Study Finds Black Families Pay 10% Higher Property Taxes than White Families

Washington Post, July 7, 2020.

A new working paper by economists Troup Howard of the University of Utah and Carlos Avenancio-León of Indiana University found that unfair property assessments lead to widespread overtaxation of black Americans’ homes. Their data analyzed more than a decade of tax assessment and sales data on 118 million homes across the US found that black families pay 13 percent more in property taxes each year than a white family in the same situation. The study showed that black-owned homes are assessed at higher values, compared to their actual sale price, than white homes.

In almost every US state, they found that property tax assessments were higher in areas with more black and Hispanics. The gap persists in differences in buildings or land but also in the racial composition of the neighborhood. The gap between white families and minority households (Hispanic and Black families) is 10 percent.

This represents an updated version of the Jim Crow era when "local white officials routinely manipulated property tax assessments to overburden and punish black populations and as a hidden tax break to landowning white gentry,” according to University of Virginia historian Andrew Kahrl.
This sometimes was done in direct retaliation for black political action. Kahrl found that in 1932 a black North Carolina resident was taxed for the value of two stray dogs that had been seen on her property.

In 1901, W.E.B. Du Bois showed that because of their unequal tax burden, black people paid more in taxes than they received in public education funds. The recently-released 2020 study stated that the absolute fiction that “black people take services but they don’t pay taxes” is widespread in the US.

Recently, the forces raising black tax bills are more subtle. The sale price of Black-owned homes tend to grow slower because the whites who are most of the home buyers tend to avoid black neighborhoods and thus eliminate many potential buyers. If an assessor assumes a black-owned home gains value as fast as a white-owned home, the assessed value of the black-owned home will exceed  its true market value. The black family annually pays more in property taxes, although the sales price is not increasing as much. The nearby white families benefit because their homes increase in value quicker than their assessments - producing an ever-growing tax break. In addition, the supposedly neutral appeals process also penalizes black wealth. While the property tax gaps are worst for low wage earners, even the highest-earning black Americans pay more on average in property taxes than similar white peers living nearby.

The authors noted that their data showed “you can equally tell the story that assessors don’t realize how unequally the burden is landing along racial and ethnic lines”

Read the Washington Post article. Read the study.