Tax Delinquency Research Articles

Real Property Tax Collection in Sta. Josefa, Agusan Del Sur, Philippines: An Exploratory Research Analysis

This research study is conceptualized to provide information on the real property tax collection in Sta. Josefa, Agusan del Sur. This employs a documentary-descriptive-research method using secondary sources of information generated from archives, and documents such as the Certified List of Real Property Tax Delinquencies, and the Electronic New Government Accounting System. Moreover, JASP is utilized to illustrate the tax collection delinquency on real property with and without government intervention. The findings of this study include that there is a compelling linkage between government intervention on tax collection of real property. It describes the importance of the interventions as a way of improving collection efficiency and reducing tax delinquency.

New Public Transportation Infrastructure and Tax Delinquency in Shrinking Cities: The Case of Detroit

Fiscal stress is a common condition in shrinking cities such as Detroit. Among the contributing factors, property tax delinquency is a significant consideration due to the unwillingness or inability to pay property taxes. The literature shows that improvement in the quality of public goods and services can increase tax compliance and strengthen the social contract between taxpayers and the local government. Nonetheless, this relationship is unclear in the context of low-income shrinking cities. This article estimates the effects of new publicly provided transportation infrastructure on property tax compliance in Detroit, Michigan. Specifically, we use the announcement of the Qline in Detroit. We compute the effects of the Qline announcement on tax delinquency behavior using a Spatial Difference-in-Difference approach. The results indicate that the announcement of the Qline had an economically and statistically significant impact on tax delinquency for properties within one mile of the nearest Qline station.

IMPROVING HOLDING TAX ASSESSMENT – A CASE STUDY OF NIRALA RESIDENTIAL AREA, KHULNA

This study presents the development of a land information system for a residential area in Khulna city of Bangladesh. The system is designed to provide the Municipal Corporation an ability to assess the holding tax in an automated GIS based application, which can also assist to trace out tax delinquency and tax defaulters. This study demonstrates a case study of a database system which can be easily maintained, queried and updated than the current hard copy database. This system can be practiced by other City Corporation and Municipality in Bangladesh for raising their internal revenue income.

Comparing forms of neighborhood instability as predictors of violence in Richmond, VA.

Violence events tend to cluster together geospatially. Various features of communities and their residents have been highlighted as explanations for such clustering in the literature. One reliable correlate of violence is neighborhood instability. Research on neighborhood instability indicates that such instability can be measured as property tax delinquency, yet no known work has contrasted external and internal sources of instability in predicting neighborhood violence. To this end we collected data on violence events, company and personal property tax delinquency, population density, race, income, food stamps, and alcohol outlets for each of Richmond, Virginia’s 148 neighborhoods. We constructed and compared ordinary least-squares (OLS) to geographically weighted regression (GWR) models before constructing a final algorithm-selected GWR model. Our results indicated that the tax delinquency of company-owned properties (e.g., rental homes, apartments) was the only variable in our model (R2 = 0.62) that was associated with violence in all but four Richmond neighborhoods. We replicated this analysis using violence data from a later point in time which yielded largely identical results. These findings indicate that external sources of neighborhood instability may be more important to predicting violence than internal sources. Our results further provide support for social disorganization theory and point to opportunities to expand this framework.

Death and taxes: Examining the racial inequality in premature death across neighborhoods.

Legacies of residential segregation have led to deep inequities felt in communities of color across the nation and have been established as a fundamental cause of health disparities. Historical practices such as the redlining of majority Black neighborhoods in cities have led to long term consequences on these communities, including concentrated poverty and disadvantage. Research shows a strong connection between living in a poor neighborhood and poorer health outcomes, including early death, but questions remain about what characteristics of poor neighborhoods drive these disparities. We combined data from the American Community Survey with administrative data from Pittsburgh, Pennsylvania to examine the difference in premature death in Black and white neighborhoods (N = 87) using measures of socioeconomic disadvantage and less commonly studied neighborhood features including vacancy, tax delinquency, and property sales and conditions. Results suggest that features of abandonment, particularly the percent of tax delinquent properties in a neighborhood, may capture an important structural difference between majority Black and majority white neighborhoods with impacts beyond socioeconomic disadvantage on community health. We discuss implications of these findings for research and practice.

