Comparing Nashville's property taxes
Nashville has a lower effective property tax rate than other major cities, a recent study says.
- Effective tax rate is a homeowner's tax bill as a percentage of a property's value.
- The effective tax rate for Nashville was 0.81% in 2022 compared to the national average of 1.32%, according to a study by the nonprofit Lincoln Institute of Land Policy and the Minnesota Center for Fiscal Excellence.
Why it matters: Property taxes "are one of the largest sources of revenue for local governments," per the Urban Institute, generating 30% of local revenue — or $581 billion — in 2020.
- In Nashville, property taxes represent over 51% of Metro's revenue, according to an analysis by the Tennessean.
Between the lines: The fact that some cities depend more heavily on property tax income than others has led to a counterintuitive situation in which the cities with the highest effective property tax rates — Detroit and Newark, New Jersey — are among the poorest.
- Wealthy cities like Salt Lake City, Denver and Boston reap revenue from other sources, and thus have the lowest effective rates.
The issue of how to handle property taxes in Nashville has provided a stark point of contrast between mayoral candidates Alice Rolli and Freddie O'Connell.
State of play: There's increasing chatter among Metro stakeholders that another property tax hike is on the horizon, especially since exploding inflation has made running the government more expensive.
- Mayor John Cooper and the Metro Council last raised property taxes by 34% in 2020.
- "Basic math tells you the rate should be adjusted in the coming years," outgoing Metro Councilmember Bob Mendes, who was a vocal proponent of the 2020 increase, tells Axios. "Just as prices change for everything from milk to cars to new construction, property taxes should be expected to change, too."
Zoom in: Rolli has repeatedly pledged on the campaign trail not to raise property taxes. She says she would govern with a more fiscally conservative approach while taking advantage of the increased tax revenue from Nashville's growth.
- O'Connell rejected such a pledge.
- "I don't think it's responsible to make pledges about either debt or revenue, particularly on the property tax piece," he said last month at a mayoral forum hosted by the Nashville Area Chamber of Commerce.
- "Because we know from the work of the business community that we can be responsible and still make sure that government is growing in a way that allows investments to continue sustainably."
What they're saying: Rolli has been especially critical of the city's rising debt. She says the issue comes down to a philosophy about how to manage the city's finances. "Sometimes that means making decisions about what is most important to fund: What are the must-haves, and what are nice to have?" Rolli said at the chamber's forum.
Go deeper: To see where individual cities rank, see page 19 of the report.
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