Arthur Laffer’s famous curve – or moreso – the idea that a tax burden that is too high will decrease net revenue, whereas a lower burden should increase revenue, has finally taken hold in Detroit! Let’s see if City Council approves of the measure which aims at reducing by over 20% the property tax burden for some of the nicer, more established neighborhoods in the City, such as the Detroit Golf Club subdivision, the Boston/Chicago/Edison district, Palmer Woods, etc.
To be fair – the City is actually predicting a net loss in revenue – they are concerned solely with eliminating the suburban flight which has plagued the city for decades, especially since falling below the 1 million population mark (at which a good portion of federal funding was cut off) in the last census.
Eligible homeowners would see their property taxes cut from 67 mills to about 50. That means that a property owner with a home assessed at $160,000 will see their total tax bill — city and county — drop from about $14,000 to $8,000, according to the latest 2004 data provided by the city
On the “other side of the tracks,” In Rochester, one of the growing northern suburbs, the total mills payed on residential property is still 20% less than it would be in Detroit after the proposed tax-cut! (PDF) And their streets are safer. Their garbage is picked up, weekly – as opposed to the intermittent pickup in Detroit that has prompted an additional, annual assessment of $300 per household for trash removal.
…I was talking about this for a moment last night, but of course my suggestion is much more in-line with Laffer’s notion. Rather than implement a targeted tax-cut to the wealthier, historic neighborhoods as is proposed, I would strive for an across the board property tax reduction. To that end, I think that eliminating the burden on the poorest of the poor is probably just as wise, if not wiser from a revenue standpoint, than lowering the taxes on the wealthy. It will give the racially motivated City vs. Suburbia war a little less footing, and it will encourage perhaps, people from all walks of life to take a chance on revitalizing the once-great City. Sure, the rich are the ones that are going to move to the suburbs, but the poor are prisoners of the city, whose property will eventually be seized by the treasurer for non-payment. The city in turn will do nothing with the property, which will rot out, be burned down, or turned into a drug den, or some other less-than-savory eventuality.
Detroit’s problem is collection – they only bring in about 65% of the taxes that they bill to homeowners, which is an appalling figure. This article in the MetroTimes actually suggests that Detroit’s tax system was not computerized until 2003, and that fully one-third of all tax parcels in the city are delinquent. So please, Detroit, recognize your problem for what it is: An across-the-board tax burden that is unreasonably high, given the paltry level of community services actually provided to the taxpayers. The problem is not that you’re taxing the rich people too much – you’re taxing everyone too much!
…but I’m not holding my breath.
