Detroit taxes are too damn high!

**David L** · July-20-16, 05:52 PM

I am flabbergasted that once again, thousands of properties in Detroit are in foreclosure. Many people on payment plans are behind again. I looked at a house on San Juan that is listing for 35K, is tax appraised at 32K and the taxes are almost 3K per year. 5-20% reductions aren't enough to make up for years of over payment for less and less services. Make the reassessment of Detroit residential property a priority or the anticipated return of residents and housing value to the all but best neighborhoods is going to be a very slow process. As it is, inventory of Detroit homes for sale is very low.

**Wesley Mouch** · July-20-16, 07:49 PM

Originally Posted by David L

I am flabbergasted that once again, thousands of properties in Detroit are in foreclosure. Many people on payment plans are behind again. I looked at a house on San Juan that is listing for 35K, is tax appraised at 32K and the taxes are almost 3K per year. 5-20% reductions aren't enough to make up for years of over payment for less and less services. Make the reassessment of Detroit residential property a priority or the anticipated return of residents and housing value to the all but best neighborhoods is going to be a very slow process. As it is, inventory of Detroit homes for sale is very low.

It is obscene. And its going to continue to be a big problem.

It is not however a problem of high taxes -- its a problem of high spending. The municipal bankruptcy adjusted income and expenses so they are balanced. So if you want to reduce the taxes, here's the only way it can happen:

1) Eliminate unnecessary services
2) Pass laws to ensure that all raises are limited by the rate of consumer inflation.

History tell us that what will happen is:

1) Politicians will give voters and supporters perks, jobs, contracts, and will add new departments, etc. because ....
2) Employees will get significant raises or bonuses or overtime or increased pensions or whatever they can slide in when the financial overseers are looking the other way.

So enjoy your high taxes!

**mwilbert** · July-22-16, 09:55 AM

Originally Posted by Wesley Mouch

It is obscene. And its going to continue to be a big problem.

It is not however a problem of high taxes -- its a problem of high spending. The municipal bankruptcy adjusted income and expenses so they are balanced. So if you want to reduce the taxes, here's the only way it can happen:

1) Eliminate unnecessary services
2) Pass laws to ensure that all raises are limited by the rate of consumer inflation.

History tell us that what will happen is:

1) Politicians will give voters and supporters perks, jobs, contracts, and will add new departments, etc. because ....
2) Employees will get significant raises or bonuses or overtime or increased pensions or whatever they can slide in when the financial overseers are looking the other way.

So enjoy your high taxes!

This doesn't really get at the core of the problem. The reason Detroit taxes are high isn't primarily because of high current spending. it is because of a small tax base, and large remaining legacy costs that couldn't be discharged by bankruptcy. That doesn't mean you couldn't do some kind of cutting of current spending, but nothing that could move the tax rate from obscene to reasonable. Remember that only a fraction of the property tax actually goes to the City of Detroit anyway.

In this person's particular case, based on the numbers he gave, the problem is that the property is overassessed by almost 100%. And overassessment is definitely a problem which can and should be fixed.

**Wesley Mouch** · July-22-16, 10:35 AM

Originally Posted by mwilbert

This doesn't really get at the core of the problem. The reason Detroit taxes are high isn't primarily because of high current spending. it is because of a small tax base, and large remaining legacy costs that couldn't be discharged by bankruptcy. That doesn't mean you couldn't do some kind of cutting of current spending, but nothing that could move the tax rate from obscene to reasonable. Remember that only a fraction of the property tax actually goes to the City of Detroit anyway.

In this person's particular case, based on the numbers he gave, the problem is that the property is overassessed by almost 100%. And overassessment is definitely a problem which can and should be fixed.

Yeah, you are certainly right about legacy costs. And this cancer does most certainly oppress the poor disproportionately. Let's see if the 'we don't pay enough in taxes' Sanders wing is willing to kick in. These legacy costs should be socially borne by the State of Michigan.

But that said, current creation of legacy costs is not acceptable -- and current wasteful spending is not acceptable. Both are especially true if a rescue from legacy costs is to be 'fair'.

**belleislerunner** · July-22-16, 11:42 AM

If someone can't afford to pay the taxes - they most definitely can't afford to maintain the house itself to a level that it should. Proposing to keep people in homes that can't afford to pay the taxes is probably the single biggest way to cause the decline of neighborhoods. You are structurally creating ghettos.

**mwilbert** · July-22-16, 12:12 PM

Originally Posted by belleislerunner

If someone can't afford to pay the taxes - they most definitely can't afford to maintain the house itself to a level that it should. Proposing to keep people in homes that can't afford to pay the taxes is probably the single biggest way to cause the decline of neighborhoods. You are structurally creating ghettos.

Who proposed that?

Also, it isn't really true. Certainly people living in houses they can't adequately maintain is a potential problem, but it is unlikely to be as big a problem as empty/squatted/trashed houses.

**ABetterDetroit** · July-22-16, 12:34 PM

With 18,000 properties being foreclosed on this year and after well over a hundred thousand houses lost to unpaid taxes in Detroit in just the last half dozen years I would think the problem is pretty obvious.

What doesn't make any sense to me is that of course die hard republicans like Wesley Mouch are going to fully support that people can choose where to live in Michigan and how much rent tax they will pay with different property tax rates all over the place. But why do democrats support this policy by constantly jacking the rate with every good idea they can come up with? One would think they would be vehemently opposed to throwing people out of there homes for unpaid taxes.

Ironic that Lansing's fear of California's Proposition 13 has put this state in this mess and their housing market has been the strongest in the nation for decades and ours has been pretty much the worst, yet we still soldier on.

