In Case You Heard Differently, Property Taxes Have Often Helped White People in Atlanta Stay Richer

In my research for an upcoming talk on the 1990s tax revolt in north Fulton County, I’ve had a revelation of sorts about one way in which white privilege is institutionalized and perpetuated (to be clear, this is a personal revelation, not a thought unprecedented in the annals of urban political economy). Ironically, this mechanism, the ad valorem tax on real estate, has been a principal boogeyman in the reactionary politics of privatism, public retrenchment and racial resentments of what George Lipsitz and Barbara Tomlinson describe as

a small cadre of affluent individuals—who comprise what surely must be the most sullen, surly, self-pitying, and sadistic group of “haves” in the history of the world.[1]

How can this be? Aren’t taxes the instrument by which the poor, minorities, liberals, and other members of the 47%  steal from upstanding taxpayers? Let’s do some quick history, drawing first on a Research Atlanta report by David Sjoquist and Drew Warwick [2], whose analysis is the basis for my summary of events below, to frame the conditions of the tax revolt.

In 1989 Fulton County’s tax digest (its list of every assessed property and its assessed taxes) was rejected by the Georgia Revenue Commissioner, who found that the county was

1. Violating state law because its overall tax digest fell nearly 10 percentage points short of the statutory requirement for property to be assessed at 40 percent of fair market value.

2. Assessing property at wildly uneven rates; a few properties were assessed above 40 percent of fair market value, most were assessed less, and some, mostly high-value residences, were assessed at much less than 40 percent.

These determinations were made through a sales ratio study conducted by the state Department of Audits on the order of the Revenue Commissioner. A sales ratio study compares the ratio of tax assessments to the sale price of properties sold in the jurisdiction that year to determine if assessments were in line with market value.

Atlanta and Fulton County’s flunking of this audit precipitated a fateful series of events. Atlanta and Fulton County, and their Joint Board of Tax Assessors, hired the firm of Cole, Layer and Trumble to perform a mass reappraisal of all Fulton County properties (more than 230,000!) based on a comprehensive sales ratio study. Fulton County was forced to acknowledge that it had been breaking state law by underassessing property. New legislation passed in 1988 also forced the two governments and their joint tax board to take swift and decisive action, or face stiff fines from the state. Atlanta and Fulton elected to bite the bullet and impose the assessment hikes all at once, rather than ratcheting up assessments gradually. The results were dramatic; virtually no property owners were spared an upward reassessment, but the most dramatic assessment hikes affected the owners of more valuable properties. It wasn’t unusual for residents of affluent neighborhoods to see their assessments double.

One might think that, since a sales ratio study makes the “free market” the yardstick by which tax assessments are evaluated, political opposition would be minimized, and the right-leaning homeowners who are prone to protest their tax bills would be placated. After all, it wasn’t some county bureaucrat arbitrarily making assessments, but the aggregated wisdom of the “free market”–the same force that was helping them to grow equity.  As Sjoquist and Warwick put it,

Despite the shock that residents face in dealing with the new assessments, the new state procedures should result in more equitable assessments.[2]

Since you’re reading and I’m writing this, you might correctly surmise that many taxpayers focused more on the “tax hike” aspect of the reassessment than on the “bringing assessments into compliance with the law” aspect–let alone any consideration of “paying one’s fair share.” In fact, the reassessments prompted the formation of taxpayers’ rights organizations, and launched the careers of many north Fulton Republicans who capitalized on the convergence of spiking tax bills and the prevailing sentiment that the region’s affluent were being soaked to support welfare recipients. The two most notable of these were Robert Proctor and Mitch Skandalakis, who were joint counsel in a taxpayers’ organization lawsuit against Atlanta, Fulton County, the Joint Board of Tax Assessors, and Cole-Layer-Trumble over the reassessment [3], and who used their new identities as tax warriors as a springboard to further political endeavors. In Skandalakis’s case, this involved a successful run for Chair of the Fulton County Commission and an unsuccessful 1998 run for Lieutenant Governor marred by extensive race-baiting of black Atlanta-area Democratic officials in his Ralph Reed-managed campaign. Proctor continued to sue virtually every government agency in Fulton County over taxes and, significantly, affirmative action, along with representing a Waffle House franchisee accused of discrimination against black customers in a briefly notorious lawsuit. (Ironically, after Skandalakis led a campaign to install a new county tax chief, Proctor served as legal counsel for a realty trust that specialized in buying tax liens at discount from the county and seizing the properties).

