6 ms·

Is high density really costs less then why are tax rates always higher in large dense cities than they are in the near by suburbs?

grogenaut 9y ago
Because people in the burbs vote against taxes and people in the cities vote for taxes? Or one of a thousand other compex set of interactions. Also many suburbs have higher tax rates if they want better infrastructure and they can keep the rif-raff out.
- nostromo 9y ago
  > Or one of a thousand other compex set of interactions. That's a very handwavey response to a serious question. If it's true that dense cities are more efficient then it follows that dense cities should be cheaper, when all evidence points to the opposite effect. By the original reasoning Boise and Boulder should have very expensive tax burdens and New York should be nearly free.
  - UrukParthian 9y ago
    And of course this "efficiency" doesn't put, into reckoning, the stress of population density on cognition. Especially "diverse density". Coming back from the military, I kept the same "look around at all times for threats" and it was absolutely exhausting. "hyper-vigilance" I think is the term. Still have some of it but it's easier to live with in Norcal than the concrete jungles of the Los Angeles sprawl. Can focus on trees and the tweets of birds instead of innumerable pedestrians and cars and noise...
  - Retric 9y ago
    First, cities often can't tax the burbs. Commuters often use city services without paying for them. So, local taxes are only a tiny part of the story you need to look at the state and federal level. At the federal spending it's major metro areas that are funding much of the country. Delaware get's back 1/2 what it puts in and South Carolina get's back almost 8x what it puts in. Those are absolutely massive tax flows which fund things like rural hospitals. But also a lot of infrastructure like new roads. Even within states if you look at Virginia the DC area provides most of the revenue which is then spread around the state. But, this ends up far more complex than just the local property tax situation.
    - briandear 9y ago
      They DO pay for city services — if they buy something within the city or work within the city, the costs of the city are reflected in the cost of goods or the compensation from employment.
      - Retric 9y ago
        They don't directly pay to use local roads etc. They may indirectly contribute to the tax base, but it's far from 1:1. Otherwise their would be little need for local property taxes on homes and apartments. And really, your argument implies that people in Japan pay US taxes when they buy Coca Cola. At some point things are indirect enough it's a meaningless connection.
CPLX 9y ago
Property taxes in NYC, for example, are drastically lower than the suburbs, precisely because of the economies provided by density. Some other forms of tax are much higher in the city, for example income taxes on higher earners, and some corporate taxes in the case of NYC, but there are also an incredible array of services provided. Your premise that city taxes are "always higher" isn't something you can assert without offering evidence. The reality is that taxes in dense cities are usually different than in less dense areas, and reflect different priorities. Higher or lower depends a lot on who you are and what you're measuring.
- intrasight 9y ago
  Look at total tax bite and I think you'll generally find that taxes in cities are higher than in suburbs. I've lived in lots of cities and suburbs. I always get more for my dollar in suburbs. In cities, there are more legacy costs in pensions and there is more corruption.
- cletus 9y ago
  The tri-state area is far more complicated than you seem to make it out to be. For one you can't make sweeping generalizations like "property taxes in NYC ... are drastically lower than the suburbs". What are "the suburbs" here? Westchester? Nassau? Which parts of Long Island? Which parts of New Jersey? Each has different characteristics. Likewise, NYC property taxes have characteristics all of their own. NJ is known as a high property tax state. That's true but you need to understand why. Why is because so many NJ residents work in NYC and pay NYS income taxes rather than NJS income taxes. As for the high-tax NY suburbs like Westchester... it's complicated but the tl;dr version is school spending, inefficiencies and state-mandated defined benefit pension plans [1]. As a general rule though, NY state single family home ("SFH") owners pay disproportionately low property tax rates compared to those in multi-dwelling units ("MDUs") ie apartments, which is NY state's (fortunately tamer) equivalent of CA's Prop 13. Upstate SFH dwellers have voted themselves tax breaks in the form of caps on property taxes. Apartment dwellers however have to property taxes based on Assessed Rental Value ("ARV"). A $3m brownstone in Prospect Park might have property taxes of ~$700/month. A $3m condo in Midtown Manhattan will likely pay $1300-2000/month in property taxes (so ignoring common charges). And that's AFTER the condo and coop tax abatement, which is a "temporary" decrease that's been continually passed by the NYS legislature every few years continually since 1996. Without that, those apartment rates would be up to 50% higher. But it gets worse. Those who pay the lowest taxes of all (as a portion of their property values) are... foreign billionaires who buy ultra-luxury condos on 57th Street, CPW, Park Avenue and 5th Avenue. I applaud your effort to correct the GP's misconceptions but you've also made some sweeping generalizations yourself. [1] http://www.westchestermagazine.com/Westchester-Magazine/June-2010/Why-Are-Our-Taxes-So-High/ http://www.westchestermagazine.com/Westchester-Magazine/June...
Declanomous 9y ago
The thing is that a lot of suburban areas are much younger than high-density areas. So they have borrowed for capital projects such as infrastructure and new buildings. They aren't paying the true costs of maintaining those things yet. Cities on the other hand have to pay for the upkeep on their existing infrastructure, as well as replacing that infrastructure. Replacing infrastructure is much more expensive than building it out in the first place. A lot of suburbs will fail when it comes time to replace their infrastructure. It just hasn't happened yet because in the United States you can keep building out forever. Furthermore people move away from areas burdened by the costs of replacing infrastructure. The entire rust belt is being brutalized by the fact that formerly suburban areas have collapsed. The urban areas were already brutalized in the 50s, 60s and 70s by white flight.
