Sources of variation in county property tax inequities

The understanding of assessment inequities in the local property tax is extended by examining the relationships between characteristics of a tax jurisdiction and the degree of vertical inequity in its assessments. A two-step analytical procedure is used on a sample of sales transactions occurring in 1999 in 39 counties in Indiana. A procedure developed by Birch, Sunderman and Hamilton is utilized to create an index of vertical inequity by county that is then predicted as a function of economic, geographic and demographic characteristics. The main purpose of the research is to explain differences in vertical tax inequity across jurisdictions. The findings from Indiana indicate that a greater degree of progressive inequity is present in growing urban tax jurisdictions with high concentrations of commercial and/or industrial properties.