Birch and Sunderman (2014) developed a neighborhood-based model to estimate vertical and horizontal inequity in assessments on residential property within a taxing district. We demonstrate that this procedure can be used to reduce any discovered inequity. Because the Birch-Sunderman model is designed to eliminate omitted variable (OV) bias and is based on the Clapp (1990) model, which addressed measurement error bias, these new sale-price-based assessed values are free of these forms of bias. The procedure can be used as a powerful statistical tool to supplement ongoing, ad hoc work of property assessors within a taxing jurisdiction, either to guide such work or to directly adjust assessments, thus improving equity on residential properties. Data from Shelby County, Tennessee, and Bloomington, Indiana, are used to illustrate this process.
Birch, J., Sunderman, M. A., & Radetsky, E. (2017). Reducing vertical and horizontal inequity in property tax assessments. Journal of Property Tax Assessment & Administration, 14(2), 71-81. Retrieved from https://researchexchange.iaao.org/jptaa/vol14/iss2/5