BillHobbs.com - Blogging about politics and media from Nashville.

news, the mayor has proposed the second-largest tax increase in city history, in a package that includes the possibility of tax relief for the city's senior citizens - if voters approve a half-cent increase in the city's sales tax. Some are questioning whether the age-based tax relief is legal. I think it probably is - but there is a larger question:

In his "State of Metro" speech, Nashville Mayor Bill Purcell said, "The city "can and should, and must lift the fear of taxes from senior citizens. It is in our power to ensure they will never pay more than 5% of their income in local taxes."

But why should the city "lift the fear" of taxes only from one group of people based on age, rather than income? And why should only people over age 65 be assured their local tax bite will never top five percent of their income? Why is it fair for people under 65 to pay a larger share of their income in local taxes than people 65 and older?

The wealthiest age group in America is people over 65. And while there are certainly poor senior citizens and lower middle-class senior citizens , there are also many senior citizens who own palatial homes in the city's Belle Meade section, one of the wealthiest zip codes in the nation. And many more populate Green Hills, another wealthy area of Nashville where simple 3-bed, 3-bath 2,500-square foot ranch homes like the one pictured (click to enlarge) go for $495,000.

A similar-sized home in the suburb of Franklin goes for about $250,000 - which perhaps explains why, as Nashville raises property taxes and fails to deliver significant improvements in schools, crime, traffic or city services, an increasing number of middle-class Nashvillians are moving to the suburbs.

As noted by Tennessee Tax Revolt recently, Davidson County (Nashville) was one of only eight counties in the entire state that had net out-migration of people from 1995 through 2000, losing 16,382 residents (out of a city of about 500,000), while the six adjacent suburbs all grew in population, gaining a total of 60,634.

More recently, Nashville's population grew four tenths of one percent between April 1, 2000 and July 1, 2004 - while the average growth in the six suburban counties over the same period was 10.8 percent.

TTR also notes a recent study by economists at Middle Tennessee State University that shows that the value of new homes being built is declining while it is rising in the suburbs.

What's happening? Simple: Nashville is increasingly pricing itself out of the middle-class market. Middle class people can find cheaper real estate - and better schools - in suburbs like Williamson and Ruterford counties. Increasingly, Nashville is becoming a city of lower-income people and a few enclaves of the very wealthy.

You can't finance a city long-term with demographics like that, but increasing the property tax - already the highest in Middle Tennessee - is only going to accelerate that trend.

I understand the mayor's desire to help poor senior citizens on fixed income withstand the relentless rise in property values by shielding them from higher property taxes. But I fail to see the fairness - or the fiscal wisdom - in a program that ties tax relief to age rather than income, and only increases the incentive for middle class people of all ages to sell and move to the suburbs.

You made not a "simple" leap in your interpretation of the demographics, but an oversimplistic one. Assuming the demographics cited by TTR are true (I don't swallow everything the partisan TTR spins), it is a leap to assume a connection between property taxes and outmigration without showing a connection from statistics themselves.

Land in all urban areas, not just Nashville (which is considered one of the most competitive urban markets in the country), is more expensive than in the suburbs and in the ex-urbs. It stands to reason that you can buy more land the farther you are willing to commute. It's the cost trade-off.

The growth of the suburban counties around Davidson is no different than the growth of suburbia everywhere, because of greater demand and higher density closer in. According to market principles, if there is a massive flight away from Downtown Nashville, then urban real estate prices should go down, not up, as demand weakens.

But you ignore that as well as variables like 1) population growth, which would lead to the middle class and upper middle class "overflowing" into the suburban areas when they cannot find urban property because of increased demand and 2) the recent explosion of gentrified neighborhoods in and around urban areas like Nashville (including the East and West Ends and Germantown). Gentrification is almost entirely a middle class phenomenon.

However, TTR's agenda is not to consider all the variables in a fair way, but to pick and choose the ones that suits its hard line. As for, "better schools," well, groups like TTR are working to change that: opposing all tax hikes for any reason whatsoever will insure that public schools everywhere will decline in quality.

Finally, I didn't read any mention of lower suburban crime rates in your analysis. That along with "better schools" and "more square footage" used to be the reasons people gave for moving to the suburbs (those living in cities and rural areas give more "cultural" reasons for living where they do). The crime rate argument is rarely used any more. Crime rates in the suburbs and ex-urbs are rising at higher rates now than in urban areas. They may have to raise their taxes in those higher crime rate areas to protect their communities, because there's no where else to migrate. You get what you pay for.

Posted by: S-townMike at May 26, 2005 07:55 AM

May 26, 2005

Ageism