Detroit’s rebirth as ‘America’s Great Comeback City’ hits roadblock.....

[Hermod]

The way to do it is through a tax reform. A tax reform that doesn't cut the size of the government's income but redistributes how it is collected. Teabaggers will be no help, their goal is to obstruct government, look what they are doing to their own party in Washington if you want proof.

How many "teabaggers" voted for the current taxation system in Detroit?

As far as the state is concerned, legislators from rural [[and poor) counties are reluctant to raise taxes on their constituents to pour down the "rathole" in Detroit.

[Hermod]

Michigan income taxes are [[as i recall) 4.8% flat rate on income after generous personal exemptions. If you are a millionaire baseball player or rock star, you only pay 4.8%. If, on the other hand, you have been frugal with your money and invested wisely, you pay "intangibles tax" of 3.5% over and above the 4.8% income tax on your corporate dividends.

[ABetterDetroit]

There isn't sales tax on groceries or rent in the U.S.

Quick question on this. The homestead property tax rate in Detroit is 68.44 mills as of 2013 and the non-homestead rate is 86.62 mills.* How is that not a tax on rent? Not a sales tax, more like a gouging in the fine print. The landlord will pass on the higher cost of the property tax to the tenant.

*
https://treas-secure.state.mi.us/pte...testimator.asp

[ABetterDetroit]

How many "teabaggers" voted for the current taxation system in Detroit?

As far as the state is concerned, legislators from rural [[and poor) counties are reluctant to raise taxes on their constituents to pour down the "rathole" in Detroit.

Do you own a home in Michigan?

If you do then you have been #%&*ed over by screwed up property taxes in the whole damn state as well. They use your hate against you, while your getting THOUSANDS of dollars lifted out of you wallet in taxes and NEVER to be seen capital gains on the value of your home they whisper in your ear "at least your not in the rat hole" and your dumb enough to feel good about it.

[hortonz]

I find this sort of post terribly frustrating and irritating.

My first few posts here were entirely original and focused on ideas like regional government for Detroit that could hardly be described as conservative or republican [[or democrat for that matter); subsequently I've posted links to stories from The Star [[not a conservative paper) and the National Post, among others.

I post stuff that I hope is either new or not discussed in a long time; and can stir debate [[hopefully thoughtful) on all sides. I freely confess to having been disappointed by some responses to many of my posts, which appeared knee-jerk and reactionary [[both left and right)

I am both non-partisan, and not narrowly ideological.

I support efficient governments that balance their budgets and personal freedoms, while having a strong preference for Canadian-style universal healthcare and believing that strong public pension plans to give everyone a decent retirement.

I don't see the world through a narrow myopic lense that must all be one way or the other.

And the National Post is not Fox news; its editorial slant leans right to be sure; but this is a story reproduced from the Bloomberg wire service and was on topic on Detroit.

I don't presume to tell residents of Detroit what is better or worse; but for those who lean progressive..........you're about to tell me Toronto is to the political right of Detroit? [[I'm laughing)............ and yes, our property taxes are lower..........its a reasonable topic to discuss and only a small and under-educated mind would suggest otherwise or seek to cast aspersions on another instead of discussing the topic at hand, and bringing facts to the argument.

Sigh.

My aim, fellow Canadian, was not to offend you but to point out that far too many neo-Cons north and south of the border use place like Detroit as an example of everything that's wrong with unions and liberalism. Do you think Toronto would have fared any better if the large financial institutions that made Toronto the center of Canadian finance deserted it for Calgary? What if most of the city's population had followed the firms and what was left was a bankrupt, destitute city full of people who didn't have the resources to leave for a better life. Do you think the editorial board of The National Post cares or wants to know what happens when an entire population becomes disposable, which is what happened to the auto workers in Detroit? Only if it proves to themselves that unions and big government are the problem and that free markets are the answer.

