City Income Tax Might Fly If Trade Offs Like Lower Property Taxes Adequate
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Financial analysts consulted by MyBayCity.com do not automatically discount the idea of a city income tax as proposed recently by Judy Brunner and Tom Baird in an op-ed column in The Bay City Times.
But they are quick to suggest that any such move would have to be accompanied by significant positive trade-offs like lower property taxes, citywide wireless Internet access and perhaps even a new water source that could be easily obtained by securing the long-delayed partnership with the Saginaw-Midland Water System.
"The main thing is not to erect barriers to businesses and homeowners moving into the city but to lower existing barriers," said our source, a respected financial expert with many years of experience in the Detroit area.
"New York City, for example, has the highest taxes in the country yet is one of the most thriving financial centers in the world," states our guru.
One good development sparked by the current financial crisis is that local citizens are stepping up with ideas of their own, not waiting for the word from officialdom.
Zigmond Kozicki's call for consideration of partnerships has struck a chord with many local residents. So has the Times' call for combining fire departments from the city and townships and for a regional water authority.
Now is the time for such forward-thinking plans to come to fruition. As The Times editorialized: "The budget crises are everyone's problem. By uniting services, our cities and townships can stay afloat." That makes a lot of sense to us.
Mark Duncan, head of a task force for the Bay County Realtor Association,says local Realtors want a second look at the city's plans to give tax breaks to developers of a South End subdivision.
We have another idea: Why doesn't the city form a partnership with the Realtor Association to "incentivize" development? Having the city and Realtors at odds over how residential development should proceed would seem to be self-defeating.
We saw what happened when landlords opposed the Heather Ridge proposal: an unqualified disaster for the city and the taxpayers. We're not sure the landlords are that happy, either, since the whole debacle probably threw a wet blanket over job development. That would result in less population and fewer people to rent apartments. We'll be thinking about the effects of that debacle for a long time.
A 30 percent tax reduction on new purchases and developments would go a long way toward equalizing the present disadvantage townships have over the city. It should not have to cost homeowners a premium to move into Bay City. Homes and condos are sitting vacant because of the high tax rate which could be eased with discussions and agreement.
Consider the dilemma faced by a township resident wishing to move into the city. My BayCity.com consulted certified assessors to determine these comparisons. Take say, a home valued at $200,000. Taxes in a typical township surrounding the city are about 19.1 mills in the summer and 7.87 mills in the winter, or an annual total of about 27 mills. The taxable value of a $200,000 home when sold in a typical township is about $100,000, resulting in an annual tax bill of $2,700.
By contrast, in the city, a home valued at $200,000 when sold, resulting in a taxable value of $100,000, the taxes would be 38.58 in the summer and 5.89 in the winter, for a total of about 44 mills. Therefore, the taxes for the city home would be about $4,400, or about $1,700 more than the same newly sold home in a township.
The stunning 38 percent difference is what the city needs to address to revitalize growth in the city, according to our sources. The problem could be solved by fixing the current taxable rate for five to seven years on current home sales, the same amount of time an enterprise zone the city has proposed would be in force.
Then, the whole city would be an enterprise zone!
Regarding Mayor Mike Buda's veto of the plan to hire an outside company to manage bridges, it would appear that more verifiable estimates of the savings are necessary for a final decision. What really are the savings? How much additional work do the bridge tenders do when bridges are not operational? Since a significant savings is estimated, it would seem that a study would be in order here.###
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