Detroit’s been having a tough time of things over the past couple of decades. Industry closing, people leaving, rotting infrastructure, etc. They’ve even been taken over by an emergency manager appointed by the state. The problems are legion, the proposed solutions are all over the place. My humble proposal is short, and to the point.
A state tax holiday for people living in Detroit.
The specifics may be a bit up for debate (5 years? 10 years?) but at the core of Detroit’s problems is a lack of people, and specifically a lack of young people earning money. People don’t move *to* Detroit – they move to the suburbs. Why? Lower crime may be one reason, but typically the issue is jobs and lower taxes. You have to pay a city income tax to live in Detroit, on top of state taxes, and federal taxes. The state has a big interest in getting Detroit in the right direction – instead of being a resource drain. So… the state should give a tax holiday to anyone living in Detroit for, say, 5 or 10 years.
There are people who would move in to the Detroit city limits immediately to save a thousands of dollars in state income tax. Detroit would get income tax from those people to help fund the city improvements that are needed for those areas. The state would lose revenue from those people, but would, over the long haul, be required to spend less to sort out Detroit’s problems and prop them up when necessary – the residents themselves would be doing so.
More people moving to Detroit in the short term would probably mean more commuting – people may drive to Royal Oak or Ferndale for their jobs, but live in Detroit for the tax savings. But over time, more people living in the Detroit city limits would mean more demand for businesses and jobs to locate in those borders as well.
Why should *businesses* get tax abatements and deals to move in to Detroit (or any city) but not residents? Detroit needs more residents than it does businesses. The more residents that it has, the more businesses will follow to serve those residents. An extra 50,000 people living in an area of Detroit should be enough to get some Kroger stores to open up to serve those residents, right?
Yes, this is overly simplistic, but it’s also something that shouldn’t require a lot of planning. People fell over backwards trying to take advantage of the ‘new home buyer credit’ a few years back, which essentially just saved them a few thousand dollars one time, while generally saddling them with huge mortgages. People move to states at least in part because of income tax codes (obviously not always, but for many people it’s a factor). Detroit needs active, productive people to live there. Give them an incentive to do so and I believe they will.
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