No tax zone for Detroit?

[iheartthed]

An idea proposed by former Speaker of the House Newt Gingrich to make the city of Detroit tax-free for 10 years is open to at least two of the region's highest leaders.

Gingrich asked the audience at the 2010 Mackinac Policy Conference to pretend Detroit "was like Puerto Rico," a notion that has been mostly well-received.

Detroit Mayor Dave Bing and Wayne County Robert Ficano told WJR's Paul W. Smith they would like to hear more, but it would take time if the decision were to be pursued.

"That is thinking out the box. There's a legislative standpoint you have to think of," Bing said. "We want to take care of people that are new to Detroit, but my concern is for people that are already there. You've got to do it with fairness the best you can," he said.

But, Bing added, "We've got a lot of land, we've got a lot of homestead. We want to look at that. I think it's a good idea."

http://www.mlive.com/business/detroi..._county_e.html

Thoughts?

[Gsgeorge]

I don't agree with everything Newt does or says, but this is something that seems like a no-brainer to me. Detroit's high taxes have always been puzzling. And Newt was not the first to propose it. I feel like Detroit's residents and businesspeople have been arguing for lower, or no, taxes in Detroit for decades. Do it now, and our city would explode with development, business, new residents. It seems like a quick-fix that might actually work.

[Detroitnerd]

Great right-wing plan. Unfortunately, where does the revenue come from in the meantime?

[Melocoton]

I don't agree with everything Newt does or says, but this is something that seems like a no-brainer to me. Detroit's high taxes have always been puzzling. And Newt was not the first to propose it. I feel like Detroit's residents and businesspeople have been arguing for lower, or no, taxes in Detroit for decades. Do it now, and our city would explode with development, business, new residents. It seems like a quick-fix that might actually work.

#1) The city has been doing Renaissance Zones for decades, so some version of what Gingrich is proposing [[and has been pushing for years) is already in place. Hasn't produced any miracles yet as far as I know.

#2) in a no-tax city, who would pay for the police and fire department?

[Novine]

Been there, done that. Isn't that what Renaissance Zones were all about? How did those do to turn around the city?

On the practical side, where does the money come from to run the city? Last time I checked, Detroit's budget wasn't zero. How many suburbs are going to want to cover 100% of Detroit's costs at the same time that they are having to compete directly with Detroit's tax-free status?

[Novine]

If it's such a great idea for Detroit, let's make the entire state a tax-free zone! If it's good for Detroit, it should be great for Michigan!

[iheartthed]

Great right-wing plan. Unfortunately, where does the revenue come from in the meantime?

I'm no Gingrich fan, but I'm also not opposed to a right-wing plan if it works [[emphasis on "if"). That said, I imagine that the revenue to support services could come from the city's personal income tax, and whatever property taxes would be paid by real-estate owners.

[iheartthed]

If it's such a great idea for Detroit, let's make the entire state a tax-free zone! If it's good for Detroit, it should be great for Michigan!

Well, that's where development planning should come into play. Do we want businesses coming in and plopping down in any random part of the state, or do we want to direct them to certain areas?

For me to support the idea, I wouldn't even want them to designate the entire city as a no-tax zone. Instead concentrate on areas like the downtown and midtown business districts -- like NYC did Times Square -- or brownfields in the industrial sections of the city to encourage redevelopment. I'm not aware of the specifics about the Renaissance Zone, but I don't think it was a completely tax-free zone. And even still, didn't it work to bring Compuware downtown? And keep GM from going to the suburbs?

[Novine]

http://ref.michigan.org/medc/service...tax/chunk2.asp

Everything but debt millage is abated. Businesses can also get a MBT credit and residents don't have to pay the state income tax. In Detroit, the Utility Users Tax is waived.

http://ref.michigan.org/medc/service...stax/index.asp

If the Renaissance Zones didn't save Detroit, why would your idea work any better?

