Property taxes

reply2spg wrote:Property taxes are typically set at a flat rate per $ 1,000 of officially assessed value. Reassessments should be frequent in order to remove distortions that arise when property values change at differential rates. In practice, however, reassessments typically occur when they benefit the government - that is, when their effect is to increase total tax revenue.

If the statements above are true, which of the following describes a situation in which a reassessment should occur but is unlikely to do so?

(A) Property values have risen sharply and uniformly.
(B) Property values have all risen - some very sharply, some less so.
(C) Property values have for the most part risen sharply yet some have dropped slightly.
(D) Property values have for the most part dropped significantly; yet some have risen slightly.
(E) Property values have dropped significantly and uniformly.

There are two factors to consider here, based on the question stem: should a reassessment occur, and will one occur? The former is determined by the second sentence of the premise, which tells us that reassessments should remove distortions that arise when property values changes at different rates. Therefore, a reassessment should occur in a situation where property values changed, but not consistently. That eliminates choices A and E.
Our second concern is whether the reassessment will occur, and according to the premise, that will probably only happen if it will increase tax revenue. In choices B and C, the overall trend has been sharp increases in property values, which means that a reassessment is likely, since increased property values lead to increased tax revenue.
Therefore, only in D do we have property values changing at inconsistent rates AND an overall decrease in property values, which would lead to decreased tax revenue if there were a reassessment.