Tuesday, August 21, 2007

Reality Of DeSoto County Taxes Belies Rhetoric

Some people raised their eyebrows last week when Memphis Mayor Willie Herenton said people who moved to DeSoto County from Memphis are now paying more taxes.

But, the truth is he’s right.

“People in Mississippi are paying more taxes than we are,” the mayor said a little too broadly, but quickly refined his target more accurately to DeSoto County.

Required Reading

While we always consider Business Perspectives – a publication of University of Memphis’ Bureau of Business and Economic Research (BBER) – required reading, we’re not sure why local economic development organizations aren’t papering the area with copies.

The notion of the land of milk and honey – and its lower taxes – is a myth widely perpetuated by real estate developers and homebuilders as they work hard to justify continued sprawl, overuse of tax freezes and continued emphasis on warehousing and distribution.

If local officials had a dollar every time they’ve been told that a company would move to the greener pastures of DeSoto County if public subsidies weren’t approved or that our homebuilding industry would be killed by higher taxes, they could pay off the Shelby County debt.


That’s why the analysis by Dr. Jeff Wallace, economist and associate research professor of the BBER, into the relative tax burdens of Shelby County and DeSoto County caught our eye, particularly this sentence about the historic southerly migration:

“Hidden behind the movement was the widespread belief that taxes were too high in Shelby County and were particularly onerous in Memphis. Taxes in Memphis and all of the communities in Shelby County were lower than those in Oliver Branch and Southaven. The taxes in Memphis, Olive Branch, and Southaven were comparable. The other communities in Shelby County had decidedly lower taxes…”

As Dr. Wallace emphatically concluded: “The evidence is clear – taxes are not lower in DeSoto County.”

Reality, Not Rhetoric

Well, finally, someone actually checked the reality behind the rhetoric. It’s also testament to a simple fact about sprawl. In the end, in trying to escape the problems of urban life – high taxes, pressures on public services and crime – they are often only replicated in another place.

Here are the assumptions for the analysis – $80,000 income, $150,000 home and two cars (2003 Saturn L200 and 2000 Chrysler Town and Country Van).

When comparing unincorporated areas of Shelby County to unincorporated areas in DeSoto County, Shelby Countians pay $865.39 less - $2,644.39 versus $1,779. That’s even with the much-loathed fire fee and wheel tax, by the way.


Meanwhile, the taxes in every city in Shelby County – including Memphis – are less than the taxes in Olive Branch and Southaven. While the difference for Memphians is about enough for a meal for two at Wendy’s, the savings for other cities range from $535 in Germantown residents to $887 Arlington.

Of course, the monkey wrench in the Mississippi equation is the state’s income tax and its personal property tax on automobiles. It more than offsets the much higher property tax bills for Memphians.

For example, the Memphis big two – the property tax and sales tax – amounts respectively to $2,726.25 and $1,850. The wheel county tax accounts for $100, the city wheel tax $60 and vehicle registration $48. The total Memphis tax bill: $3,007.50.

Tax Savings

Olive Branch taxpayers start with a much lower property tax bill - $709.50 – but they soon catch up and pass Memphians. There’s the $294.39 personal property tax on the cars; the $2,030 state income tax; and $1,400 in sales taxes. Total taxes: $3,017.89. (The total in Southaven is $3,059.89.)

Here are the tax totals for other Shelby County towns:

* $2,130.00 – Arlington

* $2,266.25 – Millington

* $2,322.50 – Bartlett

* $2,338.75 - Collierville

* $2,442.50 – Germantown

Crossing The Line

While Memphians only save about $10 when compared to Olive Branch and $52 to Southaven, they can – and do - increase their savings by crossing the county lines to take advantage of those lower DeSoto County sales taxes.

While Dr. Wallace was making a strong point about the relative tax burdens of Memphis and Shelby County with its southern neighbors, we couldn’t help but think about the unjustifiable disparity of the tax burden between Memphians and taxpayers outside of the city limits.

It graphically points up the disincentive that Memphians pay to live in the city. They immediately give themselves more disposable income by abandoning the city and moving anywhere else in Shelby County.

Fairness First

You’ve heard our position before, so we won’t belabor the point, but suffice it to say that regional services should be moved to the broader countywide tax base. In this way, the property tax bill for Memphians each year would roughly be the same as residents of Germantown, Collierville and Bartlett.

It’s one of those rare opportunities to inject fairness into our local tax structure. And overall, it’s the one doable thing that could put Memphis into an immediately better competitive position.


Will Barrett said...

Two questions.

Which regional services do Memphians carry the sole and/or partial tax burden?

What, other than consolidation, would it take to spread this burden equally between the city and county?

Anonymous said...

I live in Germantown, but you have a valid argument about spreading the tax base countywide.

Smart City Consulting said...

Regional services that Memphis pays sole/partial tax burden for include health department, parks, museums, FedExForum and other public venues, and schools.

The option to getting this done, other than consolidation, if for Memphis and Shelby County Governments to enter into negotiations with this objective in mind, reach agreement and sign intergovernmental contracts.

Gregg said...

Yes but...

My comments are from the perspective of a former suburban dweller who now lives in the city.

A $150,000 house in Desoto County is generally larger and "more attractive" (I hate subjectivity) to most than a $150,000 house in Midtown or East Memphis.

Additionally, the prospect of paying up to $12,000 (on top of property taxes) for a comparable education is another, maybe more important, issue.

The number of Mississippi specialty tags with U of Memphis Tiger blows me away.

Smart City Consulting said...


We feel your pain. It sounds like you have children, so that's a variable all its own. We need someone to next check test scores - which makes the tax comparisons seem simple - to determine the truth about DeSoto County schools. Clearly, the 75% of the people in Memphis who don't have children are better off here taxwise.

As we've said before, Memphis has to be a city where people don't feel that they live here until they have children, then they move to the suburbs for 13 years, and then they return. It's awful hard to get them back once they move.

Will Barrett said...

I've often pondered how to convince people, myself included, that it isn't necessary to move or pay for education in Memphis. I say this as a graduate of a city high school (tough guess which one), but a private elementary school.

My wife and father have both taught in the city schools, while my mother teaches in a private school. Of anyone, I ought to have some notion of where I want my child to go to school in 3 years, yet I have to admit that I don't.

Is the problem one of perception, or substance? If the problem is perception, what can be done?
If the problem is substantial, what can be done?

I'm a devoted reader of this blog, and would have to think that one reading SCM on a regular basis would come to the conclusion that the problems with the Memphis City Schools are not merely ones of perception.

I mean this not as an accusation, but perhaps as a suggestion, maybe even a plea, that you discuss what Memphis City Schools is doing right, and where this is happening (not usually on Avery Avenue, in my experience).

Smart City Consulting said...


Thanks for reading and the good comments. We try to mention MCS successes, but for posts that dealt just with good news, try June 3, 2006; October 25, 2006; and December 11, 2006.

clerk said...

Don't forget about Marshall County. Do you have any comparisons for Marshall County? It seems to be in the middle of nowhere but right around the corner from everything...Olive Branch, Collierville...what say ye??

Viagra Online said...

Willie Herenton ???? I do not who he is !!! I think that Memphis is a great city but its administration???
Dr. Jeff Wallace did an important final analysis.!!!

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