Detroit must jettison its losing tax scheme

[MikeM]

Detroit must jettison its losing tax scheme

STEPHEN HENDERSON
DETROIT FREE PRESS COLUMNIST

Pay more. Get less.

That's the social contract Detroiters endure with city government.
They pay more kinds of taxes, at higher rates, than any other citizens in Michigan.
And the services they receive in return -- police response and fire coverage, public education and lighting -- are shoddy and embarrassing.

In most cities, taxes foot the bill for services, and in the most popular big cities -- Chicago, New York, Los Angeles -- it's common to pay more because of the amenities and social and cultural benefits of city life.

But in Detroit, our extreme tax rates have the opposite effect. Sky-high taxes help drive people and businesses out, yielding less of the revenue needed to deliver quality services, which encourages more people to leave. It's a destructive cycle that's driving the city's livability index into the ground.

More at:

http://www.freep.com/apps/pbcs.dll/a...te=fullarticle

Did anyone make a New Year's resolution to quit making excuses?

[Novine]

Hey Henderson, how about telling us how you think this can be achieved? If I want to read the "cut taxes to save the city!" lecture, I can read the Detroit News editorial page. Tell us what services should be cut or eliminated to reduce the overall cost of city government that would allow for a reduction in the city income or property taxes. It's basic math, the city has high property tax rates because its property tax values are a fraction of what they are in the suburbs, the city has to provide services that few or no suburbs provide and large numbers of its residents live in or near the poverty line. Here's a resolution for 2011 - stop writing editorials that identify the problem. Everyone knows what the problems are that the city faces. Start writing editorials that suggest real solutions, not stupid schemes like Newt Gingrich's "tax-free zone".

[Fnemecek]

Hey Henderson, how about telling us how you think this can be achieved?

It's simple: hire people who know what they're doing.

Tell us what services should be cut or eliminated to reduce the overall cost of city government that would allow for a reduction in the city income or property taxes. It's basic math, the city has high property tax rates because its property tax values are a fraction of what they are in the suburbs, the city has to provide services that few or no suburbs provide and large numbers of its residents live in or near the poverty line.

When someone argues that we need to cut or eliminate services in order to cut taxes, or that the problem is our underlying property values, it simply shows that they don't know what they're talking about. Let's look at the facts.

According to Forbes magazine, the average American pays $1,183 in property taxes. Most Detroiters are paying somewhere in the neighborhood of $2,000 in property taxes. On top of that, we pay a city income tax and a utility tax that most other cities don't pay.

In raw dollar amounts - regardless of the value of our property or anything else - the City of Detroit has more money coming in today than any other community our size. In spite of that, we can't get the most basic of services on a consistent basis.

Communities that are led by people who know what they're doing get results.

[Blue]

It's simple: hire people who know what they're doing.



When someone argues that we need to cut or eliminate services in order to cut taxes, or that the problem is our underlying property values, it simply shows that they don't know what they're talking about. Let's look at the facts.

According to Forbes magazine, the average American pays $1,183 in property taxes. Most Detroiters are paying somewhere in the neighborhood of $2,000 in property taxes. On top of that, we pay a city income tax and a utility tax that most other cities don't pay.

In raw dollar amounts - regardless of the value of our property or anything else - the City of Detroit has more money coming in today than any other community our size. In spite of that, we can't get the most basic of services on a consistent basis.

Communities that are led by people who know what they're doing get results.

Very good comprehension of the facts that most people like to overlook!
Usually everyone just says "Detroit has no money". it is never discussed that Detroit actually does have quiet some money coming in every year.
This is the first time someone brings it to a short and well researched point. Bravo.
the question is: what are the people going to do about this now?
there will be no revolution as long as everyone is drooling over their own remote control. if someone has a good plan - i am in.

[Fnemecek]

Very good comprehension of the facts that most people like to overlook!
Usually everyone just says "Detroit has no money". it is never discussed that Detroit actually does have quiet some money coming in every year.
This is the first time someone brings it to a short and well researched point. Bravo.

Thanks, Blue.

the question is: what are the people going to do about this now?
there will be no revolution as long as everyone is drooling over their own remote control. if someone has a good plan - i am in.

For me, it's just a matter of constantly reminding people of the truth. The Detroit Police Department has a budget - on a per resident basis - that is roughly 30% larger than average. In spite of having more money than any other police department, DPD still can't get an officer to show up when we need them.

