The Effects of Property Tax Limits on the Racial Wealth Gap

• In Event: In Honor of Ronald C. Fisher and His Landmark Text on State and Local Public Finance: The Necessity of Non-Economic Considerations in Property Value Assessment

Abstract

Racial discrimination in homeownership opportunities have contributed to significant disparities in wealth accumulation. The median wealth of white households was over eight times that of Black households in 2022. Historically, several pieces of legislation were passed to promote more equitable access to housing, most notably the Fair Housing Act of 1968. Nevertheless, the 1970s saw the introduction of another set of policies — namely, property tax limits, which, in theory, should have exacerbated the racial wealth gap. Since white homeowners were more likely to own higher-value properties, these tax limits were regressive in nature and may have widened the racial income and wealth gap. In this paper, I examine the impact of property tax limits on the racial wealth gap, studying their impact relative to the Fair Housing Act of 1968. Exploiting the staggered state-level adoption of property tax limits and using data from Census, PSID, and the Survey of Consumer Finances, I study the effects on families’ mobility across neighborhoods, local house prices and the racial wealth distribution.

Author

• Jana Kontar, University of Michigan