Christopher McLaughlin Partners with NC Counties to Study Property Tax Appeals
In 2020, an analysis of 118 million home sales across the nation from the past decade revealed that for nearly every state, property tax assessments were higher relative to sales prices in areas with higher Black and Hispanic populations. In what researchers coined “The Assessment Gap,” areas with higher concentrations of poor and minority residents were paying more in property taxes, on average, than white families in the same financial situation.
Interested by the results of this study, School of Government faculty member Chris McLaughlin sought to determine if this national trend of inequity within the property tax system held true in North Carolina. His goal, he said, was two-fold.
“First, do poor and minority taxpayers appeal their property tax appraisals as often as do wealthy and White taxpayers?” he asked. “Second, when poor and minority taxpayers appeal their tax appraisals, do they achieve results similar to wealthy and White taxpayers?”
A call to action
In tackling this question, McLaughlin aimed to examine whether the state’s appraisal process fulfilled all the core tenets of public administration.
“Equity is one of the four universally recognized pillars of public administration, along with economy, efficiency, and effectiveness,” he said. Given my background, I believe that studying property tax data for evidence of structural bias is the best way for me to help our local governments focus on equity concerns.”
McLaughlin is a local government tax and finance expert, having published, instructed, and advised on issues of property tax collection, tax foreclosures, occupancy taxes, and more at the School for 14 years. Uniquely qualified to answer the question at hand, he reached out to Durham County—whose commissioners had made clear their strategic priority to eliminate systemic bias in an official 2020 resolution.
The County’s tax administration office readily agreed to partner with McLaughlin. With a collaborative approach between the County and School teams, the group analyzed thousands of appeals from Durham County’s last two reappraisals in 2016 and 2019.
Attempting to determine if appeal rates or appeal results varied with taxpayers’ race, income, or property value, the process ultimately found that appeal rates are generally higher for neighborhoods with lower minority populations and higher value homes.
Possibly indicative of an “assessment gap,” the study found fewer successful appeals from poor and diverse taxpayers increases the likelihood that their tax assessment are father away from true market value. What the study did not conclude, however, is that results of the appeals were definitively affected by factors like race, income or property value.
In other words, while no racial bias was found, disparities in the process remain.
“Recognizing that systemic bias exists is not an accusation. It’s a call to action. It creates an obligation,” he wrote in a Coates’ Canons blog post. “It’s vital that our local governments serve all of their constituents regardless of race, gender, income, or other demographic characteristic.”
Different county, similar finding
Building off his research, McLaughlin was contracted by Mecklenburg County to complete a study into potential systemic bias in its property tax appeal system this year.
To conduct the Study, McLaughlin and two UNC planning students and veterans of fellow faculty member Tyler Mulligan’s Community Revitalization course analyzed residential property tax appeal data related to the County’s 2019 county-wide reappraisal. The question posed was in line with the Durham County study: do appeal rates and their results vary on property values and a neighborhood’s minority population percentage?
The data yielded similar results as the previous study: appeal rates are generally higher for (1) neighborhoods with larger White populations, and (2) neighborhoods with higher value homes. The Mecklenburg County data also showed that the results of informal appeals (which were not studied in Durham County) were generally better for (1) taxpayers from neighborhoods with larger White populations, and (2) more expensive homes.
These results suggest that structural disparities, while not necessarily rooted in racial bias, exist in local property tax systems. Ignoring them, McLaughlin said, would be incongruous with government’s function to help solve community challenges.
“We can’t fix problems we don’t know exist. “
Broadening the scope
McLaughlin is in the beginning stages of contracting with Orange County to complete a similar study. He hopes other counties across the state will follow suit.
“I remain impressed by the willingness of tax officials and elected county leaders to shine a spotlight on their tax systems to help root out potential biases and would welcome the opportunity to work with additional counties.”
To contact McLaughlin regarding an analysis of property tax appraisal data, please reach him at mclaughlin@sog.unc.edu or 919.843.9167.