If anyone else has another actionable idea, I'd love to hear it.

[Locke09]

Detroit's FY 2010/11 budget is 2.9 billion, but that includes both general and enterprise funds.

Taxes [[Property, Income, Casino Wagering and Utility Users Excise Tax) account for approximately 27% of the total revenue for that budget - about 772 million. Of that 772 million, only 220 million is from property tax [[7.54% of total revenue). Note: The City expects to bill 257 million, but only collect 220 million bc of delinquencies and adjustments. 215 million is projected from Income Tax [[7.39%). So the City projects 435 million from property and income tax, approximately 15% of total revenues, 25% if you exclude the enterprise fund revenue.

Of the approximately 83 mills the City residents pay for property tax [[less for homestead properties), only 20 mills go towards City operations. The rest goes to Wayne County [[14% including summer and winter taxes), Schools and education [[37% including school bond debt) libraries [[5%) and debt [[7%).

So, what would be a significant reduction in property taxes, for instance? 10%? The entire 10% would have to come out of the City's portion for operating [[unless Wayne County is going to give up some of its portion or the State is going to ask for less for the schools or we are going to default on some debt bond obligations). The City would therefore lose 40% of its property tax revenue [[about 8 mills) to save us about 10% on our taxes.

[davewindsor]

Tell us what services should be cut or eliminated to reduce the overall cost of city government that would allow for a reduction in the city income or property taxes. It's basic math, the city has high property tax rates because its property tax values are a fraction of what they are in the suburbs, the city has to provide services that few or no suburbs provide and large numbers of its residents live in or near the poverty line.

And yet a lot of these problems could be solved by the governor stepping in and amalgamating the city and the county into a Detroit supercity like Los Angeles so everybody pays their fair share. City of Detroit = 143 square miles. City of Los Angeles = 469.1 square miles.

[ja!mz]

I dont know where Forbes gets their numbers, the last time my property was 2k was 15 years ago in eastponte...most people in the suburbs pay about 3k and that the low side look at propery taxes in GP about 5-6 k

[Fnemecek]

I dont know where Forbes gets their numbers, the last time my property was 2k was 15 years ago in eastponte...most people in the suburbs pay about 3k and that the low side look at propery taxes in GP about 5-6 k

The Forbes numbers come from a survey of what every municipality in the United States collects in property taxes.

I'd like to know where you get the idea that "most people in the suburbs pay about 3k". I have relatives in Dearborn, Westland, and elsewhere in suburban Detroit. None of them pay $3,000 in property taxes.

[sehender1]

Hey Henderson, how about telling us how you think this can be achieved? If I want to read the "cut taxes to save the city!" lecture, I can read the Detroit News editorial page. Tell us what services should be cut or eliminated to reduce the overall cost of city government that would allow for a reduction in the city income or property taxes. It's basic math, the city has high property tax rates because its property tax values are a fraction of what they are in the suburbs, the city has to provide services that few or no suburbs provide and large numbers of its residents live in or near the poverty line. Here's a resolution for 2011 - stop writing editorials that identify the problem. Everyone knows what the problems are that the city faces. Start writing editorials that suggest real solutions, not stupid schemes like Newt Gingrich's "tax-free zone".

Novine, this was the first shot at this: lay out the problem. Gotta start there, sorry..
Solutions are coming - both from me and others.. the chamber's recommendations early this year promise to be quite interesting..

Likely next topic for me is how to pay for outright tax reductions - something I've spent some time thinking about and researching. But I can't do everything in one column.. Did you not see the line that said we would be dedicated to these issues all year???
Also a request: Can we stop the accusatory missives from you? Seriously, not helpful.. and quite annoying....

[Patrick]

But what are the real solutions? How can Detroit attract people to move within its city limits? What kind of incentives can it use to attract business that haven't already beeen used?

[ja!mz]

I think we should try the crack free zone...uh...er....I mean the tax free zone...

[iheartthed]

Why would cutting taxes be more important than improving services?

[English]

No one moves into a major metropolis for cheaper taxes or the best schools. That is what the suburbs and exurbs were created for. They move for the cultural and social amenities.

And as far as shoddy city services are concerned, ours are at the bottom of the heap, to be sure, but I have yet to meet a working or middle class resident of any major city at or near a million or more who doesn't complain about services, schools, and in a few other places, crime.

[Kevgoblue]

The high tax rate can be easily defrayed by the low housing costs.
The city needs a few things. Better police response and at least a few more "succeeding" schools. But the biggest missing link is employers. Its hard to justify living in the city with substandard services, if you still have to drive to Novi or Auburn Hills to go to work.

The lack of meaningful employment shorts the city on tax revenue, middle class families and desireablity.

[Richard]

How about offering a free derelict house to someone that is willing to move tax free for two years must homestead with the option of free rein to salvage houses that are slated for demo for recycling materials to be used in the rebuilding of the house.

Short term = Occupancy of homes that have little or no value any ways,brings residents into the community with pride,saves demo costs on the unsalvageable ones etc.
Little or no costs out of the cities pocket other then administrative costs and maybe even form a group of said potential owners to help each other in the rebuilding process ,kinda like the Habitat formula.

Long term = Rebuilt neighborhoods and a bigger tax base.

Just a thought.

[citylover]

No one moves into a major metropolis for cheaper taxes or the best schools. That is what the suburbs and exurbs were created for. They move for the cultural and social amenities.

And as far as shoddy city services are concerned, ours are at the bottom of the heap, to be sure, but I have yet to meet a working or middle class resident of any major city at or near a million or more who doesn't complain about services, schools, and in a few other places, crime.

You are being less than honest.Detroit has no where near a million people anymore. And From what I read here frequently city services in Detroit including police response time is spotty at best and horrendous often. Unfortunately Detroit is perhaps much worse then other comparable cities.

[iheartthed]

You are being less than honest.Detroit has no where near a million people anymore. And From what I read here frequently city services in Detroit including police response time is spotty at best and horrendous often. Unfortunately Detroit is perhaps much worse then other comparable cities.

Having +90% of a million isn't nearly 1 million? If I had more than $900,000 in my account that wouldn't be nearly $1M?

[citylover]

Having +90% of a million isn't nearly 1 million? If I had more than $900,000 in my account that wouldn't be nearly $1M?

That is our disagreement.Yes if you had 900thou it would be close to a million........Detroit has no where near 900,000

[Lowell]

Solution no. 1 - Levelize City of Detroit insurance rates down to the metropolitan average. For most Detroiters and other Inner city dwellers that de facto tax cost far more than the higher tax rates. It is unfair and extortionate and levelization would do more to encourage people to move and stay in our troubled cities than any other incentive.

[sehender1]

Solution no. 1 - Levelize City of Detroit insurance rates down to the metropolitan average. For most Detroiters and other Inner city dwellers that de facto tax cost far more than the higher tax rates. It is unfair and extortionate and levelization would do more to encourage people to move and stay in our troubled cities than any other incentive.

Lowell: this is a great idea... not an easy one to pursue, to be sure, but one that will have to be on the table if we're going to make the choice about living in the city "competitive," as I called it in the column today..

[Wesley Mouch]

Solution no. 1 - Levelize City of Detroit insurance rates down to the metropolitan average. For most Detroiters and other Inner city dwellers that de facto tax cost far more than the higher tax rates. It is unfair and extortionate and levelization would do more to encourage people to move and stay in our troubled cities than any other incentive.

This is a great idea.

Alternative: Charge suburban areas a tax to cover the development cost of the roads and sewers required to sprawl. I'm OK with sprawl, but not so OK with paying for M59 to make it easier. Road upgrades for traffic should be locally borne. If you're in Detroit [[or inner-ring) the roads are already built.

[trstar]

Solution no. 1 - Levelize City of Detroit insurance rates down to the metropolitan average. For most Detroiters and other Inner city dwellers that de facto tax cost far more than the higher tax rates. It is unfair and extortionate and levelization would do more to encourage people to move and stay in our troubled cities than any other incentive.

sssshhhhh. Nobody wants to hear how Detroit insurance rates are red lined and subsidizing the surrounding communities.

[lincoln8740]

sssshhhhh. Nobody wants to hear how Detroit insurance rates are red lined and subsidizing the surrounding communities.

Now that is funny. Yes I am sure that Detroit's insurance rates have nothing to do with the crime level in the city. It's those damn suburbs taking the hard earned money out of Detroiter's pockets!!

[skyl4rk]

Not only are Detroiters paying too much in taxes, but many of the people in Michigan believe that too much of their state taxes are going to Detroit.