- intrasight 9y ago
  Roads and sewers aren't a big cost for a suburb if they put them out to competitive bid. My town publishes all the data. Who did the work and how much it cost. Those costs are tiny compared to running the schools.
awinder 9y ago
AIUI: the argument is that high density has less per capita costs. Tax rate should basically be a function of costs and citizen income. You can have lower per capita costs and need a higher tax rate if your revenue is not high enough relative to costs. But — if you converted the wealth located in the suburbs, into high density, costs would go down, the revenue base is the same, so taxes could fall. To me the argument seems backwards, people live where they want, they incur certain relative higher or lower costs due to it, but so what. The amount of money we are talking about here is relatively benign, if you were upfront with people about the choices being made with tax revenue, you could easily finance (with people’s own existing tax revenue) their own decisions on where to live. Where’s the fire.
bobthepanda 9y ago
Tax rates are generally a reflection of current priorities and not long term obligations. Cities tend to build and replace infrastructure bit by bit; when first built out, they built infrastructure piecemeal, and as they upgrade to cope with higher populations they also do it piece by piece. So they have to replace things often, but usually only small amounts of infrastructure. To reflect this, tax rates stay at a slightly higher rate. Suburbs, on the other hand, generally explosively grow in spurts, and put in all the infrastructure in spurts. So for 30 years they don't have to worry about replacing things and have low tax rates, but when you start getting to EOL people start getting higher and higher assessments to pay to replace all this high-quality infrastructure at the same time. This causes people to leave for that newer suburb that hasn't reached that point, which shrinks the tax base of the older suburb, which then has to raise assessments higher, which starts off a deadly tax spiral. On top of that they are often raising taxes to replace infrastructure on a much smaller tax base to begin with since their density is so low. As a case in point, Nassau County in Long Island had the original suburbs, but now the taxes are so expensive because of all this infrastructure replacement that everybody is leaving. You are starting to see this in a lot of the first-generation suburbs; not only in Long Island, but also in New Jersey, and other infamous examples include places like Ferguson, MO.
ckarmann 9y ago
Taxes don't pay the same thing in dense cities as in the suburbs. Public transport for example: in a dense city taxes pay for bus, subways, tramways, bike lanes, sometimes subsidized bike sharing. In a lot of suburbs none of this make sense because everyone has to have a car anyway, so people only pay for roads. In the end, what you pay for your car could very well be higher than the differential in taxes. That's how the dense city is more "efficient". More over, people living in a suburb only pay for a part of the roads they use in their daily commute. My (dense) borough actually did a study that showed 80% of the traffic going through our streets were people who would not stop there, for example because they are commuting between a suburb and the city center nearby. So city dwellers pay for roads that are mostly used by other people. And since the traffic we get this way is quite intense, there's a good amount of road repair each year.
- opportune 9y ago
  Has your community looked into a toll system, with reduced cost or free passes for residents? Regarding public transportation, I wish this was an issue that more people understood. Yes, it takes higher taxes to build public transportation infrastructure (although buses have pretty low upfront costs), but that public transportation could replace your need for a car, saving you a lot of money. Even if you personally don't use public transportation, it has a lot of external benefits: less traffic, less air pollution, brings in workers who may have been priced out of working in a certain area.
- pmorici 9y ago
  In the small suburban town I grew up in they had bus, train, and bike lanes. No different than a large city really.
- madengr 9y ago
  Well they could do a 1% earnings tax like Kansas City, MO; crooks.
- burfog 9y ago
  People pay the property taxes wherever they go. If you rent a home, your landlord pays property tax. If you work for an employer, your employer pays property tax. If you go out to eat, the restaurant pays property tax. I suppose some federal and religious things may be exempt, but that is also the case with non-commuters. So a person who lives in the suburb but works and shops in the city will be paying most of their property taxes in the city, via their employer and the shopkeepers. It's taxation without representation. Perhaps they should also get a pro-rated vote. :-) It could be based on time spent in each location, or economic activity in each location, or simply 1 part for each kind of activity spent in each place.
intrasight 9y ago
There's more legacy costs (pensions) and there's more corruption.
kasey_junk 9y ago
They aren’t? In Chicago at least the opposite is mostly true.
- pmorici 9y ago
  That is only true for property tax which is slightly lower in the city than the suburbs. If you include Sales tax Chicago is higher.
  - kasey_junk 9y ago
    Property taxes are fairly variable in the Chicagoland area, but there are many places where Chicago is not slightly less, it’s dramatically less. The sales tax is floored by the state sales tax which makes up more than half of the total. The Cook County minimum sales tax is 8% with lots of localities matching Chicago’s 11%. All told I imagine tax rate in the Chicagoland area largely depends on a whole equation of property value/tax & consumption. But I’d be shocked if Chicago was universally more expensive than its suburbs.
  - selectodude 9y ago
    Chicago's share of the sales tax is 1.25 percent. It's really not any higher than anywhere else in Chicagoland.
davewritescode 9y ago
I wouldn’t say that’s a rule at all. In NYC there’s a city income tax but property tax is actually incredibly reasonable compared to the surrounding suburbs. Property taxes in the northeast US are absolutely insane.
Symbiote 9y ago
Tax rates in England are often lower in cities. Map: https://www.telegraph.co.uk/finance/personalfinance/tax/12062498/Mapped-do-you-live-in-a-high-council-tax-area.html https://www.telegraph.co.uk/finance/personalfinance/tax/1206...

