The Journal of Real Estate Finance and Economics

, Volume 3, Issue 3, pp 233–249

A new test for equitable real estate tax assessment

  • John M. Clapp
Article

DOI: 10.1007/BF00216188

Cite this article as:
Clapp, J.M. J Real Estate Finan Econ (1990) 3: 233. doi:10.1007/BF00216188

Abstract

Paglin and Fogarty (1972) proposed a correct conceptual view of equitable property tax assessment, but attempts to find an empirical test of their model have become mired in technical issues. The new empirical test proposed here is based on the notion that the market value of an individual property is essentially unobservable.

Empirical results for 52 towns in Connecticut show that the new model (a 2SLS procedure) removes a substantial part of the biases present in other tests. Moreover, the 2SLS procedure provides a method for removing the time trend from sales prices. Thus, sales prices can be adjusted to the date of assessed value allowing evaluation of assessment practices as opposed to assessment lags. This refines previous approaches, and it substantially expands the number of transactions that can be used to evaluate equity in property tax assessment practices.

Key words

property taxtax assessmentequitable tax assessmenterrors-in-variablesWald methodassessment practices

Copyright information

© Kluwer Academic Publishers 1990

Authors and Affiliations

  • John M. Clapp
    • 1
  1. 1.The University of ConnecticutStorrsUSA