Assessment Lags and Property Tax Impacts

Abstract . A major administrative problem of the property tax is the difficulty of maintaining current assessments. If real estate is not reassessed as market values change, then the real tax rates on market value will diverge from the statutory rates. Within any taxing jurisdiction those properties with the highest rate of increase in market value will be taxed at the lowest real rate, while those with the lowest (including negative) rate of increase in market value will be taxed at the highest real rate. This investigation develops a straightforward method for calculating differentials in effective tax rates and describes the economic impacts of these differentials.