Market value assessment and idiosyncratic tax-price risk: Understanding the consequences of alternative definitions of the property tax base

I develop a framework, based on tax price, which 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.