Detroit City Income Tax

[DanFromDetroit]

..but they are going to quit their jobs because they need to pay 2.5% tax to the city?

My point was that it doesn't take much motivation to push people to look for jobs in other regions. A plethora of [[mostly) suburbanites that all of a sudden are faced with a reduction in pay & the lack of benefits from that cost and I wouldn't be surprised if some look elsewhere. I've often heard from the Detroit ex-pat's [[myself included) about the "last straw" effect. City tax is one more thing that isn't going to help attract talent to the region. Instead the tax will drive it away & those that are left may not be rightly qualified for the vacant positions.

[iheartthed]

The city's personal income tax made more sense when a much larger proportion of the region's jobs were located in the city, since at the time it incentivised being a resident of the city if you worked there. According to a Freep editorial from last week, Detroit was the location for 40% of the region's jobs as recently as 1970, but that is down to 13% today [[http://www.freep.com/article/2010071...-for-all-of-us).

For the sake of discussion, I personally would advocate either 1) making the resident and non-resident rate the same, or 2) eliminating both. But I also don't think that this tax is a major deterrent for people who are choosing between the city and suburbs. It's probably more like the cherry on top of the icing on the cake.

If the city were to eliminate the personal income tax, I think it should be done with an agreement from the state to make Detroit, or areas within it, some sort of sales tax free zone. But I stress that the income tax ain't the most pressing issue in Detroit right now, IMO.

New York City taxes personal income for residents at an even higher rate than Detroit, and the rate cascades proportional to income, but there is no tax for non-residents. People are going to choose to live in the city for a lifestyle that the suburbs cannot offer. That's what Detroit needs to understand.

[ndavies]

My point was that it doesn't take much motivation to push people to look for jobs in other regions. A plethora of [[mostly) suburbanites that all of a sudden are faced with a reduction in pay & the lack of benefits from that cost and I wouldn't be surprised if some look elsewhere. I've often heard from the Detroit ex-pat's [[myself included) about the "last straw" effect. City tax is one more thing that isn't going to help attract talent to the region. Instead the tax will drive it away & those that are left may not be rightly qualified for the vacant positions.

Part of the problem is, You lose some of your best people when things like this happen. The people who are most able to change jobs are the highest performers. The people with the most incentive to leave are the people with the higher salaries. High performers with high salaries have the most to gain by searching for a new job.

Just as the buyouts at the big three made high performers flee for greener pastures, so do tax hikes.

[jackie5275]

My point was that it doesn't take much motivation to push people to look for jobs in other regions. A plethora of [[mostly) suburbanites that all of a sudden are faced with a reduction in pay & the lack of benefits from that cost and I wouldn't be surprised if some look elsewhere. I've often heard from the Detroit ex-pat's [[myself included) about the "last straw" effect. City tax is one more thing that isn't going to help attract talent to the region. Instead the tax will drive it away & those that are left may not be rightly qualified for the vacant positions.

I think there is some legitimacy in this. When I first started working for Wayne County, I was located in western Wayne. I had a colleague who turned down several promotions because she didn't want to work downtown and pay the City income tax. The way she viewed it, the city tax would cancel out her promotional pay increase. Then toss parking into the equation, and she would be facing a pay decrease.

[lo_to_d]

One of the most ridiculous parts of the city income tax is that city employees get taxed more if they live in the City. How does this make sense? It's a direct financial incentive to live outside the city in which you work. I realize maybe this didn't matter when you had residency restrictions in Detroit, but when they removed it, they should have changed the city income tax to be equal for all city employees. I have written State Reps about this, but to no avail. I would say it is has a lot to do with 50% of the city workers living outside the city, Cops, firemen etc. In the end the city looses more money because of the lack of property tax collection, sales tax dollars, etc.

[Hermod]

One of the most ridiculous parts of the city income tax is that city employees get taxed more if they live in the City. How does this make sense? It's a direct financial incentive to live outside the city in which you work. I realize maybe this didn't matter when you had residency restrictions in Detroit, but when they removed it, they should have changed the city income tax to be equal for all city employees. I have written State Reps about this, but to no avail. I would say it is has a lot to do with 50% of the city workers living outside the city, Cops, firemen etc. In the end the city looses more money because of the lack of property tax collection, sales tax dollars, etc.

When I worked for the city of Detroit, I had to give them a Detroit address before being hired and i was required to maintain that address to remain on the payroll.

[Novine]

The non-resident income tax rate is required by law to be no more than 50% of the resident income tax rate. Residents are always going to pay more.

[lo_to_d]

So you're telling me that laws cannot be changed? Sounds like the Michigan way to me.

The non-resident income tax rate is required by law to be no more than 50% of the resident income tax rate. Residents are always going to pay more.

[lo_to_d]

That must have been before Archer and Engler removed Detroit's residency requirement. At the same time they should have flattened the City Income tax for city employees to be equal like it is in NYC.

When I worked for the city of Detroit, I had to give them a Detroit address before being hired and i was required to maintain that address to remain on the payroll.