Half of Detroit Property Owners Delinquent on Taxes
A few days ago I read an article about how the City of Detroit is once again teetering on the edge of bankruptcy. It cited a myriad of difficulties facing the city, but I found an article that really illustrates the crushing cycle that this badly mismanaged city has now found itself. From The Detroit News:
Nearly half of the owners of Detroit’s 305,000 properties failed to pay their tax bills last year, exacerbating a punishing cycle of declining revenues and diminished services for a city in a financial crisis, according to a Detroit News analysis of government records.
The News reviewed more than 200,000 pages of tax documents and found that 47 percent of the city’s taxable parcels are delinquent on their 2011 bills. Some $246.5 million in taxes and fees went uncollected, about half of which was due Detroit and the rest to other entities, including Wayne County, Detroit Public Schools and the library.
Delinquency is so pervasive that 77 blocks had only one owner who paid taxes last year.
The story also notes many residents say they don’t pay their taxes because they feel as though if the city can’t provide services in a matter they see fit, they should’t pay them:
Leola Wesley questions what services she gets for her taxes. Bill Lee pays out of his civic duty. Both are frustrated by the system.
Wesley paid $810 last year for her snug home near Chalmers. She was the only resident on her 32-parcel block who paid.
“It makes me not want to pay,” said Wesley, 85, who would move from her home of more than 20 years if she could afford it. “If nobody else is paying, why should I?”
A streetlight on her corner is out. Potholes are deep. She lives next to two vacant lots and rarely sees police patrol her block.
“There are so many empty houses, there’s nobody to pay,” Wesley said. “I’d like to know what is going to be the solution.”
Across town, Lee has dutifully paid his nearly $4,000 annual bill despite believing it’s too much. His stately brick Tudor in the University District is assessed at $53,810, meaning the city pegs its market value at $107,620. A recent appraisal he paid for found the house was worth $35,000.
“It was my commitment to seeing the city working,” said Lee, 67, a consultant who has lived there since 1982. “I know our difficulty is we are still operating like we have a million people. We have to have somebody to support that. … But it’s not fair that such a small percentage is paying.”
“Why pay taxes?” asked Fred Phillips, who owes more than $2,600 on his home on an east-side block where five owners paid 2011 taxes. “Why should I send them taxes when they aren’t supplying services? It is sickening. … Every time I see the tax bill come, I think about the times we called and nobody came.”
To make matters even worse, there are some property owners who are allowing their real estate to be foreclosed on and then buying them back at auctions which legally erases their debts:
Property owners increasingly are re-buying their land in tax-foreclosure auctions and legally erasing their debts. Last year, 600 properties were re-purchased by their owners, triple the number in 2010. That cost the city nearly $6 million in unpaid taxes.
“It was a business decision,” said landlord Lamont Hunter, who said the $45,400 he owed in taxes and fees were too high on four of his foreclosed rentals that he bought back at auction for $5,801 total.
“Each of these houses I bought back is in bad, poor areas I wouldn’t live in. I am better off to bid.”
Things are so bad in Detroit that a total of jut six businesses and five neighborhoods pay more than 1/3 of the property taxes collected. The five neighborhoods in that group paid 15% of the city’s taxes even though they represent about 2% of taxable land in the city.
First of all, I’m not willing to accept the arguments of some residents who say they shouldn’t have to pay taxes they owe because they aren’t happy with the services provided by the city. If you’re not happy with the way your city is being run, there is a place to remedy that. It’s called the ballot box. Let’s not forget that residents of Detroit elected Kwame Kilpatrick as their mayor. TWICE.
Second, the story says that collected taxes and fees total almost a quarter of a billion dollars. Do these folks not see how that kind of money might be helpful in providing the very services they desire? Imagine if everyone in America took on the logic of those in Detroit who decide not to pay taxes they owe because they don’t like what they get for their money? Our public schools are disasters, right? What if we all decided to stop paying taxes because we wee unhappy with them? Don’t like the police on your area? Don’t pay your taxes. See where this ends up?
Listen, if these people think tax bills are too high, unfair, or that their homes are undervalued? Fine. There is a remedy for that. However deciding not to pay taxes you know you owe because you don’t see the value in them sounds more like a cop out from someone who just doesn’t want to pay, not an act of protest or martyrdom.