Taxes 2

There’s yet another study – this one by the Center on Budget and Policy Priorities – that concludes that differences in state taxes “have little to no effect on whether and where people move.”

The primary conclusions from the research is that 1) relatively few Americans relocate from state to state and when they do, very few moved because of taxes; 2) people who move are just as likely to move from low-tax states to high-tax states; 3) climate is a major driver of relocations regardless of taxes; and 4) jobs, income, and house prices have a larger effect on decisions about interstate moves than tax levels.

Regardless of the studies, it’s conventional thinking here that many people moving from Shelby County to DeSoto County are motivated by the hunt for a reduction in their taxes.  And yet, they end up paying more in taxes than if they had stayed in Memphis.

Ranking Well

That’s one of the interesting insights in a recent study by Dr. Jeff Wallace, research associate professor, and research assistants Katie Graffam, Katie McKeel, and David Taylor at the University of Memphis’ Sparks Bureau of Business and Economic Research.

Memphis isn’t even in the top 10 for the largest tax bill in the Memphis MSA.  The first seven places where people pay the most in state and local taxes are in Mississippi: Coldwater, Holly Springs, Senatobia, Unincorporated Tate County, Potts Camp, Southaven, and Byhalia.  The final three in the top 10 are Marion, Arkansas; Olive Branch, Mississippi, and West Memphis.

In the list of 27 locations ranked from the highest to lowest tax burdens, Memphis is #17, followed by Germantown, Bartlett, Collierville, Millington, Arlington, Lakeland, and unincorporated Shelby County.  The bottom three in the tax burden ranking are Covington, unincorporated Tipton County, and unincorporated Fayette County.

Narrowing the Gap

The tax bill for residents of Southaven is $1,546.60 more than Memphis.  Notably, the gap between what Memphians pay and what residents of the county towns, particularly Germantown and Collierville, the tax burden is narrowing as a result of increases in property taxes and sales tax rates higher than Memphis.

The difference in the tax burden between Memphis and Germantown, the town with the highest tax burden, is $375.87 – or $1.03 a day.   The difference between Memphis and Lakeland, the town with the lowest tax burden, is $773.56 – or $2.12 a day.

“While the City of Memphis has the highest overall property tax burden, not having the additional burden of an earned income tax keeps the city relatively more affordable on a tax basis than areas in Arkansas and Mississippi,” the report said.

The tax sources in the study are property taxes, sales taxes, auto registrations (renewal), and income taxes.  The tax burdens were based on an average family in the MSA with a married couple with one dependent child, per capita income of $62,481, and the owners of a home valued at $128,774.

Breaking It Down

The following are the breakdowns of the tax burdens for various locations in the MSA:

Table 1. Estimated 2013 State and Local Taxes for Selected Locations within Memphis MSA, Largest to Smallest
Location Property Taxes Sales Taxes Auto Registrations (Renewal) Income Taxes Total Taxes
Coldwater, MS $2,016.64 $1,322.93 $465.80 $2,744 $6,549.43
Holly Springs, MS $1,835.33 $1,322.93 $417.71 $2,744 $6,320.02
Senatobia, MS $1,711.32 $1,322.93 $384.81 $2,744 $6,163.11
Unincorporated Tate County, MS $1,621.95 $1,322.93 $361.11 $2,744 $6,050.04
Potts Camp, MS $1,587.96 $1,322.93 $352.09 $2,744 $6,007.02
Marion, AR $ 675.04 $1,752.50 $426.53 $3,132 $5,985.74
Southaven, MS $1,534.13 $1,322.93 $336.44 $2,744 $5,937.55
Byhalia, MS $1,491.38 $1,322.93 $326.47 $2,744 $5,884.83
Olive Branch, MS $1,415.27 $1,322.93 $304.92 $2,744 $5,787.17
West Memphis, AR $ 633.83 $1,658.00 $331.59 $3,132 $5,755.09
Unincorporated Marshall County, MS $1,150.12 $1,322.93 $235.95 $2,744 $5,453.05
Unincorporated Crittenden County, AR $ 546.27 $1,374.52 $303.62 $3,132 $5,356.08
Unincorporated DeSoto County, MS $ 996.75 $1,322.93 $195.27 $2,744 $5,259.00
North Tunica, MS $ 567.16 $1,322.93 $ 81.31 $2,744 $4,715.46
Tunica, MS $ 502.78 $1,322.93 $ 64.23 $2,744 $4,633.99
Unincorporated Tunica County, MS $ 324.43 $1,322.93 $ 55.50 $2,744 $4,446.91
Memphis, TN $2,504.65 $1,674.30 $212.00 0.00 $4,390.95
Germantown, TN $2,044.29 $1,768.79 $202.00 0.00 $4,015.08
Bartlett, TN $1,944.49 $1,768.79 $202.00 0.00 $3,915.28
Collierville, TN $1,915.51 $1,768.79 $206.00 0.00 $3,890.31
Millington, TN $1,854.35 $1,768.79 $202.00 0.00 $3,825.14
Arlington, TN $1,793.18 $1,768.79 $152.00 0.00 $3,713.97
Lakeland, TN $1,696.60 $1,768.79 $152.00 0.00 $3,617.39
Unincorporated Shelby County, TN $1,422.95 $1,674.30 $152.00 0.00 $3,249.25
Covington, TN $1,150.12 $1,768.79 $174.00 0.00 $3,092.92
Unincorporated Tipton County, TN $ 753.33 $1,674.30 $174.00 0.00 $2,601.63
Unincorporated Fayette County, TN $ 476.11 $1,674.30 $212.00 0.00 $2,362.41
Note: Auto registrations include personal property taxes on assumed vehicles

 

It seems clear from the U of M study that taxes aren’t the definitive issue in attracting middle class families to Memphis who left the city hollowed out as the 21st century began.  As the recent poll by PeopleFirst Partnership indicated, a driving consideration for millennials is education, underscoring the importance of the movement here to improve public education.  Only 30 percent of Shelby County families have children under 18, but often, decisions about education are pivotal for young families making expensive decisions about whether to send their children to public or private schools…and often this involves whether they remain inside Memphis.

To read the University of Memphis study, click Memphis MSA tax comparison 3 19 2014.