Friday, June 4, 2021

Are your property taxes too low?

By Charles A. Trost, Professor of Law, Belmont University, Nashville Business Journal, Jun 4, 2021 - No one likes to pay taxes, and many people think the taxes they pay are too high. The recent controversy over the property tax rate in Metropolitan Nashville has brought the issue of property taxes into the public discussion and brought on litigation. .... 

In comparison with other cities Nashville residents pay relatively low property taxes. Those who have recently moved here from high tax states like California and Illinois know this. Indeed in many instances it may have been a principle factor in their decision to move here. Of the 23 houses on the cul de sac we live on, three are occupied by recently arrived "tax refugees" from Illinois and three from California. One new neighbor, on receiving her property tax bill, asked my wife if the amount was for the month. She was relieved to learn that it was her annual tax bill. 

The truth is that of the 50 states in 2019 at $3,322 Tennessee ranked second from the bottom in state and local taxes paid per capita. Alabama at $3,206 ranked last. And Tennessee is a good steward of its tax dollars. Tennessee law mandates that the General Assembly must balance the state's budget each year, and it not allowed to borrow to pay for current expenses, which means that of the 50 states, Tennessee, at $929 per capita, has the least amount of public debt per capita. ...

Rod's Comment:  To read the rest of the article, follow this link

I am not convinced that Nashville's property taxes are relatively low.  Compared to California, no doubt they are, but that is not with whom I want to be compared.  I could be convinced that taxes are low, but the professor provides only anicdotal evidence and simply asserts it to be so. Those who argue that our taxes are low often point out that our tax rate is low.  That is true, but that is only half of the equation.  Property values have skyrocketed as anyone who pays attention knows.  A low rate on a home with a high value can result in higher property taxes than a high rate on a home with a low value.

The professor is correct that Tennessee is one of the lowest per capita tax states and lowest debt per capita. That is well documented and established.  I want it to stay that way.  Overall per capita tax burden can be low and Nashville's property taxes still be high, however.  Home price appreciation has hit Nashville much harder than other cities in Tennessee.

This article is full of excellent background information explaining the purpose and background of equalization tax appraisals, Nashville's two property tax districts, the "certified" tax rate, and how property taxes are calculated.  

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