grogenaut 9y ago

Because people in the burbs vote against taxes and people in the cities vote for taxes? Or one of a thousand other compex set of interactions. Also many suburbs have higher tax rates if they want better infrastructure and they can keep the rif-raff out.

nostromo 9y ago
> Or one of a thousand other compex set of interactions. That's a very handwavey response to a serious question. If it's true that dense cities are more efficient then it follows that dense cities should be cheaper, when all evidence points to the opposite effect. By the original reasoning Boise and Boulder should have very expensive tax burdens and New York should be nearly free.
- UrukParthian 9y ago
  And of course this "efficiency" doesn't put, into reckoning, the stress of population density on cognition. Especially "diverse density". Coming back from the military, I kept the same "look around at all times for threats" and it was absolutely exhausting. "hyper-vigilance" I think is the term. Still have some of it but it's easier to live with in Norcal than the concrete jungles of the Los Angeles sprawl. Can focus on trees and the tweets of birds instead of innumerable pedestrians and cars and noise...
- Retric 9y ago
  First, cities often can't tax the burbs. Commuters often use city services without paying for them. So, local taxes are only a tiny part of the story you need to look at the state and federal level. At the federal spending it's major metro areas that are funding much of the country. Delaware get's back 1/2 what it puts in and South Carolina get's back almost 8x what it puts in. Those are absolutely massive tax flows which fund things like rural hospitals. But also a lot of infrastructure like new roads. Even within states if you look at Virginia the DC area provides most of the revenue which is then spread around the state. But, this ends up far more complex than just the local property tax situation.
  - briandear 9y ago
    They DO pay for city services — if they buy something within the city or work within the city, the costs of the city are reflected in the cost of goods or the compensation from employment.
    - Retric 9y ago
      They don't directly pay to use local roads etc. They may indirectly contribute to the tax base, but it's far from 1:1. Otherwise their would be little need for local property taxes on homes and apartments. And really, your argument implies that people in Japan pay US taxes when they buy Coca Cola. At some point things are indirect enough it's a meaningless connection.

