Do More Frequent Property Reassessments Improve Tax Fairness Across Neighborhoods?

This study investigates whether more frequent property tax reassessments improve tax equity in Philadelphia following the 2013 Actual Value Initiative (AVI). Using parcel-level data from Philadelphia and 15 comparison cities, the authors apply a difference-in-differences framework to assess changes in horizontal and vertical equity. They find that the 2014 and 2019 reassessments significantly reduced regressivity: the Price-Related Differential (PRD) dropped from 1.42 to 1.14, and the Coefficient of Dispersion (COD) improved from 55% to 32%. However, equity gains were uneven, with disadvantaged neighborhoods initially experiencing less improvement. The findings support regular reassessment as a tool for equitable taxation.

Full Citation and Link to Article

Hou, Y., Ding, L., Schwegman, D. J., & Barca, A. G. (2025). Assessment frequency and equity of the property tax: Latest evidence from Philadelphia. Journal of Policy Analysis and Management, 44(2), 483–507. https://doi.org/10.1002/pam.22555

Extended Summary

Central Research Question

This article investigates whether more frequent property reassessments improve the equity of the property tax system. The context for the study is Philadelphia’s 2013 Actual Value Initiative (AVI), a comprehensive tax reform effort that required reassessing all properties to their true market values and implementing regular reassessment cycles thereafter. Specifically, the paper examines whether this change improved both horizontal equity (the uniform treatment of similar properties) and vertical equity (the fair distribution of tax burdens across properties of different values), and whether these improvements were shared equitably across neighborhoods with different income levels, racial compositions, and stages of gentrification.

Previous Literature

Historically, the property tax has been viewed by many as the “worst tax” due to widespread inequities in its administration, especially when assessments are outdated or inaccurate. A central problem is that infrequent reassessments lead to distortions in tax burdens: lower-valued properties often end up being over-assessed relative to their market value, while higher-valued properties are under-assessed. Literature from the 1970s through the 2000s has explored determinants of assessment equity, including staffing, assessor characteristics, and valuation tools. Some research (e.g., Eom, 2008) has shown that each additional year of reassessment delay leads to a measurable decline in assessment uniformity. More recent studies have documented systemic regressivity and racial disparities in assessment practices across U.S. cities. However, empirical evidence on whether more frequent reassessments improve both horizontal and vertical equity, especially using recent data and a quasi-experimental design, has been limited. This paper addresses that gap by using Philadelphia’s AVI as a natural experiment.

Data

The study uses a combination of administrative parcel-level data from Philadelphia and property transaction data from 15 peer cities across the U.S. Philadelphia data were obtained from the city’s Department of Revenue, Department of Records, and Office of Property Assessment for the years 2010–2019. These data include property assessments, sales transactions, tax bills, and property characteristics. The control group includes cities such as Baltimore, Denver, and Pittsburgh, selected because they did not implement comparable reassessment initiatives during the study period. The authors focused on arm’s length transactions of single-family residential properties and excluded records with missing values, outliers, or suspicious sale prices. After data cleaning, the Philadelphia sample included over 156,000 transactions; the control group contained approximately 705,000 transactions from 2012 to 2015. These data were further matched to U.S. Census data for neighborhood-level demographic and income characteristics.

Methods

The authors use a difference-in-differences (DID) framework to compare changes in assessment equity in Philadelphia before and after the AVI, relative to the 15 control cities. The main outcomes are the Coefficient of Dispersion (COD), a measure of horizontal equity that captures variability in assessment ratios across similar properties, and the Price-Related Differential (PRD), a measure of vertical equity that captures whether lower- or higher-value homes are relatively over- or under-assessed. A PRD greater than 1 suggests regressivity. The authors also measure effective tax rates (tax paid divided by market value) and create a binary indicator for assessments with COD below 15%—a threshold for acceptable equity under industry standards. Heterogeneity is explored using neighborhood characteristics such as income quartiles, majority race, gentrification status, and property value levels. Additional models test for treatment effect differences using interactions with neighborhood types.

Findings/Size Effects

Before the AVI, Philadelphia’s assessments were highly inequitable. The average PRD was 1.42, far above the acceptable range (0.98 to 1.03), indicating substantial regressivity. The average COD was 55%, more than triple the acceptable threshold of 15%, showing a lack of uniformity in assessments. After the first comprehensive reassessment in 2014, the PRD improved to 1.28, and the COD dropped to 41%. A second reassessment in 2019 further improved these metrics: the PRD fell to 1.14 and the COD declined to 32%.

Improvements in tax equity were also observed in effective tax rates, which declined significantly post-AVI, especially for lower-income, majority-Black, and non-gentrifying neighborhoods. For example, the effective tax rate for properties in disadvantaged areas dropped more than for those in wealthier areas, suggesting a redistribution of the tax burden.

The authors found that prior to the AVI, higher-income and higher-value neighborhoods had worse horizontal equity (higher CODs), but this pattern reversed after 2014. However, the improvements were uneven. Disadvantaged neighborhoods—particularly those that were majority-Black, low-income, or not undergoing gentrification—saw smaller initial gains and, in some cases, a deterioration in assessment accuracy immediately after the 2014 reassessment. This suggests that initial implementation of the AVI may have had regressive short-term impacts for already marginalized communities.

However, the 2019 reassessment appears to have helped close these gaps. Assessment uniformity and accuracy improved across all neighborhood types in 2019, demonstrating the importance of continued reassessment over time rather than a one-time policy fix. The authors interpret this as evidence that the learning curve and iterative improvements in assessment practices can enhance equity in future reassessment cycles.

In cross-city comparisons, Philadelphia’s improvements in PRD and COD following the AVI were greater than in any of the 15 control cities, providing strong support for a causal interpretation. For example, while Philadelphia’s PRD dropped by 0.14 between 2013 and 2014, the average change among control cities was only -0.009.

Conclusion

The study concludes that more frequent, comprehensive property tax reassessments can meaningfully improve both horizontal and vertical equity in property taxation. Philadelphia’s Actual Value Initiative significantly reduced regressivity and increased uniformity in property assessments after decades of assessment neglect. However, the gains were not evenly distributed, with lower-income and minority neighborhoods benefiting less—or even experiencing setbacks—in the initial implementation phase. This underscores that frequency alone is not enough: the quality of reassessment practices and neighborhood-level capacity for accurate valuation are also essential.

The findings have implications for tax policy and public finance. First, they suggest that concerns about the fairness of the property tax system—long criticized for being regressive and opaque—can be addressed with the right institutional reforms. Second, they highlight the value of routine and well-managed reassessments, especially in rapidly changing housing markets. Third, they provide a cautionary note that one-time reassessments are insufficient to correct long-term inequities; instead, jurisdictions must commit to ongoing investment in high-quality assessment systems and consider targeted relief for disadvantaged communities.

In sum, the paper contributes both updated empirical evidence and methodological rigor to longstanding debates over the equity of property taxation. It shows that a well-designed reassessment policy like AVI can reduce inequities—but only if implemented with attention to neighborhood variation, reassessment quality, and long-term consistency.