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Property Value Assessment Growth Limits and Redistribution of Property Tax Payments: Evidence From Michigan

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  • Skidmore, Mark
  • Ballard, Charles L.
  • Hodge, Timothy R.

Abstract

We examine the change in the distribution of property tax payments resulting from Michigan’s imposition of a property tax assessment growth cap in 1994. The cap restricts growth in property value for tax purposes to the inflation rate, for those maintaining continuous ownership. Upon sale, however, the tax base is adjusted to reflect market value. Using data from a survey conducted in 2008, we find that long-time homeowners enjoy an average reduction in effective tax rates (relative to new homeowners) of 19 percent. The cap also appears to have reduced effective property tax rates for older homeowners, and for those with higher incomes.

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  • Skidmore, Mark & Ballard, Charles L. & Hodge, Timothy R., 2010. "Property Value Assessment Growth Limits and Redistribution of Property Tax Payments: Evidence From Michigan," National Tax Journal, National Tax Association;National Tax Journal, vol. 63(3), pages 509-537, September.
    • Handle: RePEc:ntj:journl:v:63:y:2010:i:3:p:509-37
    DOI: 10.17310/ntj.2010.3.05
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    Cited by:

    1. Nalitra Thaiprasert & Dagney Faulk & Michael J. Hicks, 2013. "A Regional Computable General Equilibrium Analysis of Property Tax Rate Caps and a Sales Tax Rate Increase in Indiana," Public Finance Review, , vol. 41(4), pages 446-472, July.
    2. Sung Hoon Kang & Mark Skidmore & Laura Reese, 2015. "The Effects of Changes in Property Tax Rates and School Spending on Residential and Business Property Value Growth," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 43(2), pages 300-333, June.
    3. David L. Sjoquist, 2015. "The Effect of the District of Columbia’s Assessment Limitation on Property Tax Equity," Public Finance Review, , vol. 43(5), pages 661-685, September.
    4. Skidmore, Mark & Reese, Laura & Kang, Sung Hoon, 2012. "Regional analysis of property taxation, education finance reform, and property value growth," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 351-363.
    5. Bigelow, Daniel P. & Kuethe, Todd, 2023. "The impact of preferential farmland taxation on local public finances," Regional Science and Urban Economics, Elsevier, vol. 98(C).
    6. Anderson, Nathan B., 2012. "Market value assessment and idiosyncratic tax-price risk: Understanding the consequences of alternative definitions of the property tax base," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 545-560.
    7. Johnson, Erik & Walsh, Randall, 2013. "The effect of property taxes on vacation home growth rates: Evidence from Michigan," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 740-750.
    8. Timothy R. Hodge & Mark Skidmore & Gary Sands & Daniel McMillen, 2015. "Tax Base Erosion and Inequity from Michigan’s Assessment Growth Limit," Public Finance Review, , vol. 43(5), pages 636-660, September.
    9. William H. Hoyt & Aaron Yelowitz, 2016. "Anticipated Property Tax Increases and the Timing of Home Sales: Evidence from Administrative Data," CESifo Working Paper Series 6264, CESifo.
    10. Yilin Hou & Yusun Kim & John Yinger, 2019. "Does Coordination Among Assessing Units Generate Returns to Scale? Evidence from New York State," CESifo Working Paper Series 7931, CESifo.
    11. Timothy R. Hodge & Mark Skidmore & Gary Sands & Daniel McMillen, 2013. "Tax Base Erosion and Inequity from Michigan's Assessment Growth Limit: The Case of Detroit," CESifo Working Paper Series 4098, CESifo.

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