Tests the accuracy of tax models estimating market values of depreciable assets, suggesting improved variable selection leads to better estimations.
For property tax purposes, state taxation authorities often estimate current market values for depreciable assets with "trending models." Trending models are formulas used to estimate an asset's current market value by adjusting its depreciated historical cost for Inflation effects. This study examines the accuracy of state tax valuation models in estimating market values using a sample of depreciable assets. Results show that state models currently used vary widely in estimation accuracy. However, when the variables are chosen properly, trending models can give reasonably accurate estimates of current market values of depreciable assets.
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Wertheim et al. (1990) studied this question.
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