Friday, February 28, 2020

Are we under taxed in Nashville?

by Rod Williams - According the The Tennessean the Chamber of Commerce all but says we are under taxed. In an article, Nashville's government revenue not keeping pace with peer cities, Chamber's financial study shows, the Tennessean says:

Nashville is facing many of the same challenges as its peer cities across the nation — a lack of affordable housing, the need for more transit options and navigating technological opportunities and challenges.
But Metro government's revenues — largely through taxes and fees — have not kept pace with those same cities.
The city's tax burden is the lowest among nine cities, according to a new report released Friday from Nashville Area Chamber of Commerce in partnership with the Greater Nashville Realtors.
Before you buy this whole hog,  stop and consider these factors:
  1. A lower tax rate does not necessarily mean a lower tax burden.  The median home price in Nashville according to Kiplinger is $265,000.  One of our peer cities is Louisville Kentucky were the average home price is $170,000.  Nashville's tax rate could be lower but one's property tax bill still higher if the value of the property is higher.
  2. More of our "county" is in the "city" compared to our peer cities and our "county" tax rate is higher than theirs.  When comparing property tax rates, for our peer cities, all of the studies I have examined add together the city and the county tax rates.  We in Nashville have a Metropolitan form of government but we still have something comparable to "city" and "county".  We have an Urban Services Tax District and a General Services Tax District. The rate for our General Services District is what would be the County tax rate in other jurisdictions and the Urban Services Tax District would be what would be a combined county and city tax rate in other jurisdictions. While our Urban Tax Services District may not be as high as some peer cities combined city and county tax rates, often our General Services Tax Rate is higher than the county tax rate of the county in which these peer cities reside.  Also, our "city limits" (Urban Services District) encompasses more of the county than does the city limits of our peer cities. 
So, please don't bye the argument that we are under taxed.  Take this argument with a grain of salt.  Even if it was true that Nashville was taking in less revenue than peer cities, all cities seem to be having the same problems.  Would raising taxes solve those problems?

Even if we had a lower tax burden than our peer cities, I would not conclude we are under taxed but would conclude those peer cities are over taxed.

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