Tax Culture: Perspectives from an African State

Universally, Tax Culture is not a very common topic but it is critical to administrative governance and economic development. This article argues that the Tax Culture of any milieu is an assemblage of various indices and criteria. These include the history of taxation; tax laws; tax information; tax education; tax revenue mobilization; tax system transparency; tax delinquency; tax dispute resolution; and taxpayer satisfaction. The article sheds light on these instrumental wheels of the Tax Culture of Ghana by providing the research results of field surveys conducted a decade and a half ago. Though dated, any observer of the Tax Culture of Ghana, and indeed of much of Africa and the Global South, will realize that little has since changed. In some instances, the article provides more up-to-date evidence beyond the 2005 data. The article goes beyond an assessment of the Tax Culture of Ghana and articulates recommendations for improving the same. Additionally, it attempts to interconnect issues of Taxation, Good Governance, and Legal Pluralism. Although popular themes in public discourse in Africa today, these concepts are often spoken of in different thematic spheres other than taxation. The article links these themes in practical and concrete ways to taxation, cast in the light of historical institutionalism – an examination of the institutions of taxation, governance, and traditional authority as they interacted through time.

Who\u2019s calling? The effect of phone calls and personal interaction on tax compliance

Most tax agencies use letters as the method of communicating with taxpayers. Still, other technologies exist that could be more effective. This paper reports the results of a field experiment conducted by the National Tax Agency of Colombia (DIAN), using phone calls to reduce tax delinquencies. DIAN randomly assigned 34,000 tax debtors to a phone call operation using a fixed script to communicate existing debts and invite taxpayers to a meeting at the local tax agency office. Phone calls were very effective to increase collection of unpaid taxes. Conditional on the phone call being made, the effect on the treatment is about 25 percentage points higher than the control group (about a fivefold increase). We also find suggestive evidence that the personal interaction seems to be an important channel for explaining taxpayers’ behavior. Faced with a tax agent, taxpayers tend to commit to attending the meeting and paying the tax owed. However, many taxpayers who commit do not make payment effective. The findings complement a nascent literature that shows that there are plenty of gains from innovating in the communication strategy. They also indicate that personal interactions are important, but they have to be paired with easy-to-follow and immediate actions. Paying taxes is easier said than done.

Tax deed sales and land banking to reuse vacant and abandoned properties

Purpose Tax sales intersect with the market, housing policy and socioeconomic matters, but the topic in this context is understudied. The purpose of this paper is to investigate whether and how land banking is more effective in fostering positive property outcomes than tax lien sales and what market-based measures can be combined with land banking to reuse tax delinquent, vacant and abandoned properties. Design/methodology/approach This paper analyzes the consequences of tax lien sales and land banking in Indianapolis, Indiana, the USA. Various local data sources are used. Findings This paper finds that land banking, when compared to tax lien sales, results in less tax delinquency, less vacancy and abandonment, more increase in assessed value and fewer ownership changes after sales. Also, this paper shows the contributions of non-profit and for-profit developers as business partners to land banks. Practical implications This paper demonstrates the utility of the land banks that have become prevalent in some states in the USA over the past 20 years. The results of this paper recommend the realistic approach of combining government intervention and market forces. Social implications This paper sheds light on the US practice of tax lien sales. It goes largely unnoticed, but malpractice risks harming the vulnerable members of community. Originality/value Housing policy needs to find common ground with the market. It is a dilemma, more or less, for every country. The results of this paper suggest a harmonized public policy approach that includes land banking and the market can be effective in combatting with troubled properties.

Effectiveness of nudges on small business tax compliance behavior

There has been a surge of basic and applied interest in exploring how small changes in decision contexts might be used to improve heuristic decision-making, “nudging” decision-makers toward choices that increase individual and social utility. The present study tested the impact of three types of nudges on tax compliance among delinquent businesses (n=3,130) in the state of Pennsylvania: (1) sending reminder letters that almost identically matched original tax delinquency notices, (2) sending redesigned reminder letters that simplified text and layout, increased the salience of critical information, and included an “Act Now” urgency statement, and (3) sending redesigned reminder letters with handwritten notes on the envelope. Redesigned reminder letters significantly increased the number of business owners who responded and the amount of delinquency paid within 15 days of receiving the notices. The addition of a handwritten note on the outside of the envelope did not additionally increase response rates or payment amount. Although the effect sizes observed in this study were small, the potential impact is large given the number of delinquent businesses and the average amount of taxes owed in Pennsylvania.

COMMUNICATING TAX PENALTIES TO DELINQUENT TAXPAYERS

We analyze a large field experiment conducted with the Colorado Department of Revenue to study the presentation of financial incentives and social norms in tax delinquency notices. We find that notices that highlight and provide information about financial penalties modestly raise the payment rate among delinquent taxpayers, with larger effects for notices providing greater detail. In contrast, we find no payment effect from highlighting social norms for timely payment. Our results suggest that attention to seemingly minor decisions about the wording of notices sent by tax authorities can increase tax payments and reduce administrative costs associated with taxpayer delinquency.

