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Jun 15

Here Comes The Income Tax

Comments (0) 12:00 AM posted by admin |

What a waste of time.

It was a post-Flag Day let-down.

Twenty-two grand doesn’t buy much anymore. In fact, I think the City of Ypsilanti would have been much better off trying to beat the odds and make millions on one of those Nigerian email scams than pay Plante & Moran to do a study on levying a city income tax.

The much-anticipated income tax study was vague. It used assumptions that could neither be proved nor disproved. They admitted that EMU and Visteon were not very cooperative when it came to responding to their employer surveys. The study basically encouraged the City to talk to the other twenty-two Michigan cities with a city income tax and get their take on how things worked out. At least the report had one of those fancy plastic binders.

What kind of impact might an income tax have on existing businesses? Would some of them consider leaving? How might an income tax influence the decision of business to move to Ypsilanti?

Good questions.

Plante & Moran suggests identifying research available on the subject.

How much staff would the City have to add to administer an income tax? What are the processing fees?

More good questions.

Plante & Moran said of the Michigan cities with an income tax that responded to their survey, the average administration cost was 3.4%, but the City should probably ask around.

Considering that nearly 70% of Ypsilanti residents rent and the median household income is only $28,610, would an income tax shift the tax burden to lower income families if there were to be an offset in property taxes in order to entice homeowners to vote in favor of such a measure?

Look. Plante & Moran couldn’t possibly run every scenario. To be honest