I have read about 5,000 stories about the collapse of Detroit. I keep searching for some useful or novel idea for fixing the city, and what I haven’t seen is any discussion of raising taxes.
I wrote yesterday about Stockton, California putting a 3/4 cent sales tax increase on the ballot. The city intends to use the new revenue to put more police on the streets. I thought about how little of Detroit’s revenues came from sales tax, and I wondered why a tax couldn’t be implemented to lift the city out of bankruptcy.
According to the Detroit News, Detroit has the highest property tax rate in the country:
Detroit ranked first among the 50 largest U.S. cities in taxes and last among property values in a 2011 study by the Lincoln Institute of Land Policy in Cambridge, Mass. Detroit taxes on a $150,000 house were $4,885, twice the national average of $1,983.
Wayne County, Michigan, which collects these taxes for Detroit, has a terrible collection rate. The Detroit News concluded that about half of property taxes go uncollected (an estimated $246 million last year). It will not be easy to correct this problem because so many property units are abandoned or foreclosed.