Debt and taxes: Fiscal strain and US city budgets during the Great Depression

Although municipal budgets fared well on average during the Great Depression, many suffered greatly. In newspapers and trade publications, observers blamed distress in real estate markets as well as the rise in tax delinquency and real debt obligations. This paper uses a sample of large US cities to estimate how those factors influenced municipal revenue and expenditures during the Depression. Results show that city finances were stable when facing the housing market distress that plagued many urban areas in the 1930s. The principal elements of fiscal strain were actually rising delinquency, which was associated with diminished revenue and operating expenditures, and growing real debt obligations, which were associated with reduced capital outlays. Thus local budgets were driven more by the behavior of taxpayers and obligations to city creditors than by the downturn in real estate markets. These findings illuminate municipal governments’ responses to the fiscal strain wrought by the Depression.

Effects of gentrification on homeowners: Evidence from a natural experiment

A major overhaul of the property tax system in 2013 in the City of Philadelphia has generated significant variations in the amount of property taxes across properties. This exogenous policy shock provides a unique opportunity to identify the causal effects of gentrification, which is often accompanied by increased property values, on homeowners’ tax payment behavior and residential mobility. The analysis, based on a difference-in-differences framework, suggests that gentrification leads to a higher risk of delinquency on homeowners’ tax bills on average, but there was no sign of a large-scale departure of elderly or long-term homeowners in gentrifying neighborhoods within five years after adoption of the new policy. While tax delinquencies were somewhat inflated by appeals for reassessments, programs designed to provide tax relief for long-term homeowners help mitigate the risk of tax delinquencies and displacement. Findings from this study help researchers, policymakers, and practitioners better understand the mechanisms through which gentrification may impact long-term homeowners and the effectiveness of policies to mitigate these tax burdens and displacement.

Housing demolition and property tax delinquency: Evidence from Detroit

ABSTRACT The purpose of this article is to evaluate the degree to which the demolition of low-quality structures affects property tax compliance in Detroit. During the real estate crisis, the rate of property tax delinquency in the city exceeded 50%. The demolition of dilapidated structures could lead to improvements in tax compliance in two ways. The first is through an amenity effect: removal of blighted structures improves the neighborhood and thus may increase the likelihood that neighbors pay their property taxes. The second is via the existence of a peer effect in property tax compliance decisions. We use a 6-year panel database to examine the degree to which demolitions affect nearby residential property tax delinquency. Even though we are unable to disentangle the amenity and peer effects, our analysis shows that when a dilapidated property is demolished, tax delinquency within the neighborhood is reduced, providing evidence that demolitions improve tax compliance.

Decreasing delinquency through assessment reductions: Evidence from Detroit

ABSTRACT Detroit recently decreased assessments for 3 consecutive years, 2014–2016, with 2 possible types of reduction: a decrease in assessment without a decrease in property tax bill or a decrease in both. This article examines the effect of each type of reduction on property tax delinquency using parcel-level data from 2013 to 2016. Overall, results indicate that lowering a property owner’s assessment without a decrease in their tax bill reduced delinquency by 1.7%. Lowering both assessment and tax bill reduced delinquency by 2.7%. Additional analyses examine the levels of assessment reduction that triggered changes in delinquency, the relationship between assessment reductions and taxes owed, the persistence of reduced delinquency without corresponding tax decreases, and how the results vary by property owner type (i.e., homestead and residency status). Property owner type is of particular interest because it provides possible explanations for why delinquency declined without lower taxes. Not only is this evaluation important for Detroit, but understanding what methods are effective in reducing property tax delinquencies is beneficial to officials in other jurisdictions struggling to collect property taxes.

Toward a Politics of Accountability: Feminist ethics of care and whiteness in Detroit's foreclosure crisis

In the decade since the 2008 mortgage crisis, residents of Detroit, Michigan have continued to sustain anemic levels of preventable foreclosures by tax delinquency. The city’s decades-long over assessment of property values and proceeding windfall of tax foreclosures are happening amid a post-bankruptcy governance regime to remarketize housing and land that has been accumulated by the city through forfeitures and seizures. Over 50% of the city’s households, rented or owned, are led by African American women. Growing economic inequality and community efforts to keep Detroit a majority black city have roused organized responses against territorial reconfigurations that could drive further political-economic division and displacement. The Tricycle Collective, a woman-led non-profit that assisted Detroit households in avoiding tax foreclosure, will be examined here for their use of a feminist ethics of care in their approach to foreclosure prevention. This article considers the potential for harm in exercising an ethics of care within a deeply racialized housing market, without the intention of constructing next steps for advocates and activists to direct opposition toward the ongoing crisis of racialized dispossession. Speaking through critical race studies, urban geography and feminist theory, a feminist ethics of care will be deconstructed alongside what I call a “politics of accountability”, as a framework for action and analysis.

