Don,
I would say no. There is a difference between someone who does inspections for when someone buys a house and the city/county inspectors. Now if a city/county inspector does work on his own home, then I don't know. In the engineering world, though, work would always be checked by an independent reviewer. Hopefully, it is the same with inspections.
Regarding taxes, it depends on the work being done. Adding an outlet or replacing a water heater shouldn't change the value at all. If you are adding on or doing a major renovation, then you may see taxes increase. However, I believe this is fair. If you buy a $500,000 house, you expect to pay more taxes than if you bought a $100,000 house, right? You wouldn't expect them to be the same. If they were the same, the person with the $100,000 house would say that it isn't fair because he cannot afford $5,000/year in taxes while the person with the $500,000 house probably could. I think it is the same if you fix a house up. If you bought a house that would be worth $250,000 (in good shape), but you bought for $100,000 because it was trashed and then you dumped another $100,000 into it to fix it up, don't you think it is fair to base the value on $200,000 - $250,000 value instead of $100,000 value? What it all boils down to is it costs x number of dollars to run the local government. If everyone didn't report improvements and/or property values didn't increase to offset inflation, increased wages, etc., then the % paid on property would jut be increased instead of the appraised value. The money has to come from somewhere.
As cacher_chick said, I do wish that the inspectors would spend a little more time checking things. However, they just have too many inspections to do with the number of people that they have. What I find is that if they see looks to be good work, they will be done and gone quickly. If they see things that they don't like, they are going to dig deeper and see what else is wrong.
Bottom line: I think that if you ever had to do a bunch of extra work just because the guy before you tried to say a couple bucks and skip the permit, you will agree that permits are a good idea. The system isn't perfect and the inspector is not going to catch everything, but people tend to do better work when inspections occur because they don't know what the inspector will catch and they don't want to re-do and call for another inspection (waste of time and money). Without a permit, many people tend to just throw things together and not care if it is safe or if it is correct.