Yet another study – this one by the Center on Budget and Policy Priorities – concludes that differences in state taxes “have little to no effect on whether and where people move.”
The primary conclusions from the research are 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 the conventional wisdom that many people moving from Shelby County to DeSoto County are motivated by the hunt for a reduction in their taxes.
And yet, the reality is that 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 study of tax burdens in the Mid-South 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 burden 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 yearly 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, is narrowing as a result of increases in property taxes and a sales tax rate higher than Memphis.
The difference in the tax burden between Memphis and Germantown, the small city 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 taxes included 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: a married couple with one dependent child, household 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 | |||||
Originally posted May 12, 2014
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I’m sure you meant household income of $62k, not per capita.
Taxes may be a bit higher in North Mississippi, but you get a lot more for your tax dollars paid when compared to Memphis. You get better schools, better public services, a cleaner, much safer place to live. Memphis is totally broke and pretty much beyond repair.
You, I and everyone else can point this out over and over again, but we are still talking to bigoted lampposts.
Thanks, Alex, we did mean HHI.
Anonymous: It seems to us that North Mississippi suffers from unsustainable sprawl and in a recent conversation with some financial experts, they predicted that DeSoto County’s finances would collapse in 15 years because of increasing costs and climbing debt. We would suggest that the schools aren’t better – the children have a different socio-economic profile and that’s the determinant. As for public services, the towns are delivering services over smaller areas and at a much higher per capita cost than Memphis. We understand your point of view, but we think that present momentum and projects show that Memphis remains the center of our region – economically, socially, culturally – and regrettably, Memphians pretty much bear the costs of these assets for the region, and for that, citizens outside Memphis should be its biggest fans.
Louise: Hope springs eternal.
One ironic thing is that all of these other entities depend upon the City of Memphis for jobs, infrastructure, and amenities that would not be available outside of a metropolitan area. If things were truly equitable, they would all pay some of Memphis’ tax burden.
If Memphis is truly “totally broke and pretty much beyond repair” as Anonymous above says, then it is to the long term benefit of these suburbs to help Memphis out. If the core is rotten, the rest of the apple will soon follow.
Hats off to Jeff Wallace and the crew at Sparks. A fun useful bit of information. BTW, facts will have little impact of those who feel taxes are too high. They will just keep saying the same things.
I don’t understand why so many Memphians have to follow up comments with small-minded insults through references such as “bigoted lampposts.” It’s unnecessary and negative and such thinking is at the very core of this city’s problems. Shameful. No wonder the city and region are so backward.
38112
The city and region are backward because of the “bigoted lampposts”. What about Anon 8:52 am who says Memphis “is pretty much beyond repair”? Talk about “small minded insults”. When someone speaks the truth it is not small minded. Where in 38112 do you live? Do you wish to move? Do you like 38112? Are you ANON 852?
According to census estimates, the entire nine-county Memphis metro area is losing several thousand more people each year in domestic migration than it is gaining. I think that speaks to the economic health of the entire area and not just Memphis. And so far this decade, DeSoto County has continued to grow but it is no longer Mississippi’s fastest-growing county and has not been among the nation’s top 100 fastest growing counties. In recent years, Lafayette County (Oxford) has been Mississippi’s fastest growing county.and the latest estimates show it among the nation’s top 100.
I’m not quite sure what the point of this story is. The opening sentence makes it sound like this story was written to declare that there’s room for higher taxes in Memphis, but the rest of the story is a data dump without much meaningful analysis. What is the point of posting different tax structures? What are the meaningful conclusions drawn from this?
George:
To repeat: “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, the reality is that they end up paying more in taxes than if they had stayed in Memphis.”
JCov: Really important points. As we often write, the problems facing us here are regional in nature, but unfortunately, most of the region think it’s all about Memphis.
What exactly are the reasons that Memphis and the mid south region are losing population and falling so far behind other cities in terms of economic development? It’s been like this for a long time and things seem to never get better. In comparison Nashville and middle Tennessee are booming.
