Property Tax Research in NYC [Report]

Student Name: Xinge Zhong(viola), Github account: xingezhong, NetID: xz1809

Abstract

This project has searched into two questions. First one, whether there exists an unequal contribution in NYC' property tax system. Second one, as part of property tax calculation, whether the DOF(Dept of Finance)'s assessed market value model is too old to accomplish its job.

My conclusion is that even it is true that our property tax now is being taxed rather weirdly, but the statistical model is fine. Even though some case of property tax is absurd, such as the luxury building barely pay no tax, even though some good-intention policies end up with tax poor people harder, the part of valuating market price is not the problem.

Figure1: Simplied Tax Calculation: Assessed Value * Tax Rate = Property Tax, by DOF

Introduction

The property tax levy makes up more than 40% of our city's fiscal revenue. While the process of property tax is rather complicated, which includes not only quantitative model estimation, but also lots of qualitative consideration: tax classifications, policy abatement and policy exemption.

For this case, it's easier to start with the quantitative part: the market price evaluation model. As the figure 1 has showed above, for calculating the real property bill, the first step of DOF is to evaluate the so-called "market value". While due to many reasons inside or outside the DOF, this model could be inaccurate enough to be responsible to the unequal contribution of property tax levy.

While the previous work in this filed is mainly focused on the policy part, the quantitative analysis I have found was THIS REPORT written by Galka Max. This report discussed extreme cases and still contained some queries.

So my research will reproduce some of the Galka Max's figures and find out the deviation's geospatial auto correlation, both considering overestimation and underestimation.