Detroit Mayor Mike Duggan is starting a push to get a new property tax rate system going in the city.
The idea is known as a land value tax, or split-rate tax. It would drastically cut tax rates on structures, while more than doubling them on land.
Duggan said that would give the vast majority of Detroit homeowners a tax cut. It would also incentivize people hanging onto blighted land an incentive to develop it.
Duggan said this legislation also includes new protections.
“No homeowner will get a property tax increase as a result of the land value tax. 97% are going to get cuts anyway,” Duggan said. “But with this guarantee, no one gets an increase.”
There are additional protections. For example, urban farmers and side lot owners wouldn’t see additional taxes.
Duggan said the land value tax needs approval from Lansing first. State Representative Stephanie Young (D-Detroit) is spearheading that legislation. She said those protections were key to getting her onboard.
“We cannot hurt the people who stepped up to help us,” Young said. “We have to hold them harmless. And that's what we've done with this legislation.”
The hope is to get the job done by October, Duggan said, so the Detroit City Council can put the matter on the February 2024 ballot for a final citywide vote.
Some activists think there are other more pressing property tax issues the city needs to address first, though. That includes compensating Detroiters whose properties were over-assessed and over-taxed in the past, and accusations that Detroit’s assessment division is still over-valuing the lowest-value properties (the city denies this).
“What you must do first is clean up the show in the assessment division before we can move to the land value tax,” Professor Bernadette Atuahene, a property law scholar and member of the Coalition for Property Tax Justice, told Duggan. “Because it (the land value tax) could be tax fairness, perhaps, depending on the details. Perhaps it's very good for Detroiters. But it requires an administrative burden, and our current assessment division has shown it’s not up to the task.”
