Without Bias? Government Policy That Creates Fair and Equitable Property Tax Assessments

Abstract

Ensuring accurate, unbiased residential property tax assessments is an important, and contentious, issue facing communities today, particularly in this era of fiscal and economic crisis. Furthermore, this question is critical because it involves important social justice issues. Past studies have shown inequities by race, class, and location with some neighborhoods paying more of their fair share in property taxes. This study looks at the reliability of tax-assessment data in a medium-sized American city—Louisville, Kentucky. In an effort to compare various housing data sources, this study contrasts three measures of neighborhood median housing value for 170 census tracts in Louisville in the year 2000: self-reported values (U.S. Census); sales prices (MLS); and tax assessments from the county’s property valuation administrator. We find that the effects of various neighborhood characteristics on the three property measures do not vary by measure. Furthermore, an assessments-to-sale ratio does not vary by traditional indicators of neighborhood distress including racial composition and proximity to the inner city. We conclude that assessments in Louisville are not biased by neighborhood and argue that several aspects of policy and administration present in Louisville make for more accountable and fair assessment practices—including tough state statutes, the election of the chief assessor, the use of aerial technology to view improvements, public transparency, the use of sales prices in reassessing properties, and the willingness to reassess downward communities hit hardest by the foreclosure crisis.