Interjurisdictional and intrajurisdictional property tax equity and efficiency: A case study of two valuation methods in Marion County, Indiana

An important distinction between the property tax and other taxes is the calculation of its base. It is a tax on estimated values rather than transactions. Estimated property values, referred to as assessed values, are the base on which property taxes are levied. Another distinction is that each state develops its own system for administering the property tax, including how properties are assessed. The consensus among scholars is that current market value assessment is the standard for achieving the most fair and equitable property tax burden. Assessment systems that deviate from current market value presumably jeopardize fairness, diminish ability to adequately raise revenue, and create economic distortions.;Merging three public finance research arenas, this dissertation compares market value assessment to non-market value assessment. Inter- and intrajurisdictional equity and efficiency effects of the property tax are examined under two disparate valuation methods in the same urban area before and after a change in assessment practice. Contemporary spatial analytic and spatial econometric methods are used. The findings indicate that the qualities that may make the property tax a good local government revenue source in principle are heavily reliant upon its administration. There is more systematic bias in the non-market system than in the market-based system. Differential property taxes as a result of assessment error affect housing values and may distort housing consumption.