Jun 1, 2023 - Politics

Duggan's tax reform plan would target speculators, parking lot owners

Mayor Mike Duggan speaks at the Mackinac Policy Conference Wednesday.

Mayor Mike Duggan speaks at the Mackinac Policy Conference Wednesday. Photo: Samuel Robinson/Axios

Property tax reform could help reverse recent population losses and become the biggest builder of wealth for Detroiters in history, Mayor Mike Duggan said during his keynote address at the Mackinac Policy Conference Wednesday.

Why it matters: High property taxes are one of the greatest barriers for new homeowners in the city and are often a persistent obstacle to population growth.

Driving the news: Duggan laid out a plan to ease residents' disproportionately high tax burden in a presentation outlining the history of the city's tax system.

  • The average homeowner would see annual property taxes slashed by $250, or about 30%, under the plan.
  • Decreases would be offset by tax hikes on vacant parcels and land with blighted buildings.

What they're saying: "We thought, what if instead of spending all these millions of dollars to undo the damage that our tax system causes, what if we actually fix the system?" Duggan said, alluding to the millions the city spends every year addressing blight and the effects of neglectful building owners.

  • The state's tax system has hurt Detroit in a way that hasn't hurt other cities and rewards building owners for neglecting properties, he said.
  • "If you let your building go, it has to be (worth) zero. Now what are you taxed on? The land. The greatest deal in the world is to let your building decline."

Zoom in: Duggan's proposal, which would cut taxes on commercial buildings by 30% and triple the tax on land, would target owners of abandoned buildings, vacant lots and parking lots.

  • "The downtown parking lot owners are going to be hit hard," Duggan said.
  • The annual tax on an average vacant residential lot would increase from $30 to $85.

Between the lines: Detroit has the highest commercial tax rate in America, Duggan says.

  • "Developers see 87 mills and say 'You gotta be kidding me,' and move on to the next city."
  • The mayor says that whether you're getting a cut or an increase, the change will be phased in over three years to give owners time to adjust.

What's next: Duggan is aiming for the proposal, which would first need approval from state lawmakers, to go before Detroit voters in 2024.

What we're watching: Prior to Duggan's speech, Gov. Gretchen Whitmer and Democratic legislative leaders unveiled an economic development strategy to win large business projects and transform places across Michigan.

  • The governor is expected to announce more specific actions to address the state's slow population growth Thursday during the conference.
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