[ABetterDetroit]

If you google "Michigan property tax reform" you get we already had it. Lucky us.

http://www.tax-rates.org/taxtables/p...y-tax-by-state

[davewindsor]

By way of comparison; to a City obviously in a different place financially and growth wise..........below is the property tax payable for a $500,000Cdn home in Toronto [[City's calculator)
	Total Taxes: $3,615.04*	Of which: $1,015.00 goes to Education $2,587.33 goes to the City $12.72 goes to the Transit Expansion
	* Please note that this amount is the total tax amount on your home. A portion of this goes to fund the Province’s Education system. This is why your total taxes are made up of a City rate and an Education rate. Your 2014 City tax rate is 0.5174652%. Your 2014 Education tax rate is 0.203000%. Your 2014 Transit Expansion tax rate is 0.0025433%. Your 2014 Total tax rate is 0.7230085%.

You can't compare Toronto to Detroit. Toronto has 2.8m people, while Detroit has half a million.

Let's compare Detroit to a bordering city like Windsor where the property tax rate in Windsor is almost three times higher than Toronto.

The 2014 City tax rate in Windsor was 1.64% and education was 0.203% bringing it to 1.84% [[not 0.72% like in Toronto). http://www.citywindsor.ca/cityhall/T...Tax-Rates.aspx

So, on a $500,000 house in Windsor [[and there's lots of them in South Windsor--Gundy Park has multimillion dollar houses on tiny lots) the taxes were $9,232.03 in 2014 in Windsor vs. $3,615.04 in Toronto.

To top it off, mortgage interest on a $500,000 house is not tax deductible from your income taxes like in the US. So you get burned again.

Then, you pay about $1.20 more per gallon of gas in Ontario because of higher gas taxes [[which means all your consumer goods has to cost more to cover the higher transportation costs).

And in addition to the 13% sales tax in Ontario, there's also an ecotax on a lot of goods such as tires, electronics, etc. I bought a $12 recording device that ended up being $19 with sales tax and ecotax. A huge tax on big screen tvs. Buy a new car and there's often a gas guzzler tax. We're also forced to heavily subsidize environmentally friendly power generation like windmills and solar panels through higher hydro rates. It's a f'in ripoff living in Ontario with all our taxes. From a tax perspective, you're much better off living in the US if you're a high income earner. Granted, gun crime is a lot lower, but it still doesn't justify paying the higher taxes.

[mwilbert]

Michigan income taxes are [[as i recall) 4.8% flat rate on income after generous personal exemptions. If you are a millionaire baseball player or rock star, you only pay 4.8%. If, on the other hand, you have been frugal with your money and invested wisely, you pay "intangibles tax" of 3.5% over and above the 4.8% income tax on your corporate dividends.

I'm reasonably sure the intangibles tax has been gone for quite a while. I think it was phased out starting in 1995. The current flat tax rate is 4.25%.

[Hermod]

I'm reasonably sure the intangibles tax has been gone for quite a while. I think it was phased out starting in 1995. The current flat tax rate is 4.25%.

I did some research and you are right. I have just been cleaning out stuff in my storage room and reviewed the tax returns for my mother's estate in Michigan 1990-1995 where I was filing Michigan income and intangibles taxes on the estate. In the last twenty years it must have changed because only businesses are taxed on intangibles now [[stocks, bonds, receivables, cash on hand, etc). The intangibles tax on individuals used to be 3.5% of income or 1/10th of 1% on value [[whichever was greatest) for each line item.

[BankruptcyGuy]

Detroit's property taxes are ridiculously high. They are about 25% higher than Grosse Pointe, and twice as much as rural locations.

Detroit's "solution" to a declining tax base was to keep pushing the rates up. [[For the Canadians on the board, state law allows municipalities to set local taxes, for the most part.) This was not unique to Detroit; Ecorse, Inkster, River Rouge and Ypsilanti have similarly high rates.

http://www.michigan.gov/documents/ta...e_480472_7.pdf

Another problem [[also shared with other cities, although I can't point to any data) was that assessments [[which were also ridiculously high) were often left unchallenged. It provided a convenient political excuse [["we have a budget deficit because we can't collect our taxes"), which hid the real problem is that budgeting did not reflect the reductions in tax base that happened over time.

I call this the "Wiley Coyote" problem; he runs off the cliff, and doesn't realize it until he looked down. Detroit never wanted to look down.

