EM Plan: Revenue Adjustments And Tax Reform

Detroit - Emergency Manager

Revenue Adjustments And Tax Reform

Below is a summary of a proposal made by Kevyn Orr to the creditors of the city of Detroit on June 14, 2013 regarding plans for tax reform in the city. These items are discussed on page 79 of the original document. The purpose of this post is to give you a simple summary of this section of the plan. Here is copy of entire plan.

Detroit needs to increase the amount of revenue it brings in in order to grow and better meet its obligations. Kevyn Orr is proposing the following actions.

Expanding The Tax Base

• Population growth will increase the base and that in turn will increase revenues.
• As the city provides improved services and more employees locate in the city, the value of real estate in the city will increase.
• Further, as vacant parcels of land become occupied so will the tax revenues increase for the city.

Review And Adjusting Tax Rates

• The city already has high tax rates that are near the statutory maximum.
• The city believes if income and property tax rates are lowered to levels at least equal to competitive municipalities the result could be the slowing down of the crippling population and job outflows from the city.
• The city needs to improve its rate of collecting taxes that are owed.