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.
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|
|Holly Springs, MS||$1,835.33||$1,322.93||$417.71||$2,744||$6,320.02|
|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|
|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|
|Unincorporated Shelby County, TN||$1,422.95||$1,674.30||$152.00||0.00||$3,249.25|
|Unincorporated Tipton County, TN||$ 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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