I feel that both problems will likely be solved in the near future--the tax base downtown is certainly expanding.

[Wesley Mouch]

Much of the issue could be resolved if any one of the number of proposals to shrink that totally out sized infrastructure could be enacted without screams about white suburbanites looking to profit from the plantation...stealing jewels...etc. Huge swaths of the city need to be taken offline. Addressing that could go a long way to rightsizing the tax burden to the population.

Everyone and their mother wants to 'rightsize' the city's infrastructure. Fine idea. Not politcally possible.

The political resistance is city residents themselves, who seem to prefer complaining about underfunding and of income inequality rather than fixing the problem themselves.

Our tax-credit-welfare-program-driven out-sized government is the problem. It encourages the believe that lack of money is the problem.

[Hermod]

Everyone and their mother wants to 'rightsize' the city's infrastructure. Fine idea. Not politcally possible.

The political resistance is city residents themselves, who seem to prefer complaining about underfunding and of income inequality rather than fixing the problem themselves.

Our tax-credit-welfare-program-driven out-sized government is the problem. It encourages the believe that lack of money is the problem.

I agree. One thing the bankruptcy didn't do was to fire all the city employees and make them reapply for their jobs with a city ceiling on numbers and on salaries.

[ABetterDetroit]

I agree. One thing the bankruptcy didn't do was to fire all the city employees and make them reapply for their jobs with a city ceiling on numbers and on salaries.

Right.... because that is always what happens in bankruptcy courts.

[FlyOnTheWall]

As far as the state is concerned, legislators from rural [[and poor) counties are reluctant to raise taxes on their constituents to pour down the "rathole" in Detroit.

[[Music playing in the background)
AMEN! Amen! amen! Amen! Amen!

[beachboy]

Detroit's "solution" to a declining tax base was to keep pushing the rates up. [...] I feel that both problems will likely be solved in the near future--the tax base downtown is certainly expanding.

Just curious ...what do you think will happen to Detroit when the next big
near-end-of-decade recession hits? Are the new businesses and home buy-
ers financially big and strong enough to weather a significant increase in
unemployment and consequently reduced purchasing power?

Recall that major recessions have occurred near the end of most decades
for the past 120 years ...

[Hermod]

Right.... because that is always what happens in bankruptcy courts.

Not in court, but the interim manager had the power to do it while he was running the city [[and doing away with the clownsil members cars and entourages..

[softailrider]

Detroit's property taxes are ridiculously high. They are about 25% higher than Grosse Pointe, and twice as much as rural locations.

Detroit's "solution" to a declining tax base was to keep pushing the rates up. [[For the Canadians on the board, state law allows municipalities to set local taxes, for the most part.) This was not unique to Detroit; Ecorse, Inkster, River Rouge and Ypsilanti have similarly high rates.

http://www.michigan.gov/documents/ta...e_480472_7.pdf

Another problem [[also shared with other cities, although I can't point to any data) was that assessments [[which were also ridiculously high) were often left unchallenged. It provided a convenient political excuse [["we have a budget deficit because we can't collect our taxes"), which hid the real problem is that budgeting did not reflect the reductions in tax base that happened over time.

I call this the "Wiley Coyote" problem; he runs off the cliff, and doesn't realize it until he looked down. Detroit never wanted to look down.

I feel that both problems will likely be solved in the near future--the tax base downtown is certainly expanding.

Regarding that last paragraph, I agree that downtown and midtown are expanding but then there's the remaining 95% of the city.

[313WX]

Just curious ...what do you think will happen to Detroit when the next big
near-end-of-decade recession hits? Are the new businesses and home buy-
ers financially big and strong enough to weather a significant increase in
unemployment and consequently reduced purchasing power?

Recall that major recessions have occurred near the end of most decades
for the past 120 years ...

Actually, many indications suggest that the next recession [[which WILL be worse than the last) could hit as soon as this year.

All of the key economic indicators are repeating everything that took place in late 2007/early 2008 right now.

