Neighborhoods by Assessment: An Analysis of Non-Ad Valorem Financing in California

37 Pages Posted: 14 Jun 2016

See all articles by Mathew D. McCubbins

Mathew D. McCubbins

Department of Political Science and Law School, Duke University

Ellen Seljan

Lewis & Clark College

Date Written: June 12, 2016

Abstract

Non-ad valorem assessments on property are a fiscal innovation born from financial stress. Unable to raise property taxes due to limitations, many localities have turned to these charges as an alternative method to fund local services. In this paper, we seek to explain differential levels of non-ad valorem assessment financing through the analysis of property tax records of a large and diverse set of single family homes in California. We theorize that assessments, as opposed to other forms of taxation, will be used when residents hold anti-redistributive preferences. We show that assessment financing is most common in cities with high median household incomes and greater ethnic diversity. We also show that certain types of assessments, those with narrow geographic range, are frequently levied on expensive homes in poorer communities. We argue that this new form of financing exacerbates economic inequality by creating additional inequities in public service provisions.

Keywords: Non-Ad Valorem Assessments, Special Assessments, Parcel Taxes, Mello Roos Taxes, California, Local Government Finance, Proposition 13

JEL Classification: E63, H71

Suggested Citation

McCubbins, Mathew D. and Seljan, Ellen, Neighborhoods by Assessment: An Analysis of Non-Ad Valorem Financing in California (June 12, 2016). Duke Law School Public Law & Legal Theory Series No. 2016-37. Available at SSRN: https://ssrn.com/abstract=2794680 or http://dx.doi.org/10.2139/ssrn.2794680

Mathew D. McCubbins

Department of Political Science and Law School, Duke University ( email )

210 Science Drive
Box 90362
Durham, NC 27708
United States

Ellen Seljan (Contact Author)

Lewis & Clark College ( email )

0615 SW Palatine Hill Road
Portland, OR 97204
United States

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