Blacks pay higher property taxes than whites

[Swammerdami]

I was surprised and disappointed to read that black families pay on average 13% more in property taxes than whites pay (https://www.washingtonpost.com/business/2020/07/02/black-property-tax/), relative to their homes' market values. Much of this differential is quite deliberate: whites have more political power, so naturally politicians like to transfer tax burden from whites to blacks.

[What Exit?]

Actually the reason is more that blacks are more likely to own in poorer towns and in poorer towns the tax burden per home is higher. So while it works out exactly the same where blacks get screwed by the system it isn't quite a transfer of burden.

If anything the richer towns in NJ get more burden transferred to them but it still doesn't even out of course. A rich town which is more likely to be upper middle class and due to current demographics mostly white or white & Asian gets less from the state while contributing more in income tax. The poorer town where Blacks & Hispanics are more likely to end up get more school aid from the state, a lot more in fact but they generally don't have the rateables and as I said still pay more by percentage.

Maybe there is a deliberate pattern in the south but I'm pretty sure NJ is closer to the standard for the North and the West.

BTW: In place of Blacks, we could just say low income people pay a higher percentage than the middle class and above.

[hajario]

California was excluded from the study. We have weird property tax laws that make it nearly impossible to have a bias like that.

[Jaglavak]

In California the law is, "Pay my taxes for me, youngster."

[Solfy]

In PA it's similar to What Exit's example.

Here's a real illustration - per this (http://www.anytimeestimate.com/CALCULATORS/pa-allegheny-calculator.htm) property tax estimating tool, let's assume you have a house with land value of $25,000 and a building worth $100,000. If you property is in Wilkinsburg Borough, you'll pay $5944 annually in taxes. If that exact same value of property were in Fox Chapel Borough, the tax burden would only be $3324, or nearly half.

According to the 2010 U.S. Census, the population of Wilkinsburg is 67% black. Fox Chapel is 0.6% black. The overall millage rate is lower in Fox Chapel because they have a high percentage of expensive properties (median property value $604k) contributing to the tax base, while Wilkinsburg struggles (median property value $78K).

I'm not excusing this disparity, just saying that it's not as clear cut as a Machiavellian plot to deliberately shift the burden to the disadvantaged community. Not only is the tax burden higher for people in Wilkinsburg, the median household income there is $33K compared to $162K for Fox Chapel. Those higher taxes are a higher percentage of income.

Despite the higher millage rate, the tax base is still not equal. Fox Chapel, with a population of ~5,400 and an annual school budget of $102M, spends $18,888 per capita on education, resulting in a 97% graduation rate. Wilkinsburg's population is 15.7K with a school budget of $28M, for spending of $1,783 per capita yielding a 50% graduation rate. People in Wilkinsburg are paying more and getting less. But good luck getting elected on a platform of having boroughs like Fox Chapel subsidize Wilkinsburg and similar schools.

[Pogo]

...People in Wilkinsburg are paying more and getting less...

Nice workup Solfy. I quoted only the part that I wish you would phrase differently - although good phrasings are hard to come by!

The people of Wilkinsburg are not paying more, they are paying $74 million less.
The people of Wilkinsburg are not paying more on a per capita basis, they are paying $17000 per capita less.

The people of Wilkinsburg are paying a much higher proportion/percentage/what-have-you of their incomes/real estate values and that is the underlying issue.

I was grew up in Wilkins Township (a few miles east of Wilkinsburg) and that was a part of the Richie-Rich Churchill district. In ~1980 there was a Federal Court ordered merger of many school districts because of the disparity in neighboring municipalities. (financially based that Judge Weber agreed resulted in racial discrimination)

So, Churchill (rich), Edgewood (rich), Turtle Creek (middle), Swissvale (middle), and Braddock (poor) school districts merged to create the Woodland Hills School District. That means the following municipalities: Churchill, Wilkins, Forest Hills, Chalfont, Edgewood, Swissvale, Turtle Creek, East Pittsburgh, Rankin, Braddock, North Braddock, and Braddock Hills.