[iheartthed]

http://ref.michigan.org/medc/service...tax/chunk2.asp

Everything but debt millage is abated. Businesses can also get a MBT credit and residents don't have to pay the state income tax. In Detroit, the Utility Users Tax is waived.

http://ref.michigan.org/medc/service...stax/index.asp

If the Renaissance Zones didn't save Detroit, why would your idea work any better?

Well, apparently, the Ren Zone is primarily a property tax break. I think Gingrich's idea is to suspend business taxes in Detroit. I believe that would have to be approved at the state level anyway, since I don't think Detroit has its own corporate tax [[or at least I can't find information about one through my quick Google search). I assume that he would also advocate a lifting of the sales tax in Detroit on some goods sold in Detroit [[like NYC does for clothes). That tax is also implemented at the state level, and thus is not covered by Ren Zone.

[ghettopalmetto]

Why do people think the problem is always "taxes"? Many, far-more-thriving places have higher taxes than Detroit. On the other hand, people like Newt have been cutting taxes in the South for decades--and we see what an economic juggernaut Mississippi has become.

The problem in Detroit is the SERVICES, or lack thereof, that you get for your tax dollars. The tax base needs to be GROWN, not shrunk.

Until Newt buys a house in Delaware for the tax savings, I'm not convinced.

[Detroitnerd]

I'm no Gingrich fan, but I'm also not opposed to a right-wing plan if it works [[emphasis on "if"). That said, I imagine that the revenue to support services could come from the city's personal income tax, and whatever property taxes would be paid by real-estate owners.

Yeah, I think this is a trojan horse sort of plan. Cut BUSINESS taxes, shift the burden to individuals, then, when the budget deficit is too much to take, slash social programs and privatize. We've seen this before, right-wing saviors rushing to the rescue with plans that benefit their big-business cronies. [[Not that neoliberalism is much better.)

[Hermod]

Keep the city and state taxes to run the city and state. Make Detroit city proper a federal income tax free zone. Watch the population shoot up to 2 million. Watch the hoods get gentrified. Watch the kleptocracy get voted out of office. Detroit will become the center of good living.

[casscorridor]

Keep the city and state taxes to run the city and state. Make Detroit city proper a federal income tax free zone. Watch the population shoot up to 2 million. Watch the hoods get gentrified. Watch the kleptocracy get voted out of office. Detroit will become the center of good living.

Yes! This makes sense. There is no way I can support no city and state taxes, because our services would all collapse... pretty obvious, but it is just chump change to the federal government.

And I'd like to add an amendment, that the federal government step in and build a REAL mass transit system in the city of Detroit. Not some toy train.

Also, an amendment that we eliminate homelessness completely and shoot for universal employment.

Then we'd be talking.

[Patrick]

Why do people think the problem is always "taxes"? Many, far-more-thriving places have higher taxes than Detroit. On the other hand, people like Newt have been cutting taxes in the South for decades--and we see what an economic juggernaut Mississippi has become.

The problem in Detroit is the SERVICES, or lack thereof, that you get for your tax dollars. The tax base needs to be GROWN, not shrunk.

Until Newt buys a house in Delaware for the tax savings, I'm not convinced.

How can Detroit expand their tax base though? Would they offer incentives? How do they attract initial action?

[Crumbled_pavement]

Yes! This makes sense. There is no way I can support no city and state taxes, because our services would all collapse... pretty obvious, but it is just chump change to the federal government.

And I'd like to add an amendment, that the federal government step in and build a REAL mass transit system in the city of Detroit. Not some toy train.

Also, an amendment that we eliminate homelessness completely and shoot for universal employment.

Then we'd be talking.

How many cities/states in this country would be okay with Detroit getting this kind of preferential treatment when they don't?

[mwilbert]

Some proposal from this family of ideas comes up with every so often. It could work, but it would require some other people someplace to pay the taxes that the people in Detroit [[and more importantly, the taxes that the folks who move into Detroit for the tax savings) don't pay, and I rather doubt that the people representing those taxpayers are going to think Detroit is worthier than many other poor [[or less poor) places. There also could be some pretty significant negatives. A tax advantage large enough to have a significant impact on the city would probably wipe out many of the suburbs--how would Southfield or Oak Park or Ferndale or Madison Heights or even Dearborn compete against a tax-free Detroit? I think there is enough space in the city that in ten years you might not displace too many poor folks, but that would also be a concern. I guess they could move to Southfield.

