The accelerating inflation of the past twenty years made it difficult for tax assessors to estimate current market values for their assessment rolls. Then, in the past year, the inflation rate and property values declined. Shortages of mortgage funds and resulting high interest rates have led to a large amount of sales data with price information seriously distorted by "creative financing." Unless the assessor was able to adjust nominal selling prices for effects of "creative financing," there was a chance that his entire assessment roll would be distorted. Even if sales involving "creative financing" had become the norm, the production of accurate assessment rolls required a great deal of statistical skill and technical capability. Unless data were analyzed by pricestrata and geographic location, there was great danger of producing an assessment roll that was severely biased.
In recent years, assessors who were able to keep up with the accelerating real‐ estate prices were vulnerable to political reaction. California assessors who were able to stay on top of the burgeoning real-estate prices in that volatile market found that the voters took matters into their own hands. They approved Proposition 13, limiting real-estate taxes to 1 percent of market value as defined in the initiative. Two years later, Massachusetts voters approved Proposition 2½, and several other states made similar attempts to limit the growth of property taxes.
In some eastern states, effective property-tax rates reached levels close to 10 percent. When property-tax burdens of this magnitude were added to mortgage payments with interest rates of 12 to 15 percent, it was obvious that something had to give. The give was generally in the direction of shifting taxes from residential property to business property through various classification and exemption mechanisms or of delaying the implementation of court-ordered changes.
Mineral-rich western states were able to reduce pressure on the property tax by placing greater emphasis on severance taxes. This led to the exporting of part