That same kind of thinking can lead to places like Fox Chapel providing for places like Wilkinsburg.

It might do well if Pittsburgh absorbed Wilkinsburg. The city probably wouldn't want a lower property-valued area, but I know that in the past, City Police have been stymied because criminals could run/operate over the line in Wilkinsburg. For its part, Wilkinsburg has - at times - had to have State Police patrol. (sort of a cite (https://www.publicsource.org/no-money-no-police-force/)) Pittsburgh Fire covers Wilkinsburg and I think their students are being moved into the Pittsburgh school system.

[Solfy]

The average property owner in Wilkinsburg is paying more as a percentage of average income. I shortened the phrasing for rhetorical purposes. The point remains, and aligns with the OP's article though it doesn't support the OP's assertion of political motivation.

Basing local school funding on local property base is a common problem. I remember seeing a documentary about the same problem's impact in Ohio schools back in the 90s. Wilkinsburg grades 7-12 did merge with Westinghouse a few years back (small world: I'm related to one of the administrators who was involved in that). My understanding was that low enrollment was a big driver for that.

As far as PA municipalities, Allegheny county has 130 different municipalities. There needs to be a lot more absorption in general. My brother lived in Wilkinsburg not that long ago. Taxes were a big motivator to move out. (the house being robbed didn't help)

[Swammerdami]

Actually the reason is more that blacks are more likely to own in poorer towns and in poorer towns the tax burden per home is higher....
So ... Am I correct that you did not read the article?

[Ludovic]

In addition there is the issue of renters. While I'm not sure what the percentage of black people who rent versus own relative to their income is -- my gut feeling tells me there are more renters but I could be mistaken -- I'd lay money on there being a higher percentage of renters total versus the US population as a whole once you do take income into consideration.

Rentees don't have homestead exemptions for their property, so between them, renters and rentees together are subsidizing the taxes of owners.

[What Exit?]

Actually the reason is more that blacks are more likely to own in poorer towns and in poorer towns the tax burden per home is higher....
So ... Am I correct that you did not read the article?

You posted a link to an article behind a paywall. So no, no I did not.

But from your Op I am saying I disagree a little. I made that pretty clear and the reasons why.

[JackieLikesVariety]

I did not find a paywall. :shrug:

State by state, neighborhood by neighborhood, black families pay 13 percent more in property taxes each year than a white family would in the same situation, a massive new data analysis shows.

Black-owned homes are consistently assessed at higher values, relative to their actual sale price, than white homes, according to a new working paper by economists Troup Howard of the University of Utah and Carlos Avenancio-León of Indiana University.

[Solfy]

If higher assessments were the only reason for the discrepancy, it would be easy to prove and fight against. I'm not suggesting bias in assessment doesn't happen, but it's only part of the story.

I did read the article and didn't find a paywall. Washington Post allows a certain number of free articles before walling.

[What Exit?]

It's a Washington Post article and I get the you have to subscribe message.

[thorny locust]

Actually the reason is more that blacks are more likely to own in poorer towns and in poorer towns the tax burden per home is higher. So while it works out exactly the same where blacks get screwed by the system .

Which is why what you're describing is a version of institutional racism. Institutional racism doesn't require malice; if racist results are built into the system, they function as such even if there is no current malice involved.


So ... Am I correct that you did not read the article?

You posted a link to an article behind a paywall. So no, no I did not.

There's a link to the study, but the link also goes to a Washington Post page.

Some relevant quotes from the article, enough to show that it's addressing a different question than What Exit? is:

State by state, neighborhood by neighborhood, black families pay 13 percent more in property taxes each year than a white family would in the same situation, a massive new data analysis shows.

