Detroit City Income Tax

[bartock]

I think the city should do some studies. The first survey should assess whether people who work in Detroit and pay 1.25% would consider living inthe city if their tax rate would stay the same.

The second survey should ask people who live outside the city if a reduction in the resident tax rate would entice them to move to Detroit.

The bottom line is that if the studies showed that a lower resident tax rate would bring people into the city, the city's revenues might not change because more people would be contributing, albeit at a lesser rate. The city gets the same revenue in its coffers and a higher population. A real win-win.

I'm guessing the problem with that would be the "taxation without representation problem." Right now, I'm paying half a resident's tax because, in theory, I'm not getting the full benefit of city services [[snicker). The taxation without representation camp would have a much better argument if the numbers were the same, and I wonder if it wouldn't be illegal.

[BrushStart]

I'm guessing the problem with that would be the "taxation without representation problem." Right now, I'm paying half a resident's tax because, in theory, I'm not getting the full benefit of city services [[snicker). The taxation without representation camp would have a much better argument if the numbers were the same, and I wonder if it wouldn't be illegal.

I see what you're saying, but for the sake of continuing the discussion, Detroit could study the effect of making the resident tax rate 1% and the non-resident tax rate .5%, that way it would still be half, but lower for both.

The basis of my argument is this; suppose Detroit had a tax rate of 10% for residents [[an extreme example), very few people would live in the city considering the alternatives. Now, imagine the tax rate is 5%, more people would be inclined to live in Detroit than at 10%, but less than at 2.5%. If you had the data and graphed it, there would be an intersection point that showed the best possible rate.

At 2.5%, there are people willing to live in the city, but the rate seems to be arbitrarily picked rather than based on calculation. The point is, Detroit might be able to lower its resident tax rate to say 1.21357% and it would still collect the same revenue it does now because more people would be willing to live in the city and pay that lower rate than the 2.5% currently levied. There needs to be some research done. I don't think the current tax structure is efficient. It seems arbitrary.

[Hermod]

I'm guessing the problem with that would be the "taxation without representation problem." Right now, I'm paying half a resident's tax because, in theory, I'm not getting the full benefit of city services [[snicker). The taxation without representation camp would have a much better argument if the numbers were the same, and I wonder if it wouldn't be illegal.

Unless it is illegal under a state constitution or state law, a city, town, village, county, or township can impose a tax on income earned in the entity. it could be a two-tiered tax with a lower rate for non-residents or it could be a uniform rate. It could actually be a higher "effective" rate for non-residents by giving residents a "homestead exemption"..

What restrains an entity from unbridled greed and exploitation of non-residents is the real possibility that the non-resident employees may band together and coerce their employer to un-ass the jurisdiction.