Detroit Property Tax Rate

The property tax rate in Detroit is one of the highest in the country, and it is a major obstacle to economic mobility. City leaders must continue to work towards their long-term goal of growing the tax base. This can be done by privatizing, consolidating, or outsourcing city services and limiting local government spending.

Homeowners in Detroit pay an average of 70 mills (one mill equals $1 of taxes for every $1,000 of taxable value) in property tax. Most of this comes from the city operating millage, while the remaining amount is owed to overlapping jurisdictions like school districts and county governments. The city must also pay off a massive debt, which is causing its property tax rates to skyrocket.

The proposed plan is expected to provide homeowners with a property tax cut of 17%, but it does not affect side lots. It also excludes community land uses such as urban farms from paying higher taxes. Lastly, the plan is designed to be revenue-neutral, so it won’t cause Detroit to lose out on any potential tax revenues.

Detroit’s current property tax system punishes homeowners while encouraging blight and land speculation. Some 30,000 neglected parcels in the city are owned by speculators who treat them as cheap lottery tickets, hoping to sell them for a big profit down the road. In contrast, wealthy cities tax their land at much lower rates and use the money to build more schools, roads and police departments.

How Do Property Taxes Work in Detroit?

In Detroit, property taxes are levied on a property’s taxable value, which is determined by the City’s assessor. The city levies 20 mills for operating purposes and nine for debt service. The rate is significantly higher than the national average and often burdens neighborhood residents. The city’s high property tax rates also discourage new businesses and residents from moving to the city, which has led to a decline in revenue for city services.

Mayor Mike Duggan introduced a plan to change the way Detroit property taxes are calculated, proposing a tax cut on structures and a rise on land. This is known as a split-rate or land value tax, and it would shift the burden to real estate speculators. Duggan says this will encourage them to develop their vacant land instead of holding it as cheap lottery tickets, where they gamble that future development will increase their value.

The proposed plan would also create a tax exemption for urban farms, which are defined as up to 15 acres of undeveloped land used to produce plants and animals that can be used for food. The City of Detroit would have to approve the farms, and their exemptions must be reviewed every three years. The City of Detroit must also ensure that the land used for urban farming isn’t being misused.