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Vertical Equity in the Taxation of Single Family Homes

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.

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Article provided by American Real Estate Society in its journal Journal of Real Estate Research.

Volume (Year): 14 (1997)
Issue (Month): 3 ()
Pages: 215-232

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Handle: RePEc:jre:issued:v:14:n:3:1997:p:215-232
Contact details of provider: Postal: American Real Estate Society Clemson University School of Business & Behavioral Science Department of Finance 401 Sirrine Hall Clemson, SC 29634-1323
Web page: http://www.aresnet.org/
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Order Information: Postal: Diane Quarles American Real Estate Society Manager of Member Services Clemson University Box 341323 Clemson, SC 29634-1323
Web: http://pages.jh.edu/jrer/about/get.htm Email:


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  1. Clapp, John M, 1990. "A New Test for Equitable Real Estate Tax Assessment," The Journal of Real Estate Finance and Economics, Springer, vol. 3(3), pages 233-49, September.
  2. Kochin, Levis A & Parks, Richard W, 1982. "Vertical Equity in Real Estate Assessment: A Fair Appraisal," Economic Inquiry, Western Economic Association International, vol. 20(4), pages 511-32, October.
  3. Benson, Earl D, et al, 1998. "Pricing Residential Amenities: The Value of a View," The Journal of Real Estate Finance and Economics, Springer, vol. 16(1), pages 55-73, January.
  4. Mark A. Sunderman & John W. Birch & Roger E. Cannaday & Thomas W. Hamilton, 1990. "Testing for Vertical Inequity in Property Tax Systems," Journal of Real Estate Research, American Real Estate Society, vol. 5(3), pages 319-334.
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