VERTICAL INEQUITY IN THE TAXATION OF REAL PROPERTY

This study examines the issue vertical inequity in the taxation of real property. Vertical inequity may be regressive (progressive) if the assessed value/market value ratio decreases (increases) as market values increase for properties of the same classification. The literature presents several models to measure for vertical tax inequity. This study uses a 1991 sample of owner-occupied residential properties for Miami, Florida, to test for vertical inequity and to compare the various estimation models. The results are mixed. The Paglin and Fogarty, Cheng, Bell, and IAAO models show a regressive inequity. The piecewise spline model shows a regressive tax for the middle segment of the data. The Köchin and Parks model and the Clapp model show a progressive inequity. Where appropriate, the models account for time by using a constant-quality Miami house price index estimated using a repeat-sale method.