AN APPRAISAL OF RESIDENTIAL PROPERTY TAX REGRESSIVITY.

This paper explains that the property tax-income elasticity is a composite outcome, generated by the interaction of market value, housing expenditures, normal income, and assessment practices variables. The empirical findings demonstrate that for our sample of counties, taken from five major United States SMSAs, the residential real estate property tax often appears to be (at least slightly) regressive because of assessment practices. This is true despite the recent theoretical arguments to the contrary--that the property tax is progressive--such as Aaron [1,2] or Musgrave [17]. while the value of housing in our sample counties usually increases faster than household income, this is frequently offset sufficiently by a declining rate of property tax collections per dollar of market value as value increases to create an overall income regressive property tax. Although it is difficult to say whether these results "generalize" to other jurisdictions, it would not be surprising to find that assessment practices do in fact favor more expensive residential properties. Finally, the research in this paper is not intended to be definitive; rather it is intended to be highly suggestive for further work in variations in assessment practices and for empirical work on the distributive effects of the property tax system. [ABSTRACT FROM AUTHOR]