Jackson:
First, as we told a reporter recently, no city in the Southeast compares to Nashville right now. But that said, even if compared to Louisville, Indianapolis, Birmingham, etc., we’re still running in place and on most indicators that matter to us, the Memphis MSA hangs in the bottom 5-7 for the 51 largest metros.
The malaise that hangs over the region today seems to have been here for about 15 years, but in particular, the damage done by the Great Recession is profound, deepening the structural problems in the MSA that already were plaguing us like low income, poverty, a poor economic development toolkit, treating population movement as it it’s “growth,” too little venture capital, etc.
These are just some more figures which really don’t tell the why of the situation. As referred to above, there are few areas in the nation that have had the economic and population growth than has occurred in the Nashville area. The figures do make it clear to me that the major economic and population growth in the Nashville area occurred in the suburban counties and not in Davidson County (Nashville). I have not studied other areas but I would suspect that in a number of them the major economic and population growth has been in suburban counties. The following is an unpublished piece that I wrote in 2011 (The ninth county, Benton County, Miss., was not added to the Memphis metro area until later. The Nashville metro area may also have changed as a result of the 2010 Census.):
:
Wilson County ranked fourth among Nashville metro area counties in population increase in the last decade from people moving to the county.
However, that increase alone — 19,645 — was more than the entire eight-county Memphis metro area gained from in-movers — 18,481.
The statistic is a strong example of just how much the Nashville area outpaced the Memphis area in population growth during 2000-2010.
The numbers show that the Nashville area was much more successful than the Memphis area in providing jobs and in providing places where people want to live, said Dr. John Gnuschke, executive director of the Sparks Bureau of Business and Economic Research at the University of Memphis.
“In-migration is a key indicator of economic vitality,” Gnuschke said. “Demographic growth and economic growth go hand in hand.”
The 2010 Census results, released earlier this year, show the 13-county Nashville area rising from 1,311,774 residents in 2000 to 1,589,934 last year, an increase of 278,160.
Birth-death records and census figures show 100,091 of the increase coming from births exceeding deaths and 178,069 from net in-migration (more people moving in than moving away).
The population in the eight-county Memphis area climbed from 1,205,204 to 1,316,100, a 100,896 increase. Of the gain, 92,415 came from births exceeding deaths and 18,481 from net in-migration.
Rutherford, Williamson, Sumner and Wilson led the way in population growth in the Nashville area.
The big growth county in the Memphis metro area was DeSoto County, MS.
Memphis metro area population change 2000-2010
Counties 2000 Births Deaths Net Migration 2010
Shelby 897,472 +146,081 -77,129 -38,780 927,644
Fayette 29,348 +4,502 -3,086 +9,394 40,158
Tipton 50,729 +7,520 -4,838 +5,925 59,336
Crittenden 50,866 +8,941 -4,916 -3,989 50,902
DeSoto 107,199 +20,148 -8,896 +42,801 161,252
Tate 25,370 +3,937 -2,519 +2,098 28,886
Tunica 9,227 +2,090 -1,033 +494 10,778
Marshall 34,993 +5,219 -3,606 +538 37,144
Total area 1,205,204 +198,438 -106,023 +18,481 1,316,100
Nashville metro area population change 2000-2010
Counties 2000 Births Deaths Net Migration 2010
Cannon 12,821 +1,496 -1,403 +887 13,801
Cheatham 35,912 +4,861 -2.890 +1,222 39,105
Davidson 569,891 +93,677 -49,695 +12,808 626,681
Dickson 43,146 +6,516 -4,297 +4,301 49,666
Hickman 22,295 +2,783 -2,329 +1,941 24,690
Macon 20,386 +2,822 -2,270 +1,310 22,248
Robertson 54,443 +9,639 -5,299 +7,510 66,283
Rutherford 182,023 +34,117 -12,702 +59,166 262,604
Smith 17,712 +2,230 -2034 +1,258 19,166
Sumner 130,449 +19,236 -11,582 +22,515 160,645
Trousdale 7,259 +918 -895 +588 7,870
Williamson 126,638 +19,445 -7,819 +44,918 183,182
Wilson 88,809 +13,145 -7,606 +19,645 113,993
Metro total 1,311,774 +210,912 -110,821 +178,069 1,589,934
Source: U.S. Census Bureau and State Vital Statistics Records.
