Do cities actually subsidize suburban infrastructure? I am skeptical but I don’t know all of the details on how people come to that conclusion. What happens if the economy is more spread out? Also a lot of the people that own and run companies that give a city its tax base live in the suburban areas. It might even be reasonable to say that they are the ones subsidizing the city and not the other way. How do you think about these angles?
It's not like cities give their money to every suburban mom. It's like this:
Suburbs cannot function without freeways, but the presence of freeways harm the property values of city neighborhoods not suburban ones.
SFH simply produces less tax revenue than an entire apartment building by land, so any statewide social services (education, freeway maintenance...) is paid proportionately more by cities than by SFH.
There are reports[0] of cities reporting that their SFH actually loses them money due to the fact they simply don't pay their fair share of taxes vs all the infrastructure they use.
It's not like the government is going "oh boy, SFH mom, here's 500$ plucked straight from some inner city mom's payroll taxes". But in the broader system of supporting many people's living styles through greater societal infrastructure, less-dense housing like suburbs do not put out as much as they take.
This feels more like a planning/governance problem than an innate property.
I've lived in SFH on the edge of a major city and on the edge of farmland and there's a wide gulf in the level of infrastructure that they had access to, and also a significant difference in the amount of tax that was owed. It's hard for me to believe that those two very different scenarios are functionally equivalent.
Moreover, vast swathes of the city I used to live next to, despite having significantly higher tax rates, were ultimately paying a lot less in tax due to severely depressed income levels and property values. There might have been a higher mean revenue per acre in the city as a whole, but there also was a much higher variance.
It is simple enough to break it down by area. If a city has N people per city block, but a suburb has 1/N people per city block you lose out on all economies of scale. Each individual dwelling requires water, electrical, gas, roads, etc. More efficient to amortize that across more people per unit of infrastructure. A road is always going up cost $/foot. Best if that road is being used by 100k people per day instead of 10.
Yes but that’s a cost of infrastructure angle, not an argument for who is subsidizing whom. I’m saying the fact that the economy is unnecessarily focused into cities makes suburbs look worse in tax revenue but it doesn’t have to be that way.
You cannot ignore infrastructure costs and then ask who is subsidizing whom. Infrastructure is an enormous governmental expense. Not just the initial installation, but the ongoing maintenance as well. Economies of scale are always going to result in the higher density installation being more cost effective.
Suburbs in general are losers from a government operations perspective.
They work because they are mostly newish. Core functions like keeping roads functional rely on state and federal aid.
Many older suburbs are more in decline now. Especially in 2nd/3rd tier metro areas. It’s just less obvious than the inner city or rural areas. They need growth to thrive. Once they fill out, population ages out, schools decline, and a vicious cycle starts.
Money policy has kept that going by organizing the economy around real estate. I don’t think it’s sustainable to continually recapitalize single family homes.
Suburban infrastructure is usually much more sparse, of lower quality and a lot of it is shifted to the local business/homeowner.
As an example - city water vs Water wells & Septic tank/fields. Gravel roads without sidewalks, etc.
So it's not 100% evident that cities subsidize rural counties. Cities do provide the larger tax base for states, which probably subsidize more rural counties through incentives tied to certain rural activities, but making a blanket statement is probably not accurate.
Towns and counties produce revenue from property tax and sales tax.
The infrastructure relies on state support, which is usually from Federal funds and personal income tax. That aid is a transfer payment from cities to localities. Bigger states, bigger transfer. Also, the federal funds are sourced from bigger states to the smaller states.
Thats one of the amazing things about the US. The wealth of the coasts ensured that the smaller states weren’t left behind.
