Last spring, the 18-member
2020-21 class of Institute
Visiting Scholars was named.
Some established, some
emerging, they bring a
diversity of backgrounds and
research interests as they
examine what sorts of policies
work to improve economic
opportunity and inclusion,
As an education consultant in Chicago, Troup Howard
would often hear community leaders fret that minority
homeowners were overtaxed. There wasn’t a specific
cause they pointed to, just an understanding that this was
how things have always been.
Fast-forward a few years and Howard was a graduate
student at the University of California, Berkeley, looking at
property taxes for a pension study when he and co-author
Carlos Avenancio-León realized that their data could also
provide evidence of racial inequality in taxation.
Historians have documented such bias in the 19th and
20th centuries, Howard said. “What we realized was that
we were going to have the econometric tools to be able to
test that hypothesis in aggregate data in the modern era—
within the last couple of decades.”
His research found that community leaders were right
and that the assessment process is to blame.
The assessed value of a home is what the government
estimates it’s worth if sold on the market. Taxes are levied on
the basis of this value. If assessments were perfectly fair, the
ratio between assessed and market
values would be the same for every
homeowner in a given taxing district.
But looking at homes sold from
2005 to 2016, Howard found the ratio
for Black and Hispanic homeowners
10 to 13 percent higher on average
than the ratio for White homeowners.
Half of this “assessment gap”
occurs because assessments aren’t
as sensitive to differences among neighborhoods as the
market is, according to Howard. Minority neighborhoods
often have characteristics home buyers don’t want,
such as poverty. But assessments often lump together
neighborhoods in large areas without accounting for vast
Howard said just accounting for differences among ZIP
codes would dramatically narrow the gap.
As for the other half of the gap, Howard found evidence
suggesting that minority homeowners are less likely
than Whites to appeal their assessments, less likely to
succeed, and less likely to get as high a reduction in value.
“As a scholar, I’m interested in how financial choices of
state and local governments affect both regional economies
and household finances,” he said. “The home is
typically the largest asset owned by many, many families.
Property taxes are the central pillar of essentially all local
More Scholar Spotlights from this issue