Property taxes, the lifeblood of local governments and school districts, are one of the most powerful and stealthy engines of racism and wealth inequality our nation has ever produced. And while the Biden administration has offered many solutions for making the tax code fairer, it has yet to effectively tackle a problem that has resulted not only in the extraordinary overtaxation of Black and Latino homeowners but also the worsening of disparities between wealthy and poorer communities. Fixing these problems requires nothing short of a fundamental re-examination of how taxes are distributed.
In theory, the property tax would seem to be an eminently fair one: The higher the value of your property, the more you pay. The problem with this system is that the tax is administered by local officials who enjoy a remarkable degree of autonomy and that tax rates are typically based on the collective wealth of a given community. This results in wealthy communities enjoying lower effective tax rates while generating more tax revenues; at the same time, poorer ones are forced to tax property at higher effective rates while generating less in return. As such, property assessments have been manipulated throughout our nation’s history to ensure that valuable property is taxed the least relative to its worth and that the wealthiest places will always have more resources than poorer ones.
Black people have paid the heaviest cost. Since they began acquiring property after emancipation, African Americans have been overtaxed by local governments. By the early 1900s, an acre of Black-owned land was valued, for tax purposes, higher than an acre of white-owned land in most of Virginia’s counties, according to my calculations, despite being worth about half as much. And for all the taxes Black people paid, they got little to nothing in return. Where Black neighborhoods began, paved streets, sidewalks, and water and sewer lines often ended. Black taxpayers helped to pay for the better-resourced schools white children attended. Even as white supremacists treated “colored” schools as another of the white man’s burdens, the truth was that throughout the Jim Crow era, Black taxpayers subsidized white education.
Freedom from these kleptocratic regimes drove millions of African Americans to move to Northern and Midwestern states in the Great Migration between 1915 to 1970, but they were unable to escape racist assessments, which encompassed both the undervaluation of their property for sales purposes and overvaluation of their property for taxation purposes. During those years, the nation’s real estate industry made white-owned property in white neighborhoods worth more because it was white. Since local tax revenue was tied to local real estate markets, newly formed suburbs had a fiscal incentive to exclude Black people, and cities had even more reason to keep Blacks confined to urban ghettos.
As the postwar metropolis became a patchwork of local governments, each with its own tax base, the fiscal rationale for segregation intensified. Cities were fiscally incentivized to cater to the interests of white homeowners and provide better services for white neighborhoods, especially as middle-class whites began streaming into the suburbs, taking their tax dollars with them.
One way to cater to wealthy and white homeowners’ interests is to intentionally conduct property assessments less often. The city of Boston did not conduct a citywide property reassessment between 1946 and 1977. Over that time, the values of properties in Black neighborhoods increased slowly when compared with the values in white neighborhoods or even fell, which led to property owners’ paying relatively more in taxes than their homes were worth. At the same time, owners of properties in white neighborhoods got an increasingly good tax deal as their neighborhoods increased in value.
