The relationship is that the tax assessment value is based on what the market WAS doing at the time of the assessment. It takes the city and the county a while, sometimes years, to catch up to what the market is doing. It's also to the gov't's benefit to reassess when values go up, but not so much when they go down. In fact, in some locations you can challenge your taxes. I have a client in MD who purchased a condo in a short sale last year for $40,000, but it was being assessed at $180,000, what it previously sold for four years earlier. My client challenged, providing recent market values, and got their assessment reduced to $50,000 dramatically reducing their property tax payment.
The sale price of a home is based on what the market is doing right now. That's why some houses, particularly in the DC area, are now selling for higher than list price, because inventory is low and demand is high in some areas.