**Bigdd** · July-23-16, 07:38 AM

Originally Posted by David L

I am flabbergasted that once again, thousands of properties in Detroit are in foreclosure. Many people on payment plans are behind again. I looked at a house on San Juan that is listing for 35K, is tax appraised at 32K and the taxes are almost 3K per year.

Is that what the taxes are NOW? Is the house owned by a bank?

If so,.. then the house is not currently getting the big homestead discount for being owner occupied.

If you buy that house for say,... $31k,.. then the taxes SHOULD be $1,050.28 a year. You may need to go before the board in April to get the SEV changed to 1/2 the purchase price if it's noticeably lower than the current SEV.

[[Curent Detroit Mills is 67.76. To calculate,.. what you do is multiply that by the number of thousands in the purchase price [[31k in my example),... then that gets you $2,100.56. Now divide that by 2 to get owner occupied.)

**David L** · July-25-16, 01:01 PM

Yes, current taxes, and no, the house is not owned by a bank.

**SammyS** · July-25-16, 01:44 PM

Originally Posted by Bigdd

Is that what the taxes are NOW? Is the house owned by a bank?
If so,.. then the house is not currently getting the big homestead discount for being owner occupied.

If you buy that house for say,... $31k,.. then the taxes SHOULD be $1,050.28 a year. You may need to go before the board in April to get the SEV changed to 1/2 the purchase price if it's noticeably lower than the current SEV.

[[Curent Detroit Mills is 67.76. To calculate,.. what you do is multiply that by the number of thousands in the purchase price [[31k in my example),... then that gets you $2,100.56. Now divide that by 2 to get owner occupied.)

Is milage fixed or sliding? For instance, are taxes >$21,000 for an un-homesteaded property?

**ndavies** · July-25-16, 02:01 PM

Millage is fixed to the SEV of your home. Your property tax is [[SEV/1000 * millage rate). SEV is supposed to be 1/2 of market value. Millage rates are 67 mills for a homesteaded property [[Owner occupied) and 85 mills for rental and commercial property. They pay an extra 18 mills to the schools.

so if you purchased a top end $400,000 condo downtown, your SEV would be 200,000. If you homesteaded it, your taxes would be [[200,000/1000) * 67 = $13400 per year. If you rented it out, your taxes would be $17,000. [[it is against the law to homestead a rental property.)

**SammyS** · July-25-16, 02:05 PM

Got it, thanks. I also don't see the possibility of filing two homesteads on your income taxes or am I wrong?

**ndavies** · July-25-16, 02:16 PM

Homesteading is simply filling out a form with your county property office. It would be simple to fill out 2 forms. Not sure what checks are in place to catch this issue. Once you've filled out the forms, your property tax bill comes with the exemption for the school operating funds.

Also the market value is not the value of one house, It is supposed to be an aggregate value of similar homes in the neighborhood. This is why the city fights so hard against reappraisals of the SEV. If it can hold up some SEVs, it holds up the SEVs of all the homes in the neighborhood.

**SammyS** · July-25-16, 02:34 PM

Don't they all come together on your final tax filing? Say you unintentionally homesteaded two properties in two seperate counties, wouldn't your state tax filing appear to show both are homesteaded?

**Wesley Mouch** · July-26-16, 09:08 AM

Originally Posted by ABetterDetroit

...What doesn't make any sense to me is that of course die hard republicans like Wesley Mouch are going to fully support that people can choose where to live in Michigan and how much rent tax they will pay with different property tax rates all over the place. But why do democrats support this policy by constantly jacking the rate with every good idea they can come up with? One would think they would be vehemently opposed to throwing people out of there homes for unpaid taxes.

I don't understand what you are saying, and please don't call me a Republican. But why do Democrats support jacking up tax rates... they need the cash to spend.

Originally Posted by ABetterDetroit

Ironic that Lansing's fear of California's Proposition 13 has put this state in this mess and their housing market has been the strongest in the nation for decades and ours has been pretty much the worst, yet we still soldier on.

There's just no comparing Michigan and California. California's successes over the past 50 years paper over a lot of problems. Its like saying that because rich people buy Starbucks every morning, all you have to do is buy Starbucks and you'll be rich. Correlation is not causation.

Prop 13 is a great windfall for the 1%. Populists should think about this before Felling the Bern. An expression I haven't heard much lately has been popping into my feeble mind -- "the road to hell is paved with good intentions'.

**ndavies** · August-18-16, 01:36 PM

Here's how they're enforcing the Homestead discount:

http://www.detroitnews.com/story/new...hers/88932834/

**ABetterDetroit** · August-18-16, 02:34 PM

Originally Posted by Wesley Mouch

I don't understand what you are saying, and please don't call me a Republican.

Prop 13 is a great windfall for the 1%. Populists should think about this before Felling the Bern. An expression I haven't heard much lately has been popping into my feeble mind -- "the road to hell is paved with good intentions'.

My apologies if offence was taken. There are many new conservatives and libertarians since the Republicans decided to run a reality TV star for President.

We disagree in that California is the land of "1 percenters".

Though many factors come into play that can cause land, houses and commercial property to become worthless or only have nominal value the only thing that can be done to fix it immediately when the problem is widespread is to lower the taxes on the property. The property tax rate in Detroit is to high, it encourages jobs, new construction and growing communities to go some place else where the tax rate is lower. In Detroit's case you don't even have to go that far, a 15 minute drive can cut the rate by more than half in some of the other metro area communities.

Where in the world does civalized society thrive or even exist on worthless property? Very high property tax rates remain a unaddressed problem while the city continues to throw people out of their homes by 10s of thousands annually.