Detroit Mayor Mike Duggan’s plan to modernize the city’s tax structure is critical to the progress of Michigan’s largest city. It would provide long overdue relief for overtaxed homeowners and make Detroit a magnet for investment and businesses seeking opportunities.
Duggan’s recently announced Land Value Tax Plan, simply put, is the single most important reform proposal Detroit has seen in generations that can move our city forward. As an organization focused on improving families’ lives in cities and communities in Detroit and beyond, the Kresge Foundation supports addressing the fundamental flaw in Detroit’s tax structure that has stymied homeownership, investments and ultimately, the hope of Detroit residents and small businesses to build wealth and more fully participate in the economy.
That flaw is an unfair, outdated tax structure that makes homeownership in Detroit prohibitively expensive, even unaffordable compared with neighboring suburbs. And while an owner of a single-family home in Detroit may pay thousands of dollars a year in taxes, land speculators who own weed-choked vacant lots or carcasses of buildings that have been empty for decades pay far, far less. In fact, 2,500 empty lots in Detroit belong to just 10 owners, and they pay an average of less than $30 a year per lot.
The Land Value Tax Plan changes this corrosive dynamic. The plan will reduce the tax rate for homeowners, small businesses and developers who build in the city and its neighborhoods. Based on research, the tax rate for 97% of Detroit homeowners will go down. The plan also will benefit Detroiters who are renters by creating more affordable and safe housing in the rental market. At the same time, the plan raises taxes on owners of vacant, unused and unproductive land. In other words, the Land Value Tax Plan’s two-fold approach rewards growth and investment, while discouraging land speculation and blight.
At the heart of the Land Value Tax Plan is its potential to open the door to homeownership for an entirely new generation of Detroiters who can’t own a home in their city because the cost is simply too high. And because homeownership helps individuals and families create wealth, the Land Value Tax Plan is an invaluable tool that can help reduce economic inequities and close a wealth gap that has left predominantly Black families with a disproportionately minuscule slice of the economic pie. The plan will reduce a typical homeowner’s taxes by 27% over three years, putting more money in their pockets so they can fix a vehicle they need to get to work, buy groceries to feed their families or save for the future.
The Land Value Tax Plan takes the additional step of discouraging a long-running scourge that has plagued Detroit for more than 50 years: blight. Even as the plan slashes taxes for homeowners, small businesses and developers who build in Detroit, it holds land speculators accountable by making them pay for unused, unproductive empty land and preserves support for local public services like schools, police and fire.
By making homeownership affordable, the Land Value Tax Plan can revitalize neighborhoods across Detroit, equitably sharing the prosperity in every district of the city. For 100 years, in our work building and rebuilding communities and neighborhoods, we have seen an important force at play time and time again: Homeownership can bring pride and energy to neighborhoods. And easing the path to homeownership can also create local jobs in construction and skilled trades that pay good wages and allow families to enjoy a secure middle-class life.
The Land Value Tax Plan takes aim at the heart of what has undermined Detroit for decades: an unfair tax structure that holds back growth and burdens homeowners and small businesses. In turn, this plan can help reduce poverty and build wealth. By truly supporting families’ aspirations of building wealth and joining the economic mainstream, the Land Value Tax Plan can help Detroit raze the city’s eyesores and raise hope for a brighter future.
Editor’s note: The Kresge Foundation is a philanthropic supporter of BridgeDetroit. View our full list of funders here.