Does Tennessee value corporations more than homeowners?

Oct 15, 2021 at 10:41 am by Michelle Willard

Ford

As the Tennessee General Assembly gets ready to convene a special session about funding, buildout and oversight of Ford Motor Company’s plans for the Memphis Regional Megasite, the Tennessee Board of Equalization has rejected a plan from Shelby County that would reduce taxes paid by the poor and elderly property owners in favor of keeping corporate taxes lower.

The request from Shelby County Property Assessor Melvin Burgess would shift the state's most populous county from a four-year appraisal cycle to a two-year cycle.

"Burgess’ request would have increased relief payments to poor people in Shelby County but cut payments to corporations, which still would have benefited from lower property tax rates through equalization. State law prohibits automatic property tax increases following reappraisals that increase property values," Sam Stockard of Tennessee Lookout reported.

The request was approved by the Shelby County Commission but denied by the Tennessee Board of Equalization.

"The vote prevented reductions in tax relief payments for the elderly and low-income property owners, which are being cut by 15% annually. Corporations, meanwhile, received a 15% decrease on their assessed property values, according to experts," Stockard wrote.

In other words, the Board of Equalization voted to uphold a process that grants tax discounts (via the appraisal ratio application) to businesses, interstate transportation companies, utilities, and large industries while penalizing the most economically fragile members of our communities – our elderly,

poor and disabled homeowners.

The Board of Equalization did this at the same time the state is considering giving Ford (a corporation with a net worth of $60.28 billion as of Oct.11, 2021) a $500 million grant for the electric vehicle and battery campus in Haywood County. According to Ford, Ford and SK Innovation will invest $5.6 billion to build a 3,600-acre mega campus called Blue Oval City on the Memphis Regional Megasite, where production of next generation all-electric F-Series trucks will begin in 2025. The project will result in the creation of 5,800 new jobs in West Tennessee. The state will also consider an unspecified amount in funding for site development, education and workforce preparation.

The argument given by the government is that the jobs created will produce at a higher tax base to make up for the money lost by giving a multi-billion-dollar company a tax break. According to the Tennessee Department of Economic Development, the project is anticipated to generate more than 27,000 total jobs, both directly and indirectly, to support the site’s operations. This will result in more than $3.5 billion added to the state's coffers.

But is that true? We will never know because there is no one willing to follow up on what the actual impact is.

Also, what I learned over my years covering business and government is that residential growth does not pay for itself. And because and because Tennessee doesn't have an income tax, we are dependent on sales and property taxes.

But, here's the Big But, those taxes don't balance when you give some of them away.

A report by TACIR from years ago found that residential properties use more resources than the taxes they pay produce. On the other side, commercial and industrial properties use less resources than the taxes they produce.

TL;DR: Government services – i.e., trash, roads, police and schools – to your house are subsidized by taxes paid by businesses. When those businesses don't pay as much in taxes, then you have to pay full price for those services.

According to the Tennessee Constitution, government budgets – state, county and city – are required to be balanced. Neither the City of Murfreesboro or Rutherford County take out loans to balance their budgets (loans are for capital projects). That means when corporations pay less in taxes, that deficit is made up by increasing property taxes.

Higher taxes mean more economic pressure is placed on the most vulnerable taxpayers (elderly, disabled veterans, the poor). This is why it's important to protect them with the Property Tax Relief Program and other policies like what Shelby County wanted to enact.

The Shelby County proposal would have reduced the tax burden shouldered by vulnerable taxpayers, but also reduced by the same percentage the tax cuts that are granted to major wealthy industries. Watch a video that explains it.

The predominantly affluent and economically advantaged satellite communities in Shelby County waged a political battle against Shelby County's attempt to bring equity to the revaluation process.

They fought against having more frequent revenue neutral certified tax rates applied, which would have provided an opportunity to lower tax rates more frequently for poorer homeowners. These same communities are the ones that will benefit the most by giving Ford a tax break for moving to Tennessee. 

So Tennessee's legislature will likely give Ford the tax breaks it wants and make up the difference by making homeowners pay more.

 

Sections: Opinion


Comments

Republicans value corporations more than homeowners. Goober-nor Bill Lee is a predominate example.
Well stated, Michelle. Thanks for this information!
Currently Rutherford County engages in a continuous cycle of visual inspections, land valuation modeling, income modeling, and field reviews of permits (demolitions, improvements, and new construction). In essence, the Rutherford County Assessor of Property conducts valuation activity on a continuous basis annually. However, the Assessor is not permitted to update the values in light of the current limits placed upon their revaluation plans. State law limits the update to a 6,5 or 4- year periodic frequency but does leave open the option to revalue more frequently. Consequently, Rutherford County does not recognize the changes (up or down) in real estate markets until several years after it occurs. Property taxation is "ad valorem" and based upon the “market value” of each taxable property. Most properties in Tennessee are valued on a periodic cycle. State law requires property valued by the Comptroller's Office of State Assessed Property and locally assessed business tangible personal property to be assessed annually.
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