Many jurisdictions determine real property taxes based on a combination of current market values and the recent history of market values, introducing a dynamic aspect to property taxes. By design, homes in rapidly appreciating neighborhoods enjoy lower tax rates than homes in other areas. Since growth in home prices is correlated with—and may be caused by—changing neighborhood demographics, dynamic property taxes will generally have racially disparate impacts. These impacts may explain why minority-owned homes tend to be taxed at higher rates. Moreover, the dynamic features of local property taxes may subsidize gentrification and racially discriminatory preferences.
Andrew T. Hayashi,
Dynamic Property Taxes and Racial Gentrification,
Notre Dame L. Rev.
Available at: https://scholarship.law.nd.edu/ndlr/vol96/iss4/8