Neighborhood decline and mixed land uses: Mitigating housing abandonment in shrinking cities

Neighborhood decline is a critical issue in shrinking cities. Components of sustainable urbanism such as mixed land uses have risen as possible urban planning-based approaches to help mitigate urban and neighborhood decline. This research identifies examines if mixed land uses can help mitigate urban decline by using the tax delinquent status of single family houses as a proxy for decline in Dayton, Ohio, USA. Logistic regression models are utilized to estimate the probability of tax delinquency. The results suggest that the proximity to mixed land uses is associated with increasing or decreasing the probability of tax delinquent for single family lots. The number of commercial and industrial lots in a neighborhood also has effects on the probability of a lot becoming tax delinquent, but the specific types of commercial and industrial lots dictate the direction of effects. The existence of commercial apartment lots, retail lots, and industrial food and drink plant lots were shown to help decrease the probability of tax delinquent lots. Also, decreasing the amount of property tax applied to parcels can help to limit distress in neighborhoods. This research contributes to the ongoing efforts to stymie the amount of residential abandonment in depopulating and declining cities.

Shaming tax delinquents

Many federal and local governments rely on shaming penalties to achieve policy goals, but little is known about how shaming works. Such penalties may be ineffective, or even backfire by crowding out intrinsic motivation. In this paper, we study shaming in the context of the collection of tax delinquencies. We sent letters to 34,334 tax delinquents who owed a total of half a billion dollars in three U.S. states. We randomized some of the information contained in the letter to vary the salience of financial penalties, shaming penalties, and peer comparisons. We then measured the effects of this information on subsequent payment rates. We found that increasing the visibility of delinquency status increased compliance by individuals who have debts below $2500, but had no significant effect on individuals with larger debt amounts. Financial reminders had a positive effect on payment rates independent of the size of the debt, while information about the delinquency of neighbors had no effect on payment rates.

Fiscal Centralization: Theory and Evidence from the Great Depression

The Great Depression produced a profound and lasting influence on the structure of US government. This paper studies theoretically and empirically the increased centralization of revenues and expenditures by the states relative to local governments during this period. A model of property and sales taxation and tax delinquency is introduced. In the model, the income decline of the Depression causes a rise in property tax delinquency and leads to a shift toward sales taxation and fiscal centralization by the states. Empirical evidence based on cross-state variation in the severity of the Depression is consistent with the model's key predictions. (JEL E32, H25, H71, H72, H77, N12, N42)

What explains the resolution of property tax delinquency prior to forfeiture? Evidence from Hennepin County, Minnesota

ABSTRACTThis article focuses on the rate of redemption for tax delinquent properties in suburban and central city contexts of Hennepin County, Minnesota. Using a county-wide data set of properties that became tax delinquent in 2004, time-to-event (survival) models assess how the rate of redemption for tax-delinquent properties differs for properties subject to different redemption periods determined by property type and location. After controlling for a variety of other property and neighborhood-level characteristics, results indicate that the rate of redemption for tax-delinquent properties differs by location in ways that are not completely explained by different redemption policies associated with location and property type. These results suggest that in areas with healthy economies and minor tax delinquency problems government redemption policies may play less of a role in shaping redemption behavior than the characteristics of the property, neighborhood conditions, and regional factors that influence the perceived value of tax-delinquent properties in central cities and suburbs. These results have important implications for how local governments in the United States consider tax-delinquency issues in an era when economic and social changes in suburbs have made property tax delinquency a problem for central cities and suburbs alike.

Assessing the Influence of Property Tax Delinquency and Foreclosures on Residential Property Sales

We examine the influence of property tax delinquency on the sale price of nearby homes from 2002 to 2013 using more than 46,000 residential property sales in a representative midwestern central city—Milwaukee, Wisconsin. After controlling for a number of property and neighborhood characteristics including nearby foreclosures, we find property tax delinquency has a significant influence on nearby home sales. The relationship is negative; one additional tax delinquent property within 250 m of a home sale is associated with a discounted sale price of 0.79% or approximately $1,085 on average. In addition, the influence of tax delinquent properties on home sale prices diminishes with distance, suggesting blight is the source of the discount. Based on these findings, the negative influence of tax delinquency is likely to be exacerbated in central cities where housing density is greater and delinquency is higher and more persistent than the surrounding suburbs, which has the potential to lead to fiscal distress as property taxes are the primary revenue source for cities. As such, we suggest a two-tiered approach for cities to mitigate the negative consequences of tax delinquency: a combination of policies to eliminate delinquency and also to help homeowners become financially stable.