Bernadette Atuahene & Christopher Berry, Taxed out: Illegal Property Tax Assessments and the Epidemic of Tax Foreclosures in Detroit, 9 UC IRVINE L. REV. 847 (2019).
Abstract
Detroit is experiencing historic levels of property tax foreclosure.
More than 100,000 properties, or one in four throughout the cit, have
been foreclosed upon for nonpayment of property taxes since 2011.
Simultaneously, there is strong evidence that the Cit is over assessing
homeowners in violation of the Michigan Constitution, calling into
question the record number ofproperty tax foreclosures. This Article is
the first attempt to measure the impact of unconstitutional tax
assessments on propery tax foreclosures. Controlling for purchase price,
location, and time-ofsale, we show that residentialproperties with higher
assessment ratios sold in Detroit since 2009 were more likely to
experience a subsequent tax foreclosure. We estimate that 10% of all
these tax foreclosures were caused by illegally inflated tax assessments.
Moreover, since lower-priced homes were over-assessed at a greater
frequeny and magnitude than higher priced homes, we estimate that
25% of tax foreclosures among homes in the bottom price quintile (less
than $9000 in sale price) were due to unconstitutional property tax
assessments. Consequently, property tax malfeasance has unjustly
displaced thousands of Detroit homeowners, most of whom are AfricanAmerican. While the numbers in Detroit are extreme, there is reason to be concerned that similarpractices are widespread.