Market Value Assessment and Idiosyncratic Tax-Price Risk: Understanding the Consequences of Alternative Definitions of the Property Tax Base

36 Pages Posted: 4 Oct 2011 Last revised: 10 Jan 2012

Date Written: January 9, 2012

Abstract

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.

Keywords: property tax, tax price, assessment limit, tax price risk

JEL Classification: H20, H71

Suggested Citation

Anderson, Nathan B., Market Value Assessment and Idiosyncratic Tax-Price Risk: Understanding the Consequences of Alternative Definitions of the Property Tax Base (January 9, 2012). Available at SSRN: https://ssrn.com/abstract=1938006 or http://dx.doi.org/10.2139/ssrn.1938006

Nathan B. Anderson (Contact Author)

Northwestern University School of Law ( email )

600 North Lake Shore Drive
Chicago, IL 60601
United States

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