The Unit Approach to the Taxation of Railroad and Public Utility Property

Administering a property tax system presents ongoing challenges under the best of circumstances. Whether it involves keeping taxpayer rolls up to date, pursuing tax evaders, or updating taxable property values appropriately, property tax administration requires substantial diligence and expertise. This paper focuses on one particular area of property tax administration in the United States: the taxation of railroads, public utilities, and other multijurisdiction properties. The number of such taxpayers in a state is generally fairly small compared to the total number of households and businesses paying property taxes. However, due to their size, these companies often incur the largest property tax bills in any given state. Because of both size and complexity, these properties are generally valued by state agencies rather than by local assessors, and the state agencies use valuation methods that differ markedly from the methods employed at the local level. In this paper the differences in method will be described, along with a brief summary of the history and ongoing controversies surrounding these “centrally assessed” properties.

This paper was presented at the Lincoln Institute’s annual Land Policy Conference in 2012 and is Chapter 5 of the book Infrastructure and Land Policies.