Proctor (as a civilian gadfly) and Skandalakis (in county government) were among the leaders of a movement that consolidated taxpayer resentment, white racial grudges about black political power, and a rising base of Republican party strength in Atlanta’s northern suburbs into a force that  transformed the state and has brought political conflict on the congruent axes of race, party, and geography to a head in Fulton County.

The most ironic part of this is that, far from soaking rich northsiders, the property tax system in Fulton County had been actively subsidizing them for decades. The pattern that the CLT study found in 1989 was the same one discovered by an Atlanta Urban League study of tax assessments in 1971, at the height of white flight.[4] A study by Research Atlanta, Inc. in 1975 referenced the Urban League’s study and a similar national investigation carried out by HUD [5], and rather delicately explained how race meshed with the “failure of assessment to keep pace with the rapidly changing property values in the county”:

The geographical distribution of neighborhood assessment-sales ratios mentioned above generally follows the trend of upward and downward transitional property values. Thus, houses in the city’s northern neighborhoods, where property values have been rising, had lower than average assessment-sales ratios. On the other hand, inner city neighborhoods, where property values have either declined or not risen as rapidly as the rest of the city, had higher ratios.[6]

Research Atlanta emphasized that the divergence was an effect of assessments lagging behind changes in the market–assessors devoting limited human resources to assessing newly developed property, for example–rather than deliberate attempts by assessors to favor any racial or ethnic group or any neighborhood area. I would not rule out the possibility that pro-development officials on the Fulton County Commission placed some thumbs on the scales so that rapidly booming northside and north Fulton areas would continue to grow without higher tax assessments, but this kind of malfeasance isn’t necessary to support an argument that tax assessments were racially biased against black Atlantans; the kind of property value instability happening in this era–both in terms of property that fell in value and that rose rapidly–was intrinsically tied to the racial identity of owners and neighbors. Further, if properties were reassessed at long or irregular intervals, that meshed with racial bias in the housing market to structure the tax system in whites’ favor.

In an era when (as David Freund ably argues) white suburbanites crafted a political identity around property ownership and a political agenda of racial exclusion justified by the need to protect property values, those homeowners scored a second windfall when tax assessors, whether through sloth, understaffing, or collusion with development interests, allowed tax bills to lag far behind that rising property value. So, while north Fulton tax revolt leaders like attorney Robert Proctor mounted soapboxes to lament the waste of their tax dollars after reassessment, they were utterly silent about the decades-long diversion of taxes whose collection was mandated by state law from the region’s schools and governments. They certainly didn’t thank any of the residents of low-value neighborhoods, whose relatively high assessments represented both a disproportionate share of the costs of government and public services and an effective subsidy to the underassessed rich.

Put it another way: Every dime of difference between the state-mandated assessment of 40 percent of market value and the actual assessment imposed on homeowners was a theft from the public at large.

Notes:

[1]: Tomlinson, Barbara, and George Lipsitz. “American Studies as Accompaniment.” American Quarterly 65, no. 1 (2013): 1–30. doi:10.1353/aq.2013.0009.

[2]: Sjoquist, Keith R., and Drew A. Warwick. Fulton County’s Mass Reappraisal: Why Was It Necessary? Atlanta, GA: Research Atlanta, Inc., 1993.

[3]: These suits were ultimately decided in favor of the governments. See Lomax v. Lee, 408 SE 2d 788 (GA Supreme Court, 1991).

[4]: Report of the Atlanta Urban League on the Fulton County Property Tax, 1971, cited in [6].

[5]: Arthur D. Little, Inc, and United States. A Study of Property Taxes and Urban Blight; Report to U.S. Dept. of Housing & Urban Development. Washington: U.S. Dept. of Housing and Urban Development; for sale by the Supt. of Docs., U.S. Govt. Print. Off, 1973.

[6]: Holmes, Donald E., and Robert W. Pinner. Assessment-sales Ratios in Fulton County and the City of Atlanta. Atlanta: Research Atlanta, 1975.