CPLX 9y ago

Property taxes in NYC, for example, are drastically lower than the suburbs, precisely because of the economies provided by density. Some other forms of tax are much higher in the city, for example income taxes on higher earners, and some corporate taxes in the case of NYC, but there are also an incredible array of services provided. Your premise that city taxes are "always higher" isn't something you can assert without offering evidence. The reality is that taxes in dense cities are usually different than in less dense areas, and reflect different priorities. Higher or lower depends a lot on who you are and what you're measuring.

intrasight 9y ago
Look at total tax bite and I think you'll generally find that taxes in cities are higher than in suburbs. I've lived in lots of cities and suburbs. I always get more for my dollar in suburbs. In cities, there are more legacy costs in pensions and there is more corruption.
cletus 9y ago
The tri-state area is far more complicated than you seem to make it out to be. For one you can't make sweeping generalizations like "property taxes in NYC ... are drastically lower than the suburbs". What are "the suburbs" here? Westchester? Nassau? Which parts of Long Island? Which parts of New Jersey? Each has different characteristics. Likewise, NYC property taxes have characteristics all of their own. NJ is known as a high property tax state. That's true but you need to understand why. Why is because so many NJ residents work in NYC and pay NYS income taxes rather than NJS income taxes. As for the high-tax NY suburbs like Westchester... it's complicated but the tl;dr version is school spending, inefficiencies and state-mandated defined benefit pension plans [1]. As a general rule though, NY state single family home ("SFH") owners pay disproportionately low property tax rates compared to those in multi-dwelling units ("MDUs") ie apartments, which is NY state's (fortunately tamer) equivalent of CA's Prop 13. Upstate SFH dwellers have voted themselves tax breaks in the form of caps on property taxes. Apartment dwellers however have to property taxes based on Assessed Rental Value ("ARV"). A $3m brownstone in Prospect Park might have property taxes of ~$700/month. A $3m condo in Midtown Manhattan will likely pay $1300-2000/month in property taxes (so ignoring common charges). And that's AFTER the condo and coop tax abatement, which is a "temporary" decrease that's been continually passed by the NYS legislature every few years continually since 1996. Without that, those apartment rates would be up to 50% higher. But it gets worse. Those who pay the lowest taxes of all (as a portion of their property values) are... foreign billionaires who buy ultra-luxury condos on 57th Street, CPW, Park Avenue and 5th Avenue. I applaud your effort to correct the GP's misconceptions but you've also made some sweeping generalizations yourself. [1] http://www.westchestermagazine.com/Westchester-Magazine/June-2010/Why-Are-Our-Taxes-So-High/ http://www.westchestermagazine.com/Westchester-Magazine/June...

Declanomous 9y ago

The thing is that a lot of suburban areas are much younger than high-density areas. So they have borrowed for capital projects such as infrastructure and new buildings. They aren't paying the true costs of maintaining those things yet. Cities on the other hand have to pay for the upkeep on their existing infrastructure, as well as replacing that infrastructure. Replacing infrastructure is much more expensive than building it out in the first place. A lot of suburbs will fail when it comes time to replace their infrastructure. It just hasn't happened yet because in the United States you can keep building out forever. Furthermore people move away from areas burdened by the costs of replacing infrastructure. The entire rust belt is being brutalized by the fact that formerly suburban areas have collapsed. The urban areas were already brutalized in the 50s, 60s and 70s by white flight.

intrasight 9y ago
Roads and sewers aren't a big cost for a suburb if they put them out to competitive bid. My town publishes all the data. Who did the work and how much it cost. Those costs are tiny compared to running the schools.

awinder 9y ago

AIUI: the argument is that high density has less per capita costs. Tax rate should basically be a function of costs and citizen income. You can have lower per capita costs and need a higher tax rate if your revenue is not high enough relative to costs. But — if you converted the wealth located in the suburbs, into high density, costs would go down, the revenue base is the same, so taxes could fall. To me the argument seems backwards, people live where they want, they incur certain relative higher or lower costs due to it, but so what. The amount of money we are talking about here is relatively benign, if you were upfront with people about the choices being made with tax revenue, you could easily finance (with people’s own existing tax revenue) their own decisions on where to live. Where’s the fire.

