Finance director: Detroit missing millions in unpaid income tax

By Nancy Kaffer

An increased push to collect city taxes could impact Detroit-based businesses and businesses in the suburbs that employ city residents.

The city isn't collecting all the taxes it is owed from working residents or from Detroit-based businesses, Detroit Finance Director Tom Lijana told the Detroit City Council today during a discussion of Mayor Dave Bing's deficit elimination plan.

The city collected just 36 percent of the taxes it is owed by corporations in 2009, Lijana told the council, about $12 million of a potential $33 million.

Detroit residents who work in the suburbs may not be paying the correct amount of tax, either, Lijana said, adding that the administration will ask Lansing to pass legislation requiring suburban business to withhold city taxes along with other payroll taxes from the checks of workers who are city residents.

In contrast, about 92 percent of non-Detroiters who work in the city pay city income taxes.

More than 50 percent of Detroit workers are "reverse commuters" who work outside the city, he said.

The city thinks as much as $142 million went unpaid in 2009.

Continued at: http://www.crainsdetroit.com/article...FREE/110519947

Yes, and the City also isn't delivering services for the tax revenue that it already receives.

And the tax revenue that it does receive is roughly double national averages.

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Originally Posted by Fnemecek

Yes, and the City also isn't delivering services for the tax revenue that it already receives.

And the tax revenue that it does receive is roughly double national averages.

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I don't know where that is coming from, but I just did a search on a handful of large cities and found Detroit is pretty typical, if not low:

Detroit: 2.5%
Baltimore: 3.05%
NYC: 2.9% going up to nearly 4% as income rises
St. Louis: 1%

Other cities like Chicago and Boston don't have city income tax.

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Originally Posted by drjeff

I don't know where that is coming from, but I just did a search on a handful of large cities and found Detroit is pretty typical, if not low:

Detroit: 2.5%
Baltimore: 3.05%
NYC: 2.9% going up to nearly 4% as income rises
St. Louis: 1%

Other cities like Chicago and Boston don't have city income tax.

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Not really apples-to-apples, at least in the case of NYC.

There's no city income tax whatsoever on NYC lower-income residents.

There's also no commuter tax.

Something like 90% of the city income tax is paid for by very high earners, so it's not very broad-based [[progressive system, instead of flat tax).

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Originally Posted by drjeff

I don't know where that is coming from, but I just did a search on a handful of large cities and found Detroit is pretty typical, if not low:

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Most cities don't have a municipal income tax at all. Detroit not only has one, but it also has a property tax rate that is roughly double national averages. [[Avg. = $1,176 according to Forbes.)

And it's not really that Detroit has a tax, but that Detroiters get nothing for the tax.

A place like NYC or San Francisco can arguably get away with some unique taxation schemes.

Detroit is in no position to tax folks to death for the privledge of nonexistent services.

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Originally Posted by Bham1982

Detroit is in no position to tax folks to death for the privledge of nonexistent services.

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Sure they are. It's because their residents are residents of last resort: The poorest, the least civically engaged, the most malnourished and traumatized. I suppose they should all just get a house in Commerce Township, yes?

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Originally Posted by Detroitnerd

Sure they are. It's because their residents are residents of last resort: The poorest, the least civically engaged, the most malnourished and traumatized. I suppose they should all just get a house in Commerce Township, yes?

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I'm not saying Detroit shouldn't have an income tax; they probably don't have a choice given fiscal constraints.

But I believe the existence of the income tax is a significant impediment to population and job growth. The fact that certain other cities have some less-than-popular taxes doesn't mean they're equally affected, since those other cities tend to be very competitive with their suburbs.

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Originally Posted by Detroitnerd

Sure they are. It's because their residents are residents of last resort: The poorest, the least civically engaged, the most malnourished and traumatized. I suppose they should all just get a house in Commerce Township, yes?

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Actually, with the way the housing market is going, many Detroit residents can rent homes in areas where they wouldn't have had a chance a few years ago. This is a major factor in why Detroit's population loss is accelerating.