Compliance and assessment outcomes in the personal property tax

Personal property taxpayers must decide the sort and quality of property information to report to assessors. Differences in the extent of compliance across personal property owners may result in assessors over- or underassessing noncompliers relative to compliers, which has policy implications for assessment equity and noncompliance penalties. Using nonparametric matching on a panel of restaurants from Dallas County, Texas from 2008 through 2022, I find consistent evidence that noncompliers are underassessed relative to compliers. Results suggest that Texas's statutory penalty rate for noncompliance should be almost twice as much for the rational property owner to be indifferent to compliance. Personal property compliance is taxpayer-active where property owners have a ternary participation decision: noncompliance, partial compliance, and full compliance. Assessment administration may provide an implicit subsidy or tax to property owners depending on how assessment outcomes vary by compliance status. Nonparametric matching reveals that noncompliers are best off, full compliers are next best off, and partial compliers are the worst off. Do or do not; there is no try. Though the main analysis is on restaurants, I provide evidence the conclusions generalize to nearly all types of taxable personal property owners in Dallas County.(1)(2)(3)(4)