Promote Homes & Fight Blight

Yes. No city is exactly like Detroit, but cities that have used higher taxes on land are like Detroit in many ways. Fifteen cities in Pennsylvania have used a version of a Land Value Tax called a “split-rate tax,” in which land is charged a tax rate higher than structures.

Allentown, a majority-minority city of 125,000 residents, adopted a split-rate tax in 1994. It reduced tax burdens on the vast majority of residents and businesses. Allentown has continued to grow while its sister cities have lost population, and its split-rate tax continues to deliver tax relief to residents. While Allentown is not as large as Detroit, its residents shared goals of securing growth, affordability, and fiscal stability.

Some point to Pittsburgh’s split-rate tax as a comparison, but there are major differences. In 1979, Pittsburgh’s City Council raised taxes on land, but chose not to reduce taxes on buildings. Their decision raised everyone’s taxes, but in a way that created more manageable burdens than a regular property tax. In the years after, Pittsburgh saw an 80% increase in building permits and construction. Then, Pittsburgh froze its assessments for thirty years. When they unfroze in 2001, City Councilors saw the large jumps in tax bills. They chose to repeal the higher land tax, even though reducing all property taxes could have created more tax relief.

Detroit officials studied these examples alongside all of Pennsylvania’s split-rate cities. The study found evidence of greater investment and affordability, but it also showed what else needs to happen. In a high-tax city, the best use of a Land Value Tax is to deliver tax relief. Sustaining the Land Value Tax depends on consistent property tax assessments and stable tax bills. Evaluating Pittsburgh’s errors has strengthened Detroit’s proposal.

No. The Land Value Tax Plan has no effect on current school funding.

Detroit schools are funded by a state fund that distributes money for each student in the district. The amount of money DPSCD receives per student is not affected by the reform. School funding can only be altered by changes in state education policy.

Detroit Public Schools (DPS) collects local property taxes that currently pay off the school district’s legacy debts. These taxes are not affected by this proposal. However, tax-base growth produced by a better tax structure would allow DPS to retire its legacy debts faster, giving it more freedom to fund capital projects and service improvements earlier. While the Land Value Tax Plan eliminates the state school aid fund taxes on structures, the increase in the taxes on the land will help offset the reduction.

The Land Value Tax replaces property taxes the city currently collects.

Detroiters pay the lion’s share of their property taxes on the buildings they live in and use. When property taxes are reduced, buildings get a large tax reduction, while the land underneath them pays a fair share of the Land Value Tax. Under the Mayor’s plan, a typical homeowner saves 27% on their taxes, which is the combined effect of a 38% property tax reduction and the higher Land Value Tax.

Properties that are vacant and underutilized pay more. Properties with higher land values, such as those in major business districts, pay a greater share of the total Land Value Tax. Even so, well-used downtown properties get tax reductions. And while underused parcels in Midtown and Downtown pay more to hold land out of its best use, investments in property are easier to make.

Unimproved, taxable land always pays more.

If you own less than four side lots, the decrease in the taxes on the house more than offsets the increase in the taxes on the side lots. However, if homeowners aren’t comfortable with the increase on side lot taxes, the city will buy back your side lots at no cost or penalty.

Poverty exemptions are not affected by the Land Value Tax Plan. When a homeowner enrolls in the Homeowners Property Exemption (HOPE), their house is exempt from all property taxes and the Land Value Tax. Owners with a 100% HOPE exemption will continue not to pay taxes. Owners with a partial HOPE exemption will usually see a net decrease on the taxes they still owe.

Yes. Renters pay property taxes indirectly through their monthly rent. If rental properties have lower tax costs, there are only two possibilities: rent costs will stay the same or go down. The Land Value Tax Plan has no effect on regulated affordable housing. Detroit’s deeply affordable housing units—public and rent-regulated private housing—are exempt from property taxes.

State legislation needs to be passed first. From there, the City of Detroit can put the Land Value Tax Plan on the ballot for Detroiters to vote on.

While homeowners and a majority of small business owners will be paying less property taxes, land that is vacant, blighted or underutilized will pay more in taxes, balancing the system.

Yes.

Based on a study of Detroit’s 2014-2017 residential reassessment, the reform is expected to immediately reduce residential tax foreclosures by at least 22 percent for properties currently at risk of foreclosure. If Detroit still faced the foreclosure levels it did in the mid-2010s, the effect would be larger. Tax reductions would also help people stay current on taxes, but to a lesser degree.

Yes, most save immediately. All businesses get access to a tax system that favors inclusive relief over selective support.

In Detroit, approximately 70% of retail businesses save on taxes immediately. The largest savings occur for neighborhood-based businesses like supermarkets, restaurants, child care, and merchandisers.

A Land Value Tax makes Detroit a more attractive place to set up small enterprises. A 2022 study of Pennsylvania shows that small, capital-intensive firms—like manufacturing, construction, and retail—are more likely to form in split-rate cities. On average, split-rate cities add 60 to 100 businesses within three years of implementation, or 7–12% growth in total local businesses.

Small businesses benefit from inclusive rules that favor business attraction. Most cannot access the tax incentives tailored to bigger firms. The Land Value Tax plan provides a consistent stimulus to all types of business, one without barriers to access.

For-profit, neighborhood-based farms have tax increases that will not affect their operating sustainability. Tax-exempt farms are not affected.

The Land Value Tax plan rewards taxpayers for creating community value and making productive use of land. Urban farming is one productive use of open space. For the foreseeable future, Detroit will have many neighborhoods where the best use of vacant land is farming or other land-based businesses.

Most urban farms and community gardens operate where land values are low, meaning their Land Value Tax is also low. In a typical Detroit neighborhood, an acre of taxable farmland pays an annual tax bill of $225. Under the LVT, it would rise to $588. A side-lot garden pays $25 today and $65 under the plan. For most farms, labor and capital costs are much more significant than the Land Value Tax. The land value tax is 2-3% of commercial farm revenues.

In areas of growth, urban farms could become more attractive for redevelopment. If these farms choose to sell, their profits allow them to expand operations. The 6,200 acres of empty residential lots held by the Detroit Land Bank Authority are a reserve of potential farming sites. Alternatively, farms could be put under conservation rules or deed restrictions, permanently reserving them from development and reducing their land value.

Non-profits, educational institutions, and religious organizations are exempt from local property taxes. The plan doesn’t affect properties that don’t pay taxes.

Some nonprofits and churches own portfolios of taxable property: storefronts, homes, or vacant lots not within their nonprofit purpose. The effects on these portfolios depend on what they contain.

Homeowners will be the biggest winners under the Land Value Tax Plan. Completely abolishing property taxes would not work for three main reasons.

• It’s less fair. Eliminating all taxes would let homeowners pay no taxes while asking businesses and renters to pay the nation’s highest property taxes. We don’t want to abandon residents because they are not homeowners. 
• It does not protect public services. Eliminating taxes on homeowners would result in an $87 million loss in local revenues that directly support public services.
• It would be unconstitutional. Many taxes on Detroit homeowners (tri-county arts millage for example) are paid by non-Detroit homeowners. It is unconstitutional to relieve taxes on Detroit homeowners while enforcing other homeowners to still pay.