Market Value Assessment and Idiosyncratic Tax-Price Risk: Understanding the Consequences of Alternative Definitions of the Property Tax Base
Nathan B. Anderson
Northwestern University School of Law
January 9, 2012
I develop a framework, based on tax price, that measures the distributional consequences of any alternative property tax base definition. Using administrative data, I show that defining tax base as market value produces large amounts of idiosyncratic tax-price risk. I show that an assessment limit can reduce the tax-price risk generated by the market value definition and that the benefits of the assessment limit vary over time and accrue to a majority of taxpayers. In addition, I argue that the tax-price framework is appropriate for estimating behavioral responses to alternative tax base definitions.
Number of Pages in PDF File: 36
Keywords: property tax, tax price, assessment limit, tax price risk
JEL Classification: H20, H71
Date posted: October 4, 2011 ; Last revised: January 10, 2012
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