Yeah, the COD and GM/ChryslerFord may be on a somewhat more stable financial footing thanks to being relieved of their legacy debts via. bankruptcy proceedings, but let's not pretend they won't be hit hard like always have been in the past by the huge decline in demand once people start fearing for their jobs again [[as mass layoffs kick back into gear) and thus put off new car purchases again, as the state of Michigan has done very little, if anything, to diversify our economy beyond the Auto Industry.

[Wesley Mouch]

...as the state of Michigan has done very little, if anything, to diversify our economy beyond the Auto Industry.

Its not the state's job to diversify our economy, although RTW and other progressive reforms should help build the non-auto segment.

[313WX]

Its not the state's job to diversify our economy...

It is the government's job to build an environment that's attractive to other industries [[and the people those industries would like to hire).

Michigan has not done this successfully, as becoming the Mississippi of the north obviously hasn't worked. It shows with our urban core in shambles, our struggle to maintain our road infrastructure, the lack of other dedicate means of transit aside from the automobile and our unfriendly social policies such as our continued fight against gay rights.

[BankruptcyGuy]

Just curious ...what do you think will happen to Detroit when the next big
near-end-of-decade recession hits? Are the new businesses and home buy-
ers financially big and strong enough to weather a significant increase in
unemployment and consequently reduced purchasing power?

Recall that major recessions have occurred near the end of most decades
for the past 120 years ...

Great question. I think the answer is that we're more diverse than we used to be and less diverse than we need to be. Many, many cities are focused on one or a few industries.

Also, the answer to your question depends on whether you mean downtown Detroit, the City of Detroit proper, or the Detroit metro area. Downtown has diversified over the last five years, without a doubt.

It also depends on what causes the recession: finance? oil? something else?

[iheartthed]

Great question. I think the answer is that we're more diverse than we used to be and less diverse than we need to be. Many, many cities are focused on one or a few industries.

Many cities are focused on a single industry for a finite amount of time. I think Detroit is unusual in that it's been singularly focused on the auto industry for a century now. I can't think of another major city in the world that is still doing the same thing today that it was 100 years ago.

The San Francisco Bay Area is probably just as invested in technology companies as Detroit is to automotive, but that is not what the San Francisco Bay Area was doing a half century ago. Likewise, New York, which today has finance as its primary industry, had textiles as the primary industry just 40 years ago. And since the financial crisis the New York economy has depended on finance less. Downtown Detroit probably depends a lot less on the auto-industry than other areas of Metro Detroit, however, I don't get the sense that Metro Detroit's economy has had any meaningful transition away from automobile manufacturing.

[313WX]

As a FYI, the biggest clients of the tech, law and finance firms in downtown Detroit are the Big 3 automakers.

And the health care industry of course depends heavily on the Cadillac insurance benefits [[no pun intended) the UAW and salaried Big 3 workers get...

Also, the biggest difference between the Finance industry in NYC, the tech industry in San Francisco and Detroit's auto industry is that neither NYC or San Francisco's main industries are nearly as cyclical as the auto industry.

Even in recession, people will always be spending/saving money and will always need other people to assist them with managing their money. Just as well, in the 21st century, people must have the latest and greatest technology to remain competitive in our society.

Purchasing a new or CPO Automobile, on the other hand, is something people can put off forever if they're struggling to pay for their other necessities, especially if they live in a region where there are other means for transportation besides a car.

[iheartthed]

Also, the biggest difference between the Finance industry in NYC, the tech industry in San Francisco and Detroit's auto industry is that neither NYC or San Francisco's main industries are nearly as cyclical as the auto industry.

All industries are cyclical. The San Francisco Bay Area went through a painful period in the dot com bust of the early 00s that seems like a distant memory now.

But my point was that cities find new things to do. Detroit is an oddball because it hasn't.

[313WX]

All industries are cyclical. The San Francisco Bay Area went through a painful period in the dot com bust of the early 00s that seems like a distant memory now.

San Francisco was never hit nearly as hard as Detroit and Michigan are when the Auto Industry cycles downward. Not even close actually.

As the quotes goes, "When the country catches a cold, Detroit catches the flu."