Even with the potential negative consequences I'd love to see it happen; if nothing else it would be a really interesting social experiment to watch. I suspect that if you could get enough people and business into the city, you could change a lot of the dysfunctional dynamics that currently exist. Then again, maybe not. The uncertainty is part of what would make it so interesting. However, since no one is going to be willing to provide the subsidy required, there is essentially no chance of this happening.

[lincoln8740]

And I'd like to add an amendment, that the federal government step in and build a REAL mass transit system in the city of Detroit. Not some toy train.

Also, an amendment that we eliminate homelessness completely and shoot for universal employment.

And the above post is a perfect example of what happens to a good idea in washington and lansing.

They get their hands on and just wreck it completly

Please tell me you were joking about the homeless and employment amendments--please?

[BillyBBrew]

As much as I feel for suburbs losing their people to Detroit, are we forgetting that the reason the suburbs are populated and grew so much is because people left Detroit? Kinda like a deja vu.

[English]

Keep the city and state taxes to run the city and state. Make Detroit city proper a federal income tax free zone. Watch the population shoot up to 2 million. Watch the hoods get gentrified. Watch the kleptocracy get voted out of office. Detroit will become the center of good living.

Hermod, you've been on a roll with some intriguing ideas lately! I never thought about this. If federal tax exemptions applied to places like New Orleans and Detroit, those places would be almost unrecognizable by 2025.

[Crumbled_pavement]

Hermod, you've been on a roll with some intriguing ideas lately! I never thought about this. If federal tax exemptions applied to places like New Orleans and Detroit, those places would be almost unrecognizable by 2025.

Yes, but how do you sell this proposition to the feds? Especially when other cities would be livid that Detroit would get such a tax break and they wouldn't.

[Retroit]

Detroit need to lower its property tax rate below that of the suburbs. Eliminate city income tax which the suburbs don't have. Detroit needs to compete with the suburbs for residents.

[[It also wouldn't hurt if all the residents of Detroit started doing their part to make all parts of Detroit a nice place to live.)

[Novine]

"Detroit need to lower its property tax rate below that of the suburbs. Eliminate city income tax which the suburbs don't have. Detroit needs to compete with the suburbs for residents."

How many residents choose to between Detroit or a suburb based on tax rates? There's suburban communities that have single digit local property tax millage rates. Detroit is never going to be able to match that. Where is Detroit going to come up with the hundreds of millions of dollars that would go away with the elimination of the city income tax? Bing and Council are arguing over cutting $30 million dollars with predictions of public safety disasters if the cuts go deeper than that. Cities like Detroit can never compete by trying to be the lowest-cost location. Proposals like that [[or Newt's) aren't reality-based.

[royce]

Property taxes and income taxes are not the taxes that need to be eliminated in Detroit. It's the "sales tax" that needs to be eliminated. Make Detroit a "sales tax free" zone for 10 years and you'll see Detroit grow in the number of retail developments and a reduction in unemployment and crime. The argument for a "sales tax free" zone would be that the suburbs have a disproportionate number of retail businesses in comparison to Detroit. To level the playing field, a "sales tax free" zone for all of Detroit would be more than appropriate.

Businesses not currently in Detroit could not stand by and let the current businesses in Detroit get all of the spoils. They would have to build stores, especially if the zone is good for 10 years. Residents in Detroit would find jobs which would hopefully reduce crime. The state could make up the loss of sales tax revenue from Detroit by increasing the sales tax for all to 8% after the 10 year period is over. I know many outstate residents and politicians wouldn't go for it, but if the argument for the "sales tax free" zone was crafted like the argument to allow casino gaming in Detroit, then there might be a chance that folks outstate would go for it.

[Russix]

Since we're a completely undesireable place to do business in, now that we'll have less money to try and fix the problems, things will get better. This is akin to saying, "You can have this poop for free now" and expecting a rush.