Journal of Property Tax Assessment & Administration


The property tax is a property-based wealth tax, so there is an implicit supposition that the most equitable property tax systems are those based on current market value. As the property tax is an annually recurring tax, to some extent taxable values must be determined annually to provide a basis. Arguably, the best estimate of current property wealth would be current market value. If a system using this basis is coupled with a budget (levy)-based tax system, the amount of property tax to be levied against individual properties changes as the proportional share of market value represented by each property changes. Although this system can be extremely responsive to property wealth changes related to economic activity, there is a downside. If current market value is used, there is a risk of potentially large annual swings in the distribution of the property tax burden in times of high demand. Shifts on certain properties become intensified when market effects are not uniform throughout a jurisdiction and assessed value adjustments therefore vary from place to place.

Before the recession of 2007–2009, housing values in particular had been rising rapidly in many places in the United States. This upsurge had the perverse effect of shifting the property tax burden to homes, especially in systems based on current market value. In turn, this led to political pressure for capping value increases. However, current market value systems showed marked taxable value decreases during the recession, and the pressure for caps disappeared. Subsequent to the recession period, there have been renewed value increases, tax burden shifts, and calls for caps once again. This paper updates research originally done by Dornfest in 2005 into the effects of such caps (Dornfest 2005). This update uses data from the same two Idaho counties examined in 2005 to compare and contrast the two time periods, while focusing on the impact of caps in the current economic environment.


Tax and expenditure limits (TELS); Assessment limitations