Friday, June 4, 2004

"Cool" Cities?

Amongst all the humorous banter about how government can make a city cool (an oxymoron if we've every heard one), a pollster released the results of a survey of college students this week. They were asked what makes a city cool. It wasn't nifty bars or government-funded entertainment district studies, or whoppingly expensive light rail, or gigantic convention centers - it was pretty simple: jobs. Good jobs.

However, as bureaucrats and politicians do, they ignore the fundamental conditions that are necessary for the creation of good jobs. That solution involves fewer bureaucrats and politicians, so that one's out of the question.

Of the respondents that are actually going to stay in Michigan after college, 12% want to move to the Detroit area and 8% want to move to the Grand Rapids area. Notice we say "area." We did a little analysis on the tax rate in Grand Rapids city and came to an interesting conclusion.

The city of Grand Rapids currently has a property tax millage rate of 26.6998 mills, which means that for every $1,000 of taxable value of a home, the owner pays $26.69. According to the US Census Bureau, the median home value in Grand Rapids is $91,400, which means that the owner of the median home in the city pays about $1,220 in property tax per year. The GR kleptocrats love to point to the fact that Grand Rapids has one of the lowest millage rates in the county. They're right... but there's a catch.

Grand Rapids residents have the privilege of paying a city income tax! The median household income in the city is about $37,000 and the average household is 2.57 people. For our purposes, we'll make it three people. That means the average household is paying about $451 in additional city income taxes. If we translated that into mills for a $91,400 home, it would mean an additional ten mills, and suddenly we have an effective millage rate of 37.7 mills! That's the dirty secret. Now suddenly the tax burden in Grand Rapids is higher than in the Northview, Forest Hills, Caledonia, Kentwood areas... and the list goes on. About the only municipality with a tax rate higher than in the city is for residents of East Grand Rapids who are also in the East Grand Rapids schools district.

So, back to cool cities. Instead of suggesting that taxes be lowered to attract those who are affected most by high taxes - the middle and upper classes - they want to spend more taxes on determining what's cool. Bureaucrats are much better at determining what's cool than the average folks who spend their money they way they want to. Sure.

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