Cost-Based Property Tax Inequity: Evidence from Indiana

摘要

In recent years, twelve states have appraised residential property using construction cost data. Eleven of these states adjusted the resulting values, attempting to move them closer to currently existing market levels. In contrast, Indiana's construction-based appraisals were not market adjusted. This article demonstrates that the outcome was likely to be property tax inequity. The recent history of the Indiana assessment system and specific test results strongly suggest the presence of inequity. The article presents a robust methodology to find and eliminate any significant inequity that may be present in residential property assessment.