bobthepanda 9y ago

Tax rates are generally a reflection of current priorities and not long term obligations. Cities tend to build and replace infrastructure bit by bit; when first built out, they built infrastructure piecemeal, and as they upgrade to cope with higher populations they also do it piece by piece. So they have to replace things often, but usually only small amounts of infrastructure. To reflect this, tax rates stay at a slightly higher rate. Suburbs, on the other hand, generally explosively grow in spurts, and put in all the infrastructure in spurts. So for 30 years they don't have to worry about replacing things and have low tax rates, but when you start getting to EOL people start getting higher and higher assessments to pay to replace all this high-quality infrastructure at the same time. This causes people to leave for that newer suburb that hasn't reached that point, which shrinks the tax base of the older suburb, which then has to raise assessments higher, which starts off a deadly tax spiral. On top of that they are often raising taxes to replace infrastructure on a much smaller tax base to begin with since their density is so low. As a case in point, Nassau County in Long Island had the original suburbs, but now the taxes are so expensive because of all this infrastructure replacement that everybody is leaving. You are starting to see this in a lot of the first-generation suburbs; not only in Long Island, but also in New Jersey, and other infamous examples include places like Ferguson, MO.

ckarmann 9y ago

Taxes don't pay the same thing in dense cities as in the suburbs. Public transport for example: in a dense city taxes pay for bus, subways, tramways, bike lanes, sometimes subsidized bike sharing. In a lot of suburbs none of this make sense because everyone has to have a car anyway, so people only pay for roads. In the end, what you pay for your car could very well be higher than the differential in taxes. That's how the dense city is more "efficient". More over, people living in a suburb only pay for a part of the roads they use in their daily commute. My (dense) borough actually did a study that showed 80% of the traffic going through our streets were people who would not stop there, for example because they are commuting between a suburb and the city center nearby. So city dwellers pay for roads that are mostly used by other people. And since the traffic we get this way is quite intense, there's a good amount of road repair each year.

opportune 9y ago
Has your community looked into a toll system, with reduced cost or free passes for residents? Regarding public transportation, I wish this was an issue that more people understood. Yes, it takes higher taxes to build public transportation infrastructure (although buses have pretty low upfront costs), but that public transportation could replace your need for a car, saving you a lot of money. Even if you personally don't use public transportation, it has a lot of external benefits: less traffic, less air pollution, brings in workers who may have been priced out of working in a certain area.
pmorici 9y ago
In the small suburban town I grew up in they had bus, train, and bike lanes. No different than a large city really.
madengr 9y ago
Well they could do a 1% earnings tax like Kansas City, MO; crooks.
burfog 9y ago
People pay the property taxes wherever they go. If you rent a home, your landlord pays property tax. If you work for an employer, your employer pays property tax. If you go out to eat, the restaurant pays property tax. I suppose some federal and religious things may be exempt, but that is also the case with non-commuters. So a person who lives in the suburb but works and shops in the city will be paying most of their property taxes in the city, via their employer and the shopkeepers. It's taxation without representation. Perhaps they should also get a pro-rated vote. :-) It could be based on time spent in each location, or economic activity in each location, or simply 1 part for each kind of activity spent in each place.

intrasight 9y ago

There's more legacy costs (pensions) and there's more corruption.

kasey_junk 9y ago

They aren’t? In Chicago at least the opposite is mostly true.

pmorici 9y ago
That is only true for property tax which is slightly lower in the city than the suburbs. If you include Sales tax Chicago is higher.
- kasey_junk 9y ago
  Property taxes are fairly variable in the Chicagoland area, but there are many places where Chicago is not slightly less, it’s dramatically less. The sales tax is floored by the state sales tax which makes up more than half of the total. The Cook County minimum sales tax is 8% with lots of localities matching Chicago’s 11%. All told I imagine tax rate in the Chicagoland area largely depends on a whole equation of property value/tax & consumption. But I’d be shocked if Chicago was universally more expensive than its suburbs.
- selectodude 9y ago
  Chicago's share of the sales tax is 1.25 percent. It's really not any higher than anywhere else in Chicagoland.

davewritescode 9y ago

I wouldn’t say that’s a rule at all. In NYC there’s a city income tax but property tax is actually incredibly reasonable compared to the surrounding suburbs. Property taxes in the northeast US are absolutely insane.

Symbiote 9y ago

Tax rates in England are often lower in cities. Map: https://www.telegraph.co.uk/finance/personalfinance/tax/12062498/Mapped-do-you-live-in-a-high-council-tax-area.html https://www.telegraph.co.uk/finance/personalfinance/tax/1206...