Thanks, Jimmie. Great, great information.
Economic vitality is a great term. It’s precisely what we’re lacking.
Our daughter landed a great job in Nashville which has really just gone crazy with growth and new development in the past 5 years. Yes, it’s surrounding counties are growing rapidly and are quite wealthy but the same thing is also happening in Davidson County. There are construction cranes and high rise buildings going up everywhere especially apartments, condos and hotels. Real estate prices are out of sight, especially in urban neighborhoods. The jobs growth has been very strong too. Bridgestone is building a new headquarters skyscraper right downtown. The tourism, conventions and nightlife puts Memphis to shame. Hopefully our new mayor can learn a lot from the success of Nashville.
I’d be interested to see some links supporting the article’s premise that moves from Shelby County to DeSoto County are based primarily on taxes. The perception of lower taxes may part of the reason, but I don’t think it’s the only reason, or even the largest reason, as this article assumes.
Regarding the taxes, I think the idea of perception being reality applies here. State income tax is obscured to the payer, just like federal income tax. You don’t actively pay it — it automatically comes out of your check. Once a year you fill out some paperwork to settle up and many people get some money back. The payment action doesn’t happen often enough to be felt in daily life. The same goes for auto registration.
But, things like property taxes and sales taxes are felt more often. If you owe a mortgage, you notice the property tax amount each month in your escrow. When you buy something, you see that sales tax right away. With the closest MS communities having property tax burdens about $1000/yr less than Memphis and sales tax 2+% less, the perception is felt more often, even if the amount is small.
Most of us can relate to this in gasoline prices. A price jump of $0.20/gal sounds like a lot to most of us. But, when applied to a 20 gal fillup, it only comes out to an additional $4. Most of us waste more than $4 on trivial things every day. But, the perception is that the additional amount is problematic.
It seems pretty obvious that taxes in northern Mississippi are not the biggest factor. The real reason people choose DeSoto Co. as well as other places to live is that they want to avoid the crime and gritty, dismal existence that living in Memphis brings. This is a no brainier.
Then, there is the other view that can be made: Desoto County has its own crime problems which are growing, the sprawl makes it unattractive and lacking any character, the overbuilding of highways destroys the landscapes, and the generic, chain retail makes it like every other soul-sapping suburb in the country. It all adds up to a gritty existence.
In other words, it just all depends on what lens you look at things through.
As we said, everyone has the right to choose where they live. We just don’t see the point of trashing other places that are chosen by hundreds of thousands of other people.
George:
Read the post again. We didn’t advance a premise. We merely stated the conventional wisdom and the facts about the tax burdens.
And since you bring up gas prices, the cost of commuting is producing a return to cities across the U.S. We’ll see if it happens here.
Smart City, I’m just looking for evidence to back your claim that the “conventional wisdom” is that people leave Shelby County for DeSoto County because of the perception of lower taxes. I’ve heard lower property taxes mentioned in conjunction with many other factors, but I’ve never heard lower taxes being the only thing (or even in the top two or three things).
Maybe your characterization of the “conventional wisdom” isn’t accurate.
We’ve done several polls over the past 10 years, and because of them, we referred to the conventional wisdom on the taxation issue. It has been a constant in the polling.
Can you post the data from these polls? I’ve not seen it anywhere else. Without the data, it all looks like a strawman.
This is our company’s blog so it’s based on our work. The polls were done for clients, so we’re not posting them. That said, conventional wisdom is generally something held as opinion by the public, and we think that the notion that people have moved to Desoto County for lower taxes is widespread, even mentioned in news stories.