The fight for tax justice in Detroit affects every resident of the city. You are subject to tax injustices if: you pay property taxes or a water bill, or if anyone in your family uses Detroit Public Schools, libraries, parks, or special needs education.
This is done mostly for the benefit of the wealthy investors. The tools of extracting funds from you are:
- Property tax over-assessments
- Tax captures quietly taken from your property taxes
- Tax abatements that cancel property taxes for wealthy investors
- Tax Increment Financing
- Capturing income taxes of site workers
- A rain tax added to water bills
Property tax over-assessment means your property is rated at an overly high value so more can be charged to your property tax bill. This has been occurring for at least 15 years. Research on over-assessments from 2010-2016 found that Detroit taxpayers were over-assessed $600 million. Studies since then have shown that practice continues. The Coalition for Property Tax Justice has been fighting over assessments and seeking refunds for abused residents. They recently reported a University of Chicago study that found that currently Detroit is over-assessing all home value ranges, but mostly at the lowest valued homes. Of homes valued at $34,700 or less, 72% are being overtaxed now.
Over-taxation has made property taxes less affordable for some who, as a result of an inability to pay exorbitant fees, have then lost their homes. The city has acquired so many properties in this fashion that they now own 24 % of the parcels of the city. Through the Detroit Land Bank Authority, they prioritize selling some parcels in bulk to investors and resist selling them to folks in the neighborhood or returning them to owners that they over-assessed.
Bye-Bye Property Taxes
When homeowners pay property taxes that are committed to public purposes, many trust the city to forward the tax revenue to the public services listed on our tax bills. That trust is misplaced.
In the last 10 years, Mayor Duggan has overseen the capture of $517 million from our taxes without telling taxpayers how these funds are being used or when they are taken. There is no city site where this is reported, despite the Michigan Constitution’s requirement (Article IX, Sec. 23) that all public money must be reported in public records and the information must be accessible.
Detroiter’s for Tax Justice (DFTJ) submitted multiple Freedom of Information (FOIA) requests and was able to gain access to records showing that the city took $517 million from our taxes. Their analysis shows that during the period between 2014-2023, Detroit schools lost $148 million, city services lost $148 million and the Library system was hit for $23.5 million. It is projected that once 2022-23 fiscal year data is provided, the take will be over half a billion.
The next obvious question is: where did the money go? The city is evading answering DFTJ FOIA’s on this question. But given how these funds have historically been diverted to fund the schemes of large corporate actors to the likes of the Ilitch family, Dan Gilbert, and Piston’s owner Tom Gores the most likely assumption is that once again, the hard earned money of everyday Detroiters are unwittingly serving as the bottomless coffers for the greedy ultra-rich, with zero accountability.
These same billionaires not only received grants but they were also given 35-year tax abatements that were even more beneficial to them. So they pay nothing to the city, school, or library services for their tenants or employees that live and/or work in the city. Detroiters are expected to pay their costs without a blink.
Another tax scheme for the enrichment of the ultra-wealthy is called Tax Increment Financing, or TIF’s. When a downtown building is undergoing rehabilitation and the building grows in value, the property tax on that value is paid to the Detroit Economic Growth Corporation (DEGC), not to the city’s public Treasury. The DEGC is then able to reallocate the money back to the owner to help pay for their rehab. For just one large commercial building, that can be a million-dollar g(r)ift!
The tax abatements for a seven-year period cost the Detroit school district $172 million. Add that to the $148 million captured from their millage over nine years and we can document $320 million lost to the education of our children.
If we apply the schools’ tax abatement loss proportionally to the Detroit Public Library, the number would be $26.9 million. Add the tax capture loss and the Library has taken a $50.4 million hit.
To look quickly at one beneficiary, and highlight the shameless corporate welfare that benefits the ultra rich, we can look at Little Caesars Arena (LCA). Many believe that the Ilitches own it. However, It is actually owned by the Downtown Development Authority, which is under the direct and sole control of the Mayor. That means the Illitche’s pay no property taxes. Nor do they pay any rent. The LCA was built with public funds. Rick Snyder’s “emergency” manager took $80 million from the Detroit public schools to help pay for the LCA. Yet the billionaire Ilitches get free use of it, no paybacks.
If all this tax abuse wasn’t enough, Mayor Duggan had a bill introduced last September in the House of Representatives that would give him the power to raise or lower property taxes based on his opinion of the owner’s land use. Called the Land Value Tax (LVT,) it would double or triple property taxes on all vacant land, even side lots sold to residents or on residential or businesses properties that the Mayor deems blighted or “scrap yards.” Exempted would be the vacant lots owned by the city, which is most of the vacant land within the city borders. Duggan has said that the city could then take land from owners who can’t pay his escalated rates in order to “drive them to the suburbs.”
In another instance, Duggan repeatedly claimed that there were 400 scrap yards in the city, but when DFTJ FOIA’d the list, the city provided only 96 addresses with no business names. On that list were occupied residential homes, vacant lots, abandoned structures, duplicate and also non-existent addresses…and only four scrap yards. When asked about this disparity in a community meeting, he showed a slide of downtown parking lot sites that were all labeled as “scrap yards.”
For eleven days, DFTJ had teams in Lansing to show all 110 representatives the clear unconstitutionality of the proposed LVT legislation, the land seizure motive, the unsoundness of arguments by bill lobbyists. The result is that the bill has been stalled after it failed on October 11th.
After studying city tax abuse and the false information on the LVT, the DFTJ is planning more teach-ins across the city to prepare residents for the challenges to come. The LTV fight proved that if Detroiters organize and persist, they can win. This is an issue I wrote about previously for the Metro Times and exposes the cynical view of our elected officials about the right of low and middle income people to be able to live affordably and have access to the kinds of services that provide quality of life for all residents in the city of Detroit.
Russ is co-organizer of Detroiters For Tax Justice, founded in 2023. He is an east side Detroit resident who has been active in neighborhood organizations for many years. He is a City of Detroit retiree who worked as a Water Plant Operator and later as the skilled trades Apprenticeship Program Coordinator.
