The New State Wide Initiative I am Advocating: Property Tax Reform on Real Estate
<< Is this the future of Housing in Michigan for our Children? Should those who work and own homes bear the entire cost of infrastructure and services? In Michigan, our property tax exemption laws have remained virtually unchanged since 1894. The exemptions for many uses, especially for grandious housing for the employees of non-profit organizations is being abused. In many states, it is recognized that general exemptions to State taxes can be applied to certain land use. However, local millages that provide essential fire, water, sewer, emergency responders, roads, drainage, sewers and other services directly related to owning property are assessed on all land and structures.
Exemption Based on Belief - Seperation of Church and State
Why does this not make sense? What if you were a farmer in a small town, and all the 25 non-profits in your county built facilities adjacent to your farm. Then, this area was incorporated as a Charter Township, under the name 'Farmer Township". You as the sole owner of private land in Farmer Township, MI subsequently were outvoted by all the registered residents living in tax exempt housing and were now required to pay a sufficient level local millages on your Farm and Home to support the entire Police, Fire, Water, Sewer, Road and other elements the non-taxpaying residents voted for. Owning and using land comes with a moral obligation to pay a fair share. Here in Livingston County, there are numeruous residential homes that far in excess in value of other single family suburban homes in the adjacent area. And, they are occupied by single religious over many years and decades being used as defacto private residential housing while tax exempt. As a father of 9 children, who had walked the walk of home ownership since age 20, never rented and have 2 adult children that own homes in my township, and as a Libertarian, I object to the confiscation of my private wealth to support the belief structures of others through subsidy of their wealthy living arrangements. The 1894 Property Tax Exemptions are not fair to working families.
DDA's
Collection of Property taxes, and then handing them over to unelected politically connected appointees to dispurse without voter consent is wrong. The DDA structure in Michigan creates a multi-tier taxing authority, outside of official government. Now that local revenues are falling, this is creating friction between DDA's and local Cities. And it should. Americans fought a war against 'Taxation Without Representation'. Some of our Legislators in Lansing decided that didn't mean anything, and wanted to create a structure to spend our local tax revenue without passing additional millages. DDA funds are concocted by a strange formula that diverts voter aproved millages for specific purposes, to DDA's to use as they please. This is abhorant, and must cease in Michigan. I call on all local government officials representing Villages, Townships and Cities to challange the DDA stucture in court, and to press the Legislature to eliminate it. If a DDA is to be created, there needs to be a seperate voter approved millage for this specific body. And, those who run it must be directly elected.
My Summary Proposal for Michigan Property Tax Reform
Governor Snyder has pledged property tax reform as part of his long term agenda, focusing on businesses and the taxes on working assets. Property tax when discussed with Michiganders however, means the taxes paid on homes, land and structures that include funding for local government.
Michigan’s property tax system was shaped before the turn of the last century. The responsibilities of today’s local municipalities are not well served by the paradigms of that ancient system, which included omnibus exemptions to institutions popular at that time. Today, fairness dictates that all benefactors and stakeholders contribute to essential services that they depend on, and not expect homeowners to pay the majority of costs for municipal infrastructure.
Property taxes millages must not circumvent the nature of representative government, whereby elected officials can be held responsible by voters. One heinous example is the recent introduction of taxing authority vested in DDA’s with unelected boards which overlap the legal framework of Counties, Townships, Charter Townships, Cities and Villages. The ‘shadow’ government structure of DDA’s is ripe for cronyism and corruption.
Local millages include essential and non-essential assessments. The value of essentials services such as Police and Fire are reflected in how often these two millages show up on local ballots. Yet as farmland becomes suburbia, and suburbia becomes urbanized, the burden of these elements is borne largely by individual homeowners, giving multimillion dollar property owners a free ride. Police and Fire millages would be lower overall, if they were allocated to all properties.
Lastly, local units have overused tax abatements to create chosen winners and losers in the business community. Property tax rates for businesses should be uniform. The practice of tax shopping and preferential abatement is a clear signal that local property taxes are too high for all businesses. Preference given to attracting new businesses penalizes existing local businesses, which is counterintuitive to long term economic stability.
I propose the following structural changes to Michigan’s property tax system:
1. Eliminate the two tier system of homestead versus non-homestead property taxes. As the population of Michigan has declined, and a surplus of homes exists, owning and maintaining a second home will keep up property values, and prevent blight. The largest effect of taxing non-homestead property at a higher rate, is that it raises rents on the poor.
2. Eliminate exemptions from local property tax millages for essential services. Fire, Police, Water and Sewers are essential services. What constitutes ‘essential’ should be enumerated by statute. While homeowners provide for the fire department, multimillion dollar structures owned by certain entities are exempt. Any group can locate a multimillion dollar mega-facility in a small township, burdening it with infrastructure costs, while few from that township may actually be beneficiaries or members. Fairness dictates that those that want to own and use infrastructure pay their fair share. Spreading fairly the costs of essential infrastructure will reduce property taxes on individual homeowners.
3. Eliminate the DDA (Downtown Development Authority) framework, and return tax oversight authority for downtown areas back to elected city officials.
4. Require oversight of essential services by elected boards giving citizens direct control of millage based entities. This should include a restriction on the holding of simultaneous offices on Boards, while holding office as a elected official of any associated local unit of government.
