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9 UC Irvine L. Rev. 847 (2018-2019)
Taxed out: Illegal Property Tax Assessments and the Epidemic of Tax Foreclosures in Detroit

handle is hein.journals/ucirvlre9 and id is 863 raw text is: Taxed Out: Illegal Property Tax Assessments and the Epidemic of Tax Foreclosures in Detroit Bernadette Atuahene* & Christopher Berry** 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 African- American. While the numbers in Detroit are extreme, there is reason to be concerned that similarpractices are widespread. * Bernadette Atuahene is a Senior Research Scholar at the University of Michigan Law School; Damon J. Keith Distinguished Visiting Professor at Wayne State Law School; Professor of Law at IIT, Chicago-Kent College of Law; and Research Professor at the American Bar Foundation. ** Christopher Berry is the William and Alicia Townsend Friedman Professor at The University of Chicago Harris School of Public Policy and the College and Director at the Center for Municipal Finance. We are grateful for the feedback provided by the participants of the University of Chicago Law and Economics Workshop and the Texas A&M Real Property Law Schmooze. We would like to thank Margi Dewar, Traci Burch, Eric Seymour, and Mark Skidmore for providing valuable comments on earlier drafts. Brendan Sawyer, Matthew Jacobson, and Bartoz Woda provided excellent research assistance. The National Science Foundation funded this research.

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