The relationship between population and residential property taxes is not well understood. This study is an attempt to discern the relationship. The basic questions examined are: How does population affect tax bills? What are the short-run and long-run relationships between population and taxes? What reasons lie behind the answers to the first two questions? Nearly all of a typical residential property tax bill is paid to the three units of local government, counties, cities, and school districts. The equation for determining the tax bill is the same for each unit of government: Total Expenditures minus other non-property tax revenues equals the Levy which divided by the total value of all property in the district equals the tax rate which multiplied by the value of a residence gives that residence's tax bill. The relationships between each of the above variables and population are examined to facilitate understanding of the tax-population relationship. The model chapter provides a logical link between each variable and population and corresponding estimating equations to assess long-run and short-run relationships and the relative effect of population on the separate tax variables. For long-run relationships both simple linear and quadratic functions are used with population as the explanatory variable. For short-run equations, first difference estimates are computed. Elasticities are computed for comparing the relative effect of population on the tax variables. The results obtained show that despite high R2 values the large confidence intervals about the regression lines imply that substantial variation is left unexplained by population variables. Generally, levies appear to be more responsive to population than does the value of all property as a whole resulting in a rate of growth in the levies which exceeds that of property values. Hence, tax rates tend to increase slightly with increases in population. Higher residential property taxes are associated with larger populations. This appears to be due in part to the relatively more elastic response of residential values to population than all property values as a whole. Taxes appear to be shifting toward residential property owners. Finally, short-run changes in taxes and variables composing the tax equation do not appear to be related to short-run changes in population. / Graduation date: 1979

There exist a number of factors which operate as potentially significant determinants of the distributional impact of the property tax within any specific urban or metropolitan area. This study is an attempt to explain the income distribution effects of one factor – the property tax reappraisal lag. The study is limited mainly to the impact of the lag on owners of single-family housing. An income distribution problem arises because each property subject to the property tax is reappraised only every five or six years. Each Oregon county is divided into five or six maintenance districts to facilitate reappraisal. For example, Multnomah County, which is the subject area of the thesis text, currently has five maintenance districts. All properties in one maintenance district are reappraised each year. Insofar as property values, as well as the income of the owners of these properties, experience differential movements during the five-year period in which the original appraisal is maintained on the assessment rolls, the reappraisal lag redistributes the property tax burden within the area. The hypothesis presented here is that the property tax reappraisal lag operates to increase the burden of the property tax on owners of lower-value single-family housing, while at the same time diminishing the burden of the tax on owners of higher-value single-family housing. In order to test this hypothesis, a sample was drawn from single-family housing sales data maintained by the Sales Ratio Division of the Multnomah County Assessors’ Office. Multnomah County maintains computerized records of all property transfers occurring within Multnomah County. Through the use of simple and multiple regression analysis, it was possible to examine the following questions: (1) what factors produce the initial assessment level pattern in Multnomah County; (2) how does the reappraisal lag affect the initial assessment pattern; and (3) what are the distribution effects of the initial assessment level and the reappraisal lag pattern. The results of the study strongly support the hypothesis. Within Multnomah County the reappraisal lag operates to redistribute approximately $1,200,000 per year from owners of lower-value to owners of higher-value single-family housing, significantly increasing tax burdens on lower-income groups. The redistribution of tax burdens is complicated by the relationship between business and residential property. If redistribution occurs only within the single-family housing property class, owners of housing valued below approximately $14,605 would experience a decline in tax burden, while owners of housing valued above this amount would experience an increase in tax burden. If redistribution results in a lower tax rate for business property, the cross-over point mentioned above would decline to approximately $10,260. At the same time, because of the tax rate decline effect, there would be a net shift of tax burden roughly equal to $2.8 million per year from business to residential property.