Benefits of Middle‐Income Households to the Central City
Roberto G. Quercia + George C. Galster
Professors, Co-Authors of Middle Income Housing Policy Report (2010)
Property taxes make up the largest source of local government revenue for most cities. Cities made up of a few very wealthy residents and many poor residents face difficult choices: imposing high property tax rates may push their most affluent constituents into lower-tax suburbs, but allowing the quality of public services to deteriorate also threatens stability. A happy medium is found when more middle-income residents move into a jurisdiction, renting or purchasing homes, as cities can collect more property tax revenues from a broader cross-section of households. Published in 2010 by Roberto G. Quercia (Assistant Professor of City and Regional Planning at the University of North Carolina , Chapel Hill) and George C. Galster (Professor of Urban Affairs at Wayne State University in Detroit, Michigan), their research reveals two primary benefits in bringing back, or retaining, middle‐income households in the central city: (1) improved fiscal conditions caused by increasing the tax base and (2) decreased socioeconomic isolation of central‐city low‐income households. Middle-class residents also hit the sweet spot for consumer spending: they have more disposable income to spend on groceries, restaurants, movies, and dry cleaners – all items that are consumed locally, greatly boosting local economic activity and further job creation.