Working Paper

Assessment Frequency and Equity of the Real Property Tax: Latest Evidence from Philadelphia

Abstract: Philadelphia’s Actual Value Initiative, adopted in 2013, createsa unique opportunity for us to test whether reassessments at short intervals to true market value and taxing by such values improve equity. Based on a difference-in-differences framework using parcel-level data matched with transactions in Philadelphia and 15 comparable cities, this study finds positive evidence on equity outcomes from more regular revaluations. The quality of assessment, as measured by the coefficient of dispersion, improves substantially after 2014, although the extent of improvement varies across communities. Vertical equity, measured by price related differential, also improved, although it was still above the standard threshold. Cross-city comparisons confirm Philadelphia’s improvement in quality and equity of assessments after adopting the initiative. These results highlight the importance of regular reassessment in places where property values increase quickly, and they shed light on the disparate impacts of reassessment across income, property value, race, and gentrification status. The paper makes the case that the property tax, if designed well, can be an equitable tax instrument

Keywords: real property tax; valuation; assessment cycle; equity;

JEL Classification: H20; H31; H71; R51;

https://doi.org/10.21799/frbp.wp.2021.43

Bibliographic Information

Provider: Federal Reserve Bank of Philadelphia

Part of Series: Working Papers

Publication Date: 2021-12-08

Number: 21-43