Vertical Consolidation of Indiana's Property Tax System

Optimal government unit size is a subject of continued concern among tax economists. Aspiring for the economies of scale and cost savings, Indiana recently consolidated its township assessor functions to the county level. This paper finds that following reform the new structure resulted in annual cost savings of nearly one million dollars per county. We estimate the new elasticity of cost function and show the economies of scale within the reformed system. Specifically in regard to parcel counts and geographic service areas, the counties achieved production efficiencies. Contrary to literature, assessment quality indicators in Indiana do not significantly affect assessor's office spending: while high-performing counties produce accurate assessments at a low cost, the low-performing ones can turn out spendthrifts