Detroit homeowners would pay 17% less on property taxes under new proposal, mayor says

Mike Duggan says Detroit homeowners would see a 17% drop in their property taxes under a new Land Value Tax plan he's proposing.

If approved by voters, 97% of Detroit homeowners would see a tax cut, the mayor said

To get there, the city would reduce the value a property in Detroit could be taxed at. To offset the cuts, the plan would also raise the taxable value on land, which includes abandoned buildings, parking lots, and scrapyards.

The Land Value Tax plan would make Detroit's properties more competitive and valuable when compared to homes in the suburbs, the mayor said. In a news release from the city, Duggan said his team had held more than 50 meetings over the past three months with groups that would be impacted by the tax plan. 

"The proposal we developed together provides homeowners with an average 17% property tax cut while protecting side lots and community land uses such as urban farms from seeing any tax increases," he said in a statement.

The goal of the plan is to make Detroit's property tax rates in line with nearby cities like Southfield, Ferndale, Warren, and Grosse Pointe communities. To get there, Duggan is proposing reducing the number of mills that a homeowner would pay on their property.

The millage rate is the rate at which property taxes are levied on property. That rate is calculated by multiplying the taxable value of the property by the number of mills levied. According to the state, a mill is 1/1,000 of a dollar.

Currently, Detroit land is taxed at a low rate: about $30 for an average lot. The proposal would more than double the cost to $67 per lot.

"We’ve had a lot of very constructive conversations and the feedback we received helped us to create a proposal that provides homeowners a 17% tax cut, reduces the tax increase to others and is fiscally sound," Detroit Chief Financial Officer Jay Rising said.

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Before Detroit voters could vote on the plan, the proposal would need to pass the Michigan legislature. State Rep. Stephanie Young will introduce legislation for the proposal next week.

If authorized by state lawmaker, the city council could decide to put the proposal on the ballot, which residents would vote on in February 2024. If approved, the tax cut would go into effect in 2025. 

Find more information about the proposal here.