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| Vertical Equity in the Taxation of
Single Family Homes Author: Earl D. Benson and Arthur L. Schwartz, Jr. Start Page: 215 Abstract: Vertical equity in ad
valorem real property taxation is the concept that all properties within a taxing
jurisdiction are assessed in equal proportion to their fair market value. This study
examines the assessment of single family homes in Bellingham, Washington, utilizing a
database of 1,118 home sales in the southern half of Bellingham that sold during the time
period of January, 1990 through June, 1994. The results of several empirical tests suggest
the presence of regressive vertical inequity. It appears that higher market value homes
are assessed at a lower proportion of their value (sales price) than less expensive homes.
These results suggest that property taxation at the local level magnifies the regessivity
of Washington State's already highly regressive state tax system. Why does this apparent
regressive vertical inequity exist? The authors offer several possibilities including the
propensity of wealthy homeowners to challenge property tax assessments, the difficulty of
valuing the amenities inside an upper-end home, the heterogeneity of the upper-end home
market coupled with a small number of transactions, and the lack of ample staff and other
resources at the County Assessor's office. |
