A national assessment of racism, combined with the economic damage caused by the pandemic, prompts some state and local officials to take a closer look at a problem that has long preoccupied black landowners: inflated property tax contributions.
For decades, white taxpayers have imposed a heavier tax burden on black residents by intentionally overstating their property. Authorities in southern Jim Crow have used property taxes to punish black landowners and churches who boycotted white businesses or held civil rights meetings.
Several recent studies and surveys show that, whether or not motivated by racial motives, many taxpayers still charge black residents and minorities too high property bills given the value of their homes.
With millions of unemployed and the economy teetering on the sidelines, some cities and states have approved temporary tax breaks to help people avoid unpaid and tax foreclosures. Others, prompted by recent protests, take a closer look at the racial inequalities at issue in the system.
“People are starting to think about it,” said Paul Bidanset, project manager at the International Association of Assessing Officers, a professional organization that develops guidelines used worldwide. “Evaluators have tools to measure and correct any inequity in their evaluation.”
Many historians and housing experts say the conversation is long overdue.
“We have seen these moments of crisis bring about structural change,” said Andrew Kahrl, associate professor of African American history and studies at the University of Virginia, in a telephone interview. “Who will they be, who knows?
“These are forms of structural racism that are very invisible,” he said. “It’s subtle. It is insidious and it happens in a way that the victims themselves are not aware of. “
Because property taxes are assessed locally, said Kahrl, there has been no national movement for change. And the task of demystifying the opaque assessment process generally falls to city listeners and local journalists.
In addition, any effort to ease the property tax burden on minority homeowners could face resistance from desperate local authorities to recover the tax revenue evaporated by the downturn.
Cornell Brooks, professor at the Harvard Kennedy School of Government and former president of the NAACP, noted that in the aftermath of the Great Recession, many communities became more aggressive about the foreclosure and sale of property with taxes unpaid.
“All of this points to a larger problem: local governments have been without income for decades,” said Brooks in an interview. “And the way they reacted made the problem worse for the most disadvantaged.”
A heavier burden
In several cities, surveys or audits of recent newspapers have revealed disturbing inequalities in tax contributions.
In 2017, the Chicago Tribune published a series of stories on the office of the Cook County tax expert, noting that, for years, the county property tax system had provided huge financial compensation to homeowners in wealthy and largely white communities, while imposing an unfair burden on the poor living in minority communities.
The newspaper blamed the flawed county appraiser system for assessing the properties, not overt racism, for the disparities. The result, however, was that people living in the poorest areas, many of whom are minorities, tended to pay more taxes as a percentage of the value of their homes than residents of the wealthier areas.
In 2018, investigation speak Philadelphia inquirer and the Philadelphia Daily News found that homes in this city that sold for between $ 25,000 and $ 50,000 were valued at 70% more than they should have been, inflating the tax bill for a home by about $ 37,500 $ 360 per year.
At the same time, the owners of more expensive properties got important breaks. Homes that sold for between $ 1 million and $ 2 million were valued at almost 11% less than their true value, resulting in tax bills of $ 2,000 less than they should have been.
A suite report The city controller admitted that homeowners in low-income, minority-majority neighborhoods in Philadelphia “likely pay more than their fair share of property taxes.”
In February, the Center for Municipal Finance at the University of Chicago Harris School of Public Policy released a review property assessments in Detroit between 2016 and 2018, finding that the property tax burden has dropped disproportionately on the city’s most modest homeowners.
New Orleans has also been criticized for its property tax assessments. A walk report by the Louisiana legislative auditor found that the assessor of the parish of Orleans had not assessed 18% of the residential and commercial properties that he should have reassessed during the 2020 taxation year and had proceeded to “land only” revaluations of 38% of the properties, instead of including the building value as required by state law.
The section of the city that was not rated was home to the wealthiest properties in New Orleans, said Broderick Bagert, a main organizer of Together Louisiana, a national network of more than 250 religious and civic organizations lobbying for big changes in the tax assessment process in the city.
“This means that the poorer you are, the more your property taxes have increased relative to the value of your home,” Bagert said in an interview. “It’s not just a question of abstract equity. This is an issue that can have an impact on the ability of people to stay at home and stay in town. “
The problem extends far beyond this handful of cities, according to a report published this month by the Washington Center for Equitable Growth nonprofit. The study found that compared to market value, the assessed property values are considerably higher for minority residents nationally.
In the same tax jurisdiction, the researchers found that black and Hispanic residents bear an average property tax burden of 10% to 13% higher than white residents. One reason for the disparity: minority owners are less likely to appeal their appraisals and less likely to earn them when they do.
Intentional or not
In an interview, the parish evaluator of Orleans Erroll Williams bristled at the idea that the evaluations in New Orleans are unfair to minorities.
“There are no racial disparities in the process,” said Williams. Stateline, adding, “I am a black appraiser. … We are looking for fair market value. We don’t care who owns it. “
But Carlos Avenancio-Leon, co-author of the recent study by the Washington Center for Equitable Growth, said that “systemic racism does not always require individual racism”.
“If your system is faulty,” said Avenancio-Leon, an assistant professor at the Kelley School of Business at the University of Indiana, “even if it’s not racial, you still have systemic racism.”
Certain policies designed to protect all homeowners from precipitous increases in their property taxes end up creating racial inequality, said Jared Walczak, director of state tax policy for the Tax Foundation, a not-for-profit tax policy based in Washington, DC.
Walczak has cited rules in many cities and states that cap growth in the assessed value of a home, allowing revaluation to full market value only when the home is sold or significantly transformed. This relieves incumbent landowners, who pay much lower effective tax rates than their neighbors who bought homes more recently.
In part because of racist policies in the past, those who have lived at home the longest tend to be older, wealthier and whiter than newer home buyers, he said.
“Decision makers should be aware that these policies choose the winners and the losers,” Walczak wrote in an email. “For everyone whose house value is artificially low, someone else pays more – a policy that often penalizes younger, lower-income families, and sometimes especially people of color.”
Avenancio-Leon says appraisers could significantly reduce racial disparities by basing their appraisals on recent sales in smaller, more geographically precise areas. And Williams suggests that Louisiana lawmakers should draft legislation capping property taxes for low-income homeowners.
“You have to protect the people at the bottom of the ladder,” said Williams.
Chicago offers a glimmer of hope, according to Aneel Chablani of the Chicago Lawyers’ Committee for Civil Rights, who represented three housing organizations in a trial in 2017 alleging that Cook County assessor Joseph Berrios violated national and federal civil rights and housing laws by producing unfair assessments for poor and minority homeowners.
In 2019, the complainants agreed to dismiss the trial after Berrios’ successor, Fritz Kaegi, increased transparency and made other changes, including ordering an external audit of his office, pushing for automatic renewal of tax exemptions for older residents, and improving the process for call. The Cook County Assessor’s office has also started using digital images of properties taken by aerial photography.
“I don’t want to give the impression that everything is rosy now,” said Chablani. “But we think the changes will produce a more equitable evaluation system.”
This story first appeared on June 25, 2020 in Stateline, an initiative of The Pew Charitable Trusts.