5. Restrict abatements on property taxes by local government officials. Abatements provided to businesses by local units of government, violate the consent of voters that passed local millage rates at the polls without exception. Michigan statute should make it clear, that voters pass millages for all.
John Hargenrader - December 2011
Exemption Based on Belief - Seperation of Church and State
Why does this not make sense? What if you were a farmer in a small town, and all the 25 non-profits in your county built facilities adjacent to your farm. Then, this area was incorporated as a Charter Township, under the name 'Farmer Township". You as the sole owner of private land in Farmer Township, MI subsequently were outvoted by all the registered residents living in tax exempt housing and were now required to pay a sufficient level local millages on your Farm and Home to support the entire Police, Fire, Water, Sewer, Road and other elements the non-taxpaying residents voted for. Owning and using land comes with a moral obligation to pay a fair share. Here in Livingston County, there are numeruous residential homes that far in excess in value of other single family suburban homes in the adjacent area. And, they are occupied by single religious over many years and decades being used as defacto private residential housing while tax exempt. As a father of 9 children, who had walked the walk of home ownership since age 20, never rented and have 2 adult children that own homes in my township, and as a Libertarian, I object to the confiscation of my private wealth to support the belief structures of others through subsidy of their wealthy living arrangements. The 1894 Property Tax Exemptions are not fair to working families.
DDA's
Collection of Property taxes, and then handing them over to unelected politically connected appointees to dispurse without voter consent is wrong. The DDA structure in Michigan creates a multi-tier taxing authority, outside of official government. Now that local revenues are falling, this is creating friction between DDA's and local Cities. And it should. Americans fought a war against 'Taxation Without Representation'. Some of our Legislators in Lansing decided that didn't mean anything, and wanted to create a structure to spend our local tax revenue without passing additional millages. DDA funds are concocted by a strange formula that diverts voter aproved millages for specific purposes, to DDA's to use as they please. This is abhorant, and must cease in Michigan. I call on all local government officials representing Villages, Townships and Cities to challange the DDA stucture in court, and to press the Legislature to eliminate it. If a DDA is to be created, there needs to be a seperate voter approved millage for this specific body. And, those who run it must be directly elected.
My Summary Proposal for Michigan Property Tax Reform
Governor Snyder has pledged property tax reform as part of his long term agenda, focusing on businesses and the taxes on working assets. Property tax when discussed with Michiganders however, means the taxes paid on homes, land and structures that include funding for local government.
Michigan’s property tax system was shaped before the turn of the last century. The responsibilities of today’s local municipalities are not well served by the paradigms of that ancient system, which included omnibus exemptions to institutions popular at that time. Today, fairness dictates that all benefactors and stakeholders contribute to essential services that they depend on, and not expect homeowners to pay the majority of costs for municipal infrastructure.
Property taxes millages must not circumvent the nature of representative government, whereby elected officials can be held responsible by voters. One heinous example is the recent introduction of taxing authority vested in DDA’s with unelected boards which overlap the legal framework of Counties, Townships, Charter Townships, Cities and Villages. The ‘shadow’ government structure of DDA’s is ripe for cronyism and corruption.
Local millages include essential and non-essential assessments. The value of essentials services such as Police and Fire are reflected in how often these two millages show up on local ballots. Yet as farmland becomes suburbia, and suburbia becomes urbanized, the burden of these elements is borne largely by individual homeowners, giving multimillion dollar property owners a free ride. Police and Fire millages would be lower overall, if they were allocated to all properties.
Lastly, local units have overused tax abatements to create chosen winners and losers in the business community. Property tax rates for businesses should be uniform. The practice of tax shopping and preferential abatement is a clear signal that local property taxes are too high for all businesses. Preference given to attracting new businesses penalizes existing local businesses, which is counterintuitive to long term economic stability.
I propose the following structural changes to Michigan’s property tax system:
1. Eliminate the two tier system of homestead versus non-homestead property taxes. As the population of Michigan has declined, and a surplus of homes exists, owning and maintaining a second home will keep up property values, and prevent blight. The largest effect of taxing non-homestead property at a higher rate, is that it raises rents on the poor.
2. Eliminate exemptions from local property tax millages for essential services. Fire, Police, Water and Sewers are essential services. What constitutes ‘essential’ should be enumerated by statute. While homeowners provide for the fire department, multimillion dollar structures owned by certain entities are exempt. Any group can locate a multimillion dollar mega-facility in a small township, burdening it with infrastructure costs, while few from that township may actually be beneficiaries or members. Fairness dictates that those that want to own and use infrastructure pay their fair share. Spreading fairly the costs of essential infrastructure will reduce property taxes on individual homeowners.
3. Eliminate the DDA (Downtown Development Authority) framework, and return tax oversight authority for downtown areas back to elected city officials.
4. Require oversight of essential services by elected boards giving citizens direct control of millage based entities. This should include a restriction on the holding of simultaneous offices on Boards, while holding office as a elected official of any associated local unit of government.
5. Restrict abatements on property taxes by local government officials. Abatements provided to businesses by local units of government, violate the consent of voters that passed local millage rates at the polls without exception. Michigan statute should make it clear, that voters pass millages for all.
John Hargenrader - December 2011
