment gap arises through two channels. First, property assessments are less sensitive to neighborhood attributes than market prices are. This generates racially correlated spatial variation in tax burden within jurisdiction. Second, appeals behavior and appeals outcomes differ by race. This results in higher assessment growth rates for minority residents. We propose an alternate approach for constructing assessments based on small-geography home price indexes, and show that this reduces inequality by at least 55–70%.
(Hat Tip: Ted Seto)