2022/02/16 by Carlos F. Avenancio-León, Troup Howard
Economics, Econometrics and Finance · Social Sciences · #Housing Market and Economics #Fiscal Policy and Economic Growth #Gender, Labor, and Family Dynamics
paper · doi:10.1086/717989
We show that legislative caps on assessment growth are associated with reduced racial inequality in property taxation. These reductions increase in treatment intensity and are largest in highly minority neighborhoods and low-income neighborhoods, which prior work shows are more susceptible to assessment misvaluations. We provide support for two channels explaining this finding. First, conditional on a binding cap, Black and Hispanic homeowners are exposed to slightly higher home-price growth within jurisdiction, which leads to a small mechanical reduction of existing inequality. Second, caps appear to discipline assessor errors by reducing the correlation between neighborhood amenities and erroneously high assessments.