Michigan Information & Research Service Inc.
Michigan Information & Research Service Inc.

Duggan, Young Push Tax Cuts for Homeowners, Tax Hikes for Speculators 

09/15/23 12:26 PM By Team MIRS

(Source: MIRS.news, Published 09/13/2023) Detroit Mayor Mike Duggan urged lawmakers to move his property tax plan to disincentivize land speculation by increasing taxes on vacant land and reducing taxes on buildings during Wednesday’s House Tax Policy Committee hearing. 


Duggan said he's observed a trend under which individuals own vacant land in the hope that someday a developer who wants to build a huge auto factory or housing project will buy them out for a handsome sum.  


Duggan said on average, owners of vacant lots pay $30 per year in property taxes, which is reduced to $0 if there is a blighted structure on the property. Meanwhile, property owners pay about 67 mills. 


Rep. Stephanie Young (D-Detroit), the lead sponsor of the Land Tax Equity Act package, said that on average the act would save Detroit property owners 17% on their property taxes by 2025. 


Young said the plan laid out in HB 4966, HB 4969, HB 4970, HB 4967 and HB 4968 would “stop the insanity” by requiring property owners of blighted vacant land to pay their fair share and will incentivize developing on their property. The bills are among Speaker Joe Tate (D-Detroit)'s top legislative priorities for the fall 2023 session. 


Rep. Pat Outman (R-Six Lakes) questioned the 50% average increase in property taxes for businesses like scrapyards.  


“This seems like we’re picking winners and losers,” Outman said.  


“We absolutely do not pick any winners or losers,” Duggan said. 


At the Mackinac Policy Conference in May, Duggan said there would be winners and losers, with the winners being small property owners and neighborhood developers, and the losers being vacant lot owners, owners of vacant commercial buildings, scrapyards and parking lot owners.  


Duggan said the city of Detroit has been ahead of the legislature in asking for help many times due to financial trouble, but after 10 straight balanced budgets, the city is in a different situation, now asking for the tools to fix something themselves. 


“The high property tax rates are choking off small businesses, new housing, and they’re a terrible imposition on our residents,” Duggan said.  


Duggan said those backing the legislation want the law to take effect by July 2025, so the assessor would have to send out the assessment notice in Feb. 2025, which means the bills would need to be taken up during this session so that the Detroit City Council could vote to put it on the presidential primary ballot.  


Duggan said the city is not going to make money by cutting the property tax rate, but he claims the cut will bring business and people into the city, which will in turn bring higher revenue via income tax.  


For Detroit homeowners who own vacant lots adjacent to their property for more space, the tax on their main property would go down while their adjacent lots would see an increase, but Duggan said it would be rare for the increases on their vacant lots to be greater than the decrease on their main lot.  


The MIRS team also interviewed Detroit Chief Financial Officer Jay Rising on this week’s episode of the MIRS Monday podcast: https://mirsnews.podbean.com/e/mirs-monday-september-11-2023/ 


In Other News: 


The following bills were also reported out of the committee: HB 4530, HB 4531, and SB 127, which create a credit for donating to the endowment fund of a community foundation or organizations providing accommodation, food or meals to the poor. Other bills reported with recommendation were HB 4553 and HB 4554, which create the Local Government Reimbursement Fund that can be used to bail out municipalities for revenue lost under the small business taxpayer personal property exemption and subsequently deposits $54 million into the fund.