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Detroit Mayor Mike Duggan proposes Land Value Tax Plan at Mackinac Policy Conference

Posted at 5:02 PM, May 31, 2023

MACKINAC ISLAND (WXYZ) — Detroit Mayor Mike Duggan has unveiled a new tax proposal during a speech at the Mackinac Policy Conference.

Duggan's plan is called the Land Value Tax Plan. Under it, cities like Detroit would be able to increase the taxes on land, while reducing the taxes on homes and structures.

The plan is designed to change the current system, under which vacant land and blighted buildings are taxed at a lower rate than single-family homes and other structures.

“We have a property tax system that punishes anyone that builds in Detroit and strongly rewards anyone who owns vacant land and completely neglects it,” Detroit Mayor Mike Duggan said. “Our land has value and it’s time we tax it that way and stop incentivizing blight.”

Here is information on the city of the effect of the plan:

Homeowners


Homeowners are the biggest winners under the Land Value Tax Plan. Ninety-seven percent of Detroit homeowners would see a reduction in their property taxes while the remaining 3% would see no change at all. The Land Value Tax Plan provides more relief than the NEZ Homestead exemption. The median homeowner will save 27% on their tax bills. The average $50,000 home in Detroit will see a $450 tax cut, while a $100,000 home will see a tax cut of $900.



Side Lots



The CIty of Detroit has sold more than 20,000 side lots to homeowners all over the city. Under the Land Value Tax Plan, the median tax on a side lot will go up by about $40. However, for homeowners who own less than four side lots, the decrease in property taxes on the house will more than offset the increase in the taxes on the side lots.



Vacant Lots 



The City of Detroit spends $5 million dollars every year cutting grass and clearing illegal dumping on vacant lots, while the owners pay a fraction of that in taxes, approximately $30 per vacant lot. The Land Value Tax Plan will increase taxes on the median vacant lot by 185%. This move will shift the burden of blight from Detroiters to the land speculators who have profited from Detroit’s tax system for far too long.



Scrap Yards



There are nearly 900 scrap yards throughout the City of Detroit. Since 2012, there have been 20 new properly permitted scrap yards and dozens more that don’t have permits. The City has spent nearly $2 million hiring staff and personnel to crack down on scrap yard complaints while scrap yard owners pay a total of less than $700,000 every year. The Land Value Tax Plan will increase the median tax bill for scrap yards by 100%.



Warehouses



The median tax on warehouses will go up 10%, however 30% of warehouses will see a reduction in property taxes–rewarding those who efficiently use their space and maintain their structures.



New and Expanded Developments



The land value tax plan will also make building, rehabbing, and expanding multifamily housing more affordable. Multifamily housing will benefit from a median savings of 20%. New housing developments will be easier to finance and less expensive to operate. The tax savings will help spur more high-quality, affordable housing throughout Detroit.



Small Businesses



Under the Mayor’s Land Value Tax Plan, 70% of small businesses can expect to see a reduction in their property taxes. A typical retail business will see 5% in savings, while others may see an increase based on the size of their parking lot and the location of their business. While the Land Value Tax Plan will increase taxes on vacant, unproductive land, the City of Detroit is working on a plan to protect existing businesses and developments through a tax credit system. Properties that meet a certain development threshold will be capped at a maximum increase, and businesses that meet zoning requirements for parking will be protected from increases on those parking spaces.

The proposal will have to be passed by the legislature to take effect. Once approved by the legislature, municipalities like Detroit would have the option of enacting it with the approval of residents.

Duggan wants to get the Land Value Tax Plan on the Detroit ballot next February. If approved, the Land Value Tax Plan would be phased in over three years beginning in 2025.