Detroit discusses Land Value Tax Plan to lower property tax

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A new Land Value Tax Plan is being discussed by the Detroit City Council. The city is considering implementing it to lower the property tax. Detroit doubles the national average regarding property tax rate. The property tax rate for a median-valued home in Detroit is about 3.21% in 2023. Detroit’s Land Value Tax Plan will lower property taxes by 17%; instead, increase the taxes on the vacant land in Detroit.  

This will supposedly lighten the load and relieve homeowners who have had to pay high property taxes. The difference between property tax and land tax is that land doesn’t have structures on it, and once the land has a structure, it is officially considered property and qualifies for a property tax. 

According to Nick Allen, a doctoral candidate at the Massachusetts Institute of Technology DUSP (Department of Urban Studies and Planning), the value of homes in surrounding cities have higher values that at times double the value of homes in Detroit even though they may have identical infrastructure. 

Nick Allen said “The Land Value Tax Plan can raise property values and household wealth in Detroit, while lowering the property tax. Taxes on a $250,000 home moves closer to the regional average. The current average tax is $8,450 and the average tax would lower to $7,345.” 

The Detroit City Council will decide whether to place the Land Value tax Plan on the ballot by November. The Detroit Voters will vote on whether the tax plan will be adopted on Feb 24th, during the Presidential primary election. If the tax plan is favored in voting, homeowners would see the lowered property tax in 2025.  

Newly added Detroit City Council Member, Fred Durhall III, fully supports the Land Value Tax Plan. 

“We all talk about the development that happens downtown. We want our neighborhoods fixed also and this is the tool to do that and that’s why I’m pushing full, for it, and ahead on this plan.” 

Tyrae Jackson, who owns property in Detroit, had mixed feelings about the Land Value Tax Plan. 

“I am a homeowner and would love the property tax cut, but I feel like the plan’s structure is a catch-22 because they are taking the debt and just putting it elsewhere. I’m not opposed to it, but I would need to know the details of it.” 

The Land Value Tax Plan may benefit homeowners, but it could put landowners at a disadvantage because they would be taxed at a higher rate on the land they own.  

“This means that the Land Value Tax Plan does nothing, but lower my property tax by 17% and . just dumping it all on the landowners, which would put them in a hole because land taxes are usually much cheaper than property taxes. You’re penalizing them for not having a structure on their land?” 

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