Black-owned homes are consistently assessed at higher values, relative to their actual sale price, than white homes, according to a new working paper by economists Troup Howard of the University of Utah and Carlos Avenancio-León of Indiana University.
[ . . . ]

So the duo, then working on doctorate degrees at the University of California at Berkeley, combined 118 million real estate transactions and assessments from 2005 to 2016 with maps of more than 75,000 local taxing entities — such as counties, school districts, airport authorities and utility districts.

They used the maps to sort homes into areas that faced the same property tax burdens, identified the races of homeowners using federal mortgage data, and looked at every time a dwelling was assessed and then sold in the same year. That allowed them to compare a home’s assessed value and its market value, alongside the homeowner’s race and ethnicity.
[ . . . ]
The property tax gaps are worst for low earners, but even the highest-earning black Americans pay more on average in property taxes than similarly well-off white peers living nearby.

[Solfy]

I wonder how the assessment process is done in those areas. Where I live, assessments are based on a photo of the house to assign a condition grade, the age/square footage/# of bedrooms/etc. of the building and the lot, and comparables in the area. There's no way the race of the owners should be able to enter into it. The data isn't there, and the assessor never meets the owner.

I could see the effects of redlining or making generalizations about the racial makeup of an entire neighborhood impacting assessed values, but that wouldn't account for black homeowners paying more than adjacent white peers.

[Glazer]

In Georgia Assessors visit the home. Usually just a drive by. But sometimes a walk around the property if a new out building or addition is seen. Maybe a walk through if there has been a remodel.

[What Exit?]

...
The property tax gaps are worst for low earners, but even the highest-earning black Americans pay more on average in property taxes than similarly well-off white peers living nearby.

Thank you for filling in the missing pieces. Did the article say "Much of this differential is quite deliberate: whites have more political power, so naturally politicians like to transfer tax burden from whites to blacks." or just our Op?

[zut]

The white paper referred to in the article can be downloaded at this dropbox link (https://www.dropbox.com/s/d66yj47ze9h0mg1/Troup%20Howard%20JMP%2C%20Current.pdf?dl=1). It's a bit dense, but from what I understand, the authors calculated the ratio between a house's assessed value and actual sale price, using recently sold homes. They found a racial gap of 10-13% in this ratio between white residents and black or Hispanic residents.

About half of this discrepancy is due to what they call "between-neighborhood variation." Continuing, "Residential sorting by race in the U.S. means that the average black or Hispanic resident faces a different set of local attributes than a white resident does. Market prices appear to be substantially more sensitive to a wide range of observable neighborhood characteristics than assessed valuations. We use hedonic regressions to show that market prices and assessed values align well on home-level attributes, but diverge on tract-level characteristics." In other words, I believe they are saying that if you were to look at similar houses in adjacent neighborhoods, they would have similar assessed values, but the market price would tend to be lower in the minority neighborhood.

The remainder of the discrepancy, they hypothesize, is due to assessment appeals. "In Cook County, minority residents are 1% less likely to appeal; are 2% less likely to win an appeal; and conditional on success, receive a 2-3% smaller reduction."

[Solfy]

About half of this discrepancy is due to what they call "between-neighborhood variation." Continuing, "Residential sorting by race in the U.S. means that the average black or Hispanic resident faces a different set of local attributes than a white resident does. Market prices appear to be substantially more sensitive to a wide range of observable neighborhood characteristics than assessed valuations. We use hedonic regressions to show that market prices and assessed values align well on home-level attributes, but diverge on tract-level characteristics." In other words, I believe they are saying that if you were to look at similar houses in adjacent neighborhoods, they would have similar assessed values, but the market price would tend to be lower in the minority neighborhood.


If that is indeed what they are stating, then it doesn't line up well with the article's conclusion that "even the highest-earning black Americans pay more on average in property taxes than similarly well-off white peers living nearby." If I'm interpreting "tract-level characteristics" correctly, the difference is the neighborhoods. Still not cool to assess houses unfairly in minority neighborhoods, but not the same as having a black family living next door to a white family in an identical house with a difference in assessments.

If the difference is really based on market prices rather than assessed value, then that's hardly a sign that The Man is exerting influence. If we consider two identical houses assessed at the same value, but the one in the minority neighborhood has a different market value, then the only way to reduce the discrepancy would be to lower the assessment to account for the lower market value. Tying assessed values to comparable sales would achieve this, assuming the comparables were pulled from houses with the same "tract-level characteristics."

[zut]

That's essentially what the authors suggest: "Last, we demonstrate that these distortions can be fixed by a relatively simple procedure. Our results suggest that it is important for assessors to recognize that market prices are highly sensitive to local conditions in ways that correlate with race. Accordingly, assessed valuations should reflect price dynamics at a narrow geographical level." Narrow in this case is, in their example, at the zip code level.

[Swammerdami]

It's a Washington Post article and I get the you have to subscribe message.

I also find such things annoying, but there are simple work-arounds that work in many cases. I don't use any of the more sophisticated tricks, so I figure if the click works for me it works for everyone. NYTimes is easy to read. I'm not sure about WP -- I think it can be fixed just like NYTimes but I've not needed to.

Start a new thread -- or PM me -- if you need help with the simple tricks. (And if anyone knows a way to read WSJ for free, please tell me!)

Thank you for filling in the missing pieces. Did the article say "Much of this differential is quite deliberate: whites have more political power, so naturally politicians like to transfer tax burden from whites to blacks." or just our Op?

Uhhh ... Same to you buddy! :haw:

I won't write an essay characterizing an easily read article on the 'Net, but "during the Jim Crow era":
“During the Jim Crow era, local white officials routinely manipulated property tax assessments to overburden and punish black populations and as a hidden tax break to landowning white gentry,” said University of Virginia historian Andrew Kahrl.

Many county assessors intentionally overvalued black properties, sometimes in direct retaliation for black political action. Kahrl, who has long researched the history of property tax discrimination against black Americans, has found white officials going to extreme lengths to hike black taxes. In one such case in 1932, a black North Carolina resident was taxed for the value of two stray dogs that had been seen on her property.

If you're one of those "Jim Crow was then, America has gotten over racism now" guys then ... whatever.

[thorny locust]

then the only way to reduce the discrepancy would be to lower the assessment to account for the lower market value. Tying assessed values to comparable sales would achieve this, assuming the comparables were pulled from houses with the same "tract-level characteristics."

Well, yes. That's what assessors are supposed to be doing.

Whether any individual assessor isn't currently doing so due to malice, incompetence, an expectation of political/financial benefit, laziness, or blind spots which cause them not to recognize that they can't just average prices over a wide area but need to pay attention to the individual neighborhood, is going to be difficult to judge if one doesn't know the assessor, or otherwise have specific evidence. But in any case the overall pattern shows a built-in bias in the system; and in any case it needs fixing.

[Red Skeezix]

I wonder how the assessment process is done in those areas. Where I live, assessments are based on a photo of the house to assign a condition grade, the age/square footage/# of bedrooms/etc. of the building and the lot, and comparables in the area. There's no way the race of the owners should be able to enter into it. The data isn't there, and the assessor never meets the owner.

I could see the effects of redlining or making generalizations about the racial makeup of an entire neighborhood impacting assessed values, but that wouldn't account for black homeowners paying more than adjacent white peers.

Where I live the initial assessment is done in a similar way, but the percent of assessed value that is taxable is variable based on no logical reason. I, a white male was able to walk into city hall tax assesors office and get my pct of assessed value lowered by 5%. Based on other interactions I've had in that building, I feel confident that the same opportunity would not be extended to my wife, or any person of color. I can't get out of this town soon enough.

[thorny locust]

In some areas, the assessor may live in the neighborhood and know who lives in at least some of the houses.