Eliminating the income tax is financial suicide
There has been a lively discussion on our website (www.hamtramckreview.com) about whether to abolish the city’s income tax.
One reader insists that the city’s ongoing re-assessment of property values will bring in more revenue and thus, cover any loss in revenue from getting rid of the income tax.
Also, this reader argues, by eliminating the tax, that would attract developers, entrepreneurs and folks looking for a place to live.
And also, this reader has argued that if need be, ask voters to increase the city’s millage to make up for any financial loss.
Hamtramck’s income tax is 1 percent for those who live here, and ½ percent for those who work here but don’t reside in Hamtramck.
To us, that is hardly a deterrent for folks to do business and live here. But perception is everything, and perhaps this could be a turnoff for some.
But taking away the income tax would be an immediate loss of $2.5 million a year.
The city’s total budget is $16 million – so obviously such a hit to the budget would be catastrophic.
Also, the re-assessment of properties won’t mean there will be a sudden influx of money gushing into the city. For sure, our property values will be increasing. We have not had a citywide re-assessment in about 50 years.
But that increase in value won’t happen until properties change ownership. Otherwise, by law, the taxable value is capped for current owners.
Also, asking voters to increase the millage is out of the question. By law, we are also capped by how many total millages we can charge property owners.
A bigger point, though, is why penalize property owners with a further financial burden so we can lift the income tax? Wouldn’t a higher millage rate, if we could increase it, be a turnoff to any potential investor?
It seems unfair to keep punishing property owners. It’s better to spread the financial obligation around to everyone – not just property owners.
Besides, it’s likely voters would reject an increase in property taxes.
But even if you were to buy into the thinking that an increase in property assessments will be some magic financial bullet, wouldn’t it make more sense to first wait and see if that bundle of revenue comes in before rushing to eliminate the income tax?
We mention all of this because there were some city council candidates who campaigned on a promise to lower taxes and water bills. This is reckless thinking.
Do you really think the folks at the state Treasury Department would allow Hamtramck to commit financial suicide?
Move on folks, there’s nothing to see here.
Nov. 29, 2019
6 Responses to Eliminating the income tax is financial suicide
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Nasr Hussain
December 7, 2019 at 12:07 pm
All fear-mongering tactics that can be rebutted one by one.
But for the sake of not wasting anyone’s time on an issue that has been discussed enough I pose this question:
What is the worst that can happen if we give this idea a try?
The worst: An emergency financial manager will be appointed by the state which was done before and was not the end of the world for the city residents.
Poor Hamtramckian
December 7, 2019 at 10:50 pm
You mean less taxes? Until we have a Republican Mayor/Council it would never happen.
Democrats love taxes!
Dennis Nowak
December 7, 2019 at 11:17 pm
Is there any support for this abolition of the city income tax other than Mr. Hassan?
It seems that this becomes a moot point unless there is a prospect of four votes on City Council.
For the record, I think that Cathy Square and Katrina Powell did an outstanding job of tacking a financial emergency with Hamtramck and creating a budget surplus.
Nasr Hussain
December 8, 2019 at 1:36 pm
@ Dennis
We will know how much support does this proposal has once the issue is placed on the ballots.
It’s fair that Hamtramck residents should be the ones who decide this issue.
We should trust them and not treat them like kids.
Resident
December 9, 2019 at 11:12 pm
Any business which can’t find 1% or more in savings through accounting, needs to hire new account. Paying city tax is a business expense which is deductible on business’s federal tax return. Net cost to business for paying Hamtramck income tax is DEFINITELY less than 1% (more like 0.79%).
Taxes should be lowered for property owners. Looking at my summer tax bill, the city is charging 19.562100 mills for CITY OPERATING. City should cut it in half and give the residents and homeowners a break. It doesn’t require a referendum. All it takes is an act of the City Council.
City should lower property assessment further. Lower taxable value means a break for the property owners from tax hungry Wayne County Taxing Atthority (WCCCD, RESA, WCTA, WCZA, WCAIA).
-Resident
Nasr Hussain
December 10, 2019 at 1:03 pm
First: State and local taxes deductions is limited to $10,000 only.
Second: The issue is not necessarily the money, the issue is the image of the city and the extra headache it causes for businesses and individuals.
Third: Hamtramck has to compete fairly with other cities, whether for residents or businesses, and removing the income tax will help us do so.