Why Doesn't Detroit Levy a Local Sales Tax?

[DetroitHabitater]

With Income tax and Property tax already insane, a sales tax is a horrible idea for residents.

[jj84]

With Income tax and Property tax already insane, a sales tax is a horrible idea for residents.

Michigan in general needs to get away from the property tax structure that it has it drives people away [[sprawl) and keeps property values low.

A higher sales tax that locals can levy is a logical step allowing locals to charge people that come to the City to Shop and Eat. When visitors visits a city they use Roads, Police, Fire, Parks, DPS, and Planning Services even thought they don't realize it. Sales taxes are use taxes, you don't pay it if you don't use it, and it doesn't stick the residents of a city with the burden that people visiting their city cause.

I would propose that local City's [[not Townships, even charter -- become a City if you want this benefit) could levy up to 1.5% in sales tax, and the local County could levy up to 1.0%. Intelligent people are not going to drive cross town to save 2.5% as all areas would still have the base state sales tax.

For big purchase items you would do what Colorado/Texas/CA does for car or large purchases, you pay the tax at your address.

If city's did do this, you would put a rider that the maximum total levy could be 15 mills, including of all special levy, Police/Public Safety/Fire/Pension/etc. Another thing that that should be added to sales tax is tickets, Movie/Sports etc, then take off sales tax for the first $30 of clothing.

Michigan Tax Structure is broke and needs a massive overhaul. This isn't just a Detroit issue it is a state issue, done right this could be a huge benefit for the residents of Detroit and get them out from the insane property tax burden most live under.

[aj3647]

Like most cities with a local sales tax, you will be receiving your tax bill in the mail if you attempt avoid the additional city taxes not added at the suburban dealership.

This would only apply to those who live in Detroit. Which further illustrates how dumb this idea is. The people you're really wringing extra money out of are not suburbanites, but Detroiters.

Exactly. Michigan legislature has forbid local sales taxes in lieu of revenue sharing. Bottom line is that you will need to get the State to permit this. With the number of Tea Partiers in both the house and senate, this is very unlikely.

Tea Partiers like sales taxes, because they are a regressive form of taxation. They see sales taxes as a preferred alternative to income and property taxes. Tea Party darling Herman Cain ran on a platform of drastically reducing the federal income tax rate and replacing that revenue by levying a 9% national sales tax.

Income taxes are a progressive from of taxation. By replacing income taxes with sales taxes, you shift the tax burden from the rich to the poor. Which is ultimately what conservatives want. They aren't anti-tax, they're anti-progressive tax. After all, someone has to pay for our giant military apparatus and overseas military adventurism, and conservatives would rather that poor people be wrung for every cent possible so that rich people don't have to pay a dime.

[Hermod]

It is relevant if you want to keep the bars and hotels full of conventioneers and those who are attending events. Besides the state will not allow a local tax. How these got through though may be able to answer some questions about who, why, or how.

Generally there is little resistance to "tourist taxes" on hotels, restaurants, and rental cars particularly if the revenue from these taxes is targeted toward some governmental goal. After all, the folks paying these taxes don't vote in the jurisdiction.

[MikeyinBrooklyn]

By replacing income taxes with sales taxes, you shift the tax burden from the rich to the poor.

FOILED! Yes, you've discovered my plot to keep the poor poor! Oh, wait. The war on poverty is already doing that for me... Seriously dude, just because you're paranoid doesn't mean that we're out to get you.

Several things not mentioned about sales taxes: in most scenarios, neither food nor rent are taxed, meaning the 2 biggest expenditures for the working poor are not taxed. It is easier to collect than either property or income taxes, leading to a significantly higher compliance rate than the other forms of taxation. It's proceed projections can be tracked with accuracy every month, allowing governments to adjust their spending throughout the year to avoid red ink at the end of the year. Lastly, it does not require the rank and file citizen to file paperwork, itemize expenditures, etc. Government is not making any judgments, unlike income and property taxes, where the state is determining what kind of citizen you are, which classifications qualify/disqualify you from assessments/breaks etc. You just pay your rate at the register for the items that are taxable. Also note: nothing paid for with food stamps is eligible to be taxed under federal law.

[wolverine]

South Florida has a plethora of multimillion dollar yachts which are docked here while the owners use them for Caribbean cruises and for charter. These yachts are all registered in foreign countries and fly the flags of various Caribbean countries or the Marshall Islands [[in the Pacific). The only stricture is that the yacht has to leave US waters at least two weeks a year [[big deal). If the yacht is sold, the transaction must take place outside the US.

A freind was a captain on a yacht that was being sold. I helped him take it to the Bahamas. The buyer,his friend, his broker, and a guy from a bank flew out to meet us. A Bahamanian lawyer met them at the airport and drove them to the marina. They did the transaction [[the captain had POA from the owners) and took over the yacht. The lawyer drove the bank guy, the captain, and myself back to the airport and we flew back to Florida. The buyer, friend, and broker took the yacht back to Florida. Florida was out $12,000 in sales taxes.

Exactly. The rich will always try to stay rich and there certainly are ways to get through loopholes. But for most of us, we'll just do things the right way and accept this as part of life.

[rex]

joking right? Detroiters already pay too much in taxes

[finster]

This won't be happening any time soon. Detroit already has a reputation for having exhorbitant taxes for too little of services. Even if it was technically possible the public outcry from Detroiters and outsiders would be horrendous.

The political backlash and mockery would come from all over the country too.

[Hermod]

Exactly. The rich will always try to stay rich and there certainly are ways to get through loopholes. But for most of us, we'll just do things the right way and accept this as part of life.

The not-so-rich do it as well. Northern Virginia residents purchase their packaged alcohol in DC where the whiskey tax is low. Virginia ABC often has spotters at large DC liquor stores and if they see a car with Virginia plates loading up a lot of cases, they will have it stopped when it enters Virginia for possession of alcohol with taxes unpaid in Virginia. Folks in Virginia often register their cars in Maryland to avoid Virginia personal property taxes on their autos.

[iheartthed]

This won't be happening any time soon. Detroit already has a reputation for having exhorbitant taxes for too little of services. Even if it was technically possible the public outcry from Detroiters and outsiders would be horrendous.

The political backlash and mockery would come from all over the country too.

It's not like we're talking revolutionary stuff here, this is something that many [[most?) states already allow. New York, Los Angeles [[county), Chicago and plenty of other major cities all levy a local sales tax on top of the state sales tax. Detroit is actually the odd ball by not being allowed to levy a sales tax.

[Honky Tonk]

It's not like we're talking revolutionary stuff here, this is something that many [[most?) states already allow. New York, Los Angeles [[county), Chicago and plenty of other major cities all levy a local sales tax on top of the state sales tax. Detroit is actually the odd ball by not being allowed to levy a sales tax.

QUESTION: What's the difference between the Cities you've mentioned and Detroit? ANSWER: The mentioned Cities are all FUNCTIONAL! People move to and live in the mentioned Cities no matter what it costs because things are going on and you can make a living there. Detroit is JUST going through bankruptcy and just starting to come around. It still has a ways to go to become viable. Why would you want to make it even more costly to move to and live here? Why would I want to? What Detroit needs is better monetary management of the resources it currently has. Once it reaches it's goal of truly becoming a place where people actually want to live, [[I'm not talking about a few Urban Pioneers in Delta City), then you raise taxes. Doing it @ this time, IMO, would be shooting yourself in the foot.

[jaytheory]

While a sales tax might be seen as reliable way to generate revenue from tourism, there are several problems.

- A sales tax is regressive and disproportionately affects our poor. Why? A local sales tax might pinch the pocketbooks of those people who spend their extra income on a ballgame coming in from the suburbs, but it will effect me, my neighbors, and every Detroiter on every purchase from groceries to gasoline.

- Detroit retailers already have a difficult time with city residents fleeing to the suburbs for better goods and services. The sales tax would only make a severely bad problem only worse.

But the idea of having surrounding areas pick up their fair share of social services, the homeless, the mentally ill is find by me and I'm in support of finding ways to do it. I don't think a sales tax would be effective in that.

What would, IMHO, be effective would be to regionalize services so that we would have a greater pool of resources working toward the problem. But, of course, there are two hurdles: [[1) selling the region on picking up some of the tab, [[2) selling Detroit politicians on giving up majority control over the contracts.

We are making progress on both fronts, but far and away it's the Detroit politicians who are harder to get buy-in from.

lets make a restaurant/bar tax then. other cities have those. or only implement in the CBD/greater Downtown

[iheartthed]

QUESTION: What's the difference between the Cities you've mentioned and Detroit? ANSWER: The mentioned Cities are all FUNCTIONAL! People move to and live in the mentioned Cities no matter what it costs because things are going on and you can make a living there. Detroit is JUST going through bankruptcy and just starting to come around. It still has a ways to go to become viable. Why would you want to make it even more costly to move to and live here? Why would I want to? What Detroit needs is better monetary management of the resources it currently has. Once it reaches it's goal of truly becoming a place where people actually want to live, [[I'm not talking about a few Urban Pioneers in Delta City), then you raise taxes. Doing it @ this time, IMO, would be shooting yourself in the foot.

And doing the exact opposite of what functional cities do is totally the right way to get Detroit back on the right trajectory. Understood.

[Honky Tonk]

And doing the exact opposite of what functional cities do is totally the right way to get Detroit back on the right trajectory. Understood.

Hey, go for it, you never know......

[rb336]

I don't think a sales tax is a wise idea. Those cities that have such a tax are tourist destinations and/or are situated in such a way that it isn't convenient to leave the city to shop. I know a lot of people in Chicago. None of them shop in the city for anything but groceries. They go to the suburban malls or even the Michigan City outlet center. IN LA's case, I think it is a county-wide tax.

As far as bar/hotel taxes, Detroit has those and the funds are directed to development [[this is where the hockey arena funding originates - from a tax approved by the people specifically for such developments)

[EastsideAl]

FOILED! Yes, you've discovered my plot to keep the poor poor! Oh, wait. The war on poverty is already doing that for me... Seriously dude, just because you're paranoid doesn't mean that we're out to get you.

Several things not mentioned about sales taxes: in most scenarios, neither food nor rent are taxed, meaning the 2 biggest expenditures for the working poor are not taxed. It is easier to collect than either property or income taxes, leading to a significantly higher compliance rate than the other forms of taxation. It's proceed projections can be tracked with accuracy every month, allowing governments to adjust their spending throughout the year to avoid red ink at the end of the year. Lastly, it does not require the rank and file citizen to file paperwork, itemize expenditures, etc. Government is not making any judgments, unlike income and property taxes, where the state is determining what kind of citizen you are, which classifications qualify/disqualify you from assessments/breaks etc. You just pay your rate at the register for the items that are taxable. Also note: nothing paid for with food stamps is eligible to be taxed under federal law.

None of which makes sales taxes any less regressive. Short of taxing lower incomes at a higher rate [[also effectively done in the U.S.) sales taxes are about the most regressive form of taxation there is

[iheartthed]

None of which makes sales taxes any less regressive. Short of taxing lower incomes at a higher rate [[also effectively done in the U.S.) sales taxes are about the most regressive form of taxation there is

But pretty much any tax system will disproportionately affect people at the lower end of the pay scale. I'm not sure that's a good reason to not have one...

[MikeyinBrooklyn]

Short of taxing lower incomes at a higher rate

Seriously, I think this would be a worthwhile experiment: the more you earn, the more you get to keep. I bet the working poor [[the non-working poor would be unaffected, of course) would seek out more hours, second jobs, etc, to get to a lower rate threshold.

[jj84]

I don't think a sales tax is a wise idea. Those cities that have such a tax are tourist destinations and/or are situated in such a way that it isn't convenient to leave the city to shop. I know a lot of people in Chicago. None of them shop in the city for anything but groceries. They go to the suburban malls or even the Michigan City outlet center. IN LA's case, I think it is a county-wide tax.

That makes no sense, if they are doing it to avoid tax. Tax in Chicago is 9.25%, Tax in the Cook County part of Schaumburg is 9.00% [[where Woodfield, Ikea are at), Dupage CO is 8% but there are just basic stores there. Rosemont where the new Outlets just opened is also 9.25%

Michigan City is 7%, It is 65 miles from Chicago to Michigan City [[130 round trip), unless you're buying over $1,300 it isn't worth the drive, and that isn't taking into account wear on your vehicle or time, or if you use the Skyway to avoid traffic which will be about $4.00 in tolls [[each way) assuming you have an I-pass and get discounted tolls.

Now if they go up to Pleasant Prairie in Wisconsin the tax rate is 5.5% and is also about 65 miles away, you'll pay tolls going this way which are also about $4.00 with an Ipass [[each way) So here you'll only need to spend about $1000 to make it worth while of the drive, then also not taking wear and tear on the car.

[Lily]

Whether or not Detroit could levy a city sales tax, imho it would be a terrible move . Why do anything to deter more business from taking place in Detroit?while many businesses have left Detroit, others have fought their battles and remained. Doesn't matter if the items to be purchased are clothing, furniture, electronics-building supplies or whatever. Too many times it comes down to one thing and that is money. 1% or 1-1/2 % city sales tax adds up. Just my thought on the matter. Lily

[Goose]

I know of people that like the idea of living downtown or in other areas of Detroit such as Indian Village or Palmer Park but will NEVER move to Detroit because of the income tax.

Sounds easy, but why not drop the income tax for residents, thus increasing demand for housing, thus increasing home values, and in the long run, increasing property tax collected?

Lowering tax rates to collect more taxes, crazy idea.

[jj84]

I know of people that like the idea of living downtown or in other areas of Detroit such as Indian Village or Palmer Park but will NEVER move to Detroit because of the income tax.

Sounds easy, but why not drop the income tax for residents, thus increasing demand for housing, thus increasing home values, and in the long run, increasing property tax collected?

Lowering tax rates to collect more taxes, crazy idea.

If Detroit drops the income tax it would be a huge benefit for people to move in. Actually my idea is that if you pay Detroit City Tax is you could apply your city income tax as a credit on your homestead property tax bill. The income tax you pay would be a credit on your property taxes. If Pay $5,000 a year in property taxes but pay $2,500 in city tax you'd only pay $2,500 in property tax. Economically for most it doesn't make sense to move into Detroit.

[poobert]

How about all liquor store sales?

What will always amaze me most about Michigan and Metro Detroit is the lack of creativity. We can never do anything new because we've never done it before.

[professorscott]

How about all liquor store sales?

What will always amaze me most about Michigan and Metro Detroit is the lack of creativity. We can never do anything new because we've never done it before.

I have no problem with "sin taxes"; while you're at it, tax prostitution and all of the drugs that we laughably claim to prohibit. But any change in the tax structure requires a constitutional amendment, or at least a lot of legal eagles think it does. In any state it is at least moderately difficult to amend the state constitution.

Our constitution is our problem, and we haven't convened a constitutional convention in a long time. The combination of the idiotic "home rule" provision, coupled with a nearly flat prohibition on the way cities in the rest of the world raise money to pay for stuff, just about mandates that Michigan is comprised of a bunch of broke-ass fiefdoms, struggling to retain a false sense of power and control.

Once in a while we break through in spite of it: Metro Parks, the Cobo authority, the fledgling RTA. But it would be a lot easier if we didn't live in a jail whose rules were written by the inmates.

[royce]

A "sales-tax free" zone is what Detroit needs, not a local sales taxes. Detroit should ask the legislature to put on the ballot a proposal that would allow Detroit to be exempt from having to pay a sales tax for 10 years. The argument would be that the suburbs have an unfair advantage when it comes to retail activity. Eliminating the state sales tax in Detroit would balance things out and promote economic activity since businesses not in Detroit would be encouraged to get a foot hold in Detroit to take advantage of said situation. This would also encourage Detroiters to shop more in the city. A win-win for Detroit, right?