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Duggan’s Tax Plan Moves After Initial Stall

October 3, 2023

With the flip of Rep. Kristian C. Grant (D-Grand Rapids)’s “pass” to a “yes,” the 12-member House Tax Policy Committee Wednesday moved Detroit Mayor Mike Duggan’s property tax reform plan to the full House for consideration.

The tie-barred Land Tax Equity Act package – HB 4966, HB 4967, HB 4968, HB 4969, and HB 4970, which is among Speaker Joe Tate (D-Detroit)’s top legislative priorities – would require property owners of blighted vacant land to pay a higher tax as a way to spur them into developing their property.

The 7-0 vote, with five GOP lawmakers abstaining on each bill, came after around six Detroiters –  led into committee by former Rep. Cynthia Johnson – testified in opposition to the bills out of distrust for Duggan and his administration. One speaker said passage of the proposed bill would give carte blanche to a “man who has not been honest or truthful” with Detroit taxpayers.

“The entire bill is based on hope and intents,” said Toinu Reeves, a doctorate student at the University of Michigan, who is currently researching tax policy. “… I will also argue that land tax is a very efficient tax, but that efficiency goes out the window when you create these loopholes or exemptions.”

Rep. Grant initially passed when the bill was first put forth. The five Republicans on the 12-member panel all withheld a “yes” vote. Reps. Greg VanWoerkom (R-Norton Shores), Greg Markkanen (R-Hancock) and Mark Tisdel (R-Rochester Hills) abstained and Reps. Pat Outman (R-Six Lakes) and Mike Hoadley (R-Au Gres) voted no. The committee then went at ease while the House met. Once they reconvened, Rep. Karen Whitsett (D-Detroit) put forth an amendment that allowed a majority vote of a city council to revert to its prior tax rate if the land equity tax was “not working.”

The new vote had Grant saying “yes” while the Republicans abstained.

Brian Shoaf, director of government affairs for the Detroit Regional Chamber of Commerce, said his organization supports the bill package because it lowers the tax rate for residents and businesses, and in Detroit will encourage redevelopment of underutilized property in the community.

A number of Detroit residents disagreed with Shoaf’s comments.

Rep. Alabas A. Farhat (D-Dearborn), who sponsored HB 4968, said safeguards have been put in place as the intent of the package is to “flip the tax burden” onto those property owners who have been holding onto property for decades without maintenance or development.

Farhat noted that can keep potentially needed businesses from coming to a community, including in his district where there are 18 scrapyards, but only two grocery stores for 40,000 residents.

“It’s unattainable. It’s not easy for folks to have access to food,” he noted, adding that current homeowners will not see a tax increase.

Reeves countered that lawmakers could consider alternatives, such as an excise tax on scrap metal that would specifically target scrapyards without affecting other aspects of the community.

Theo Pride, an organizer with Detroit People’s Platform and Detroit for Tax Justice, summarized the testimony from Detroit residents, bluntly noting that Detroiters don’t want the bill package.

Pride said Detroiters do not believe that they will receive a tax break because the city administration could have given that years before and chose not to, and residents also don’t believe that it will create economic development.

“We don’t trust the administration. We don’t trust the city government to properly and fairly and equitably assess the land,” he said. “We have already seen over-assessments over the last 10 years at the tune of $600 million. And now you hand over more legislative and administrative power right to the folks who have abused that power?”

The state Constitution states that property cannot be assessed at more than 50% of its market value, but the city assessed 55% to 85% – overtaxing homeowners by at least $600 million between 2010 and 2016.

Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter

 

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