Vertical Inequity in Property Taxation: A Neighborhood Based Analysis

Abstract

This paper applies a model to test for vertical inequity in property taxes using a set of residential sales from Bloomington, Indiana. The initial purpose is to compare results with those using the presently accepted regression approach as applied by Smith (2000) to the same data. The new outcomes demonstrate there can be significant inequity in a jurisdiction that remains hidden under previous testing methods. Also, the new procedure generates multipliers to adjust for identified inequities. Findings imply that tests for value related inequity in property tax assessment should be conducted using multiple spatial scales.

Keywords: Vertical Property Tax Inequity, Property Taxation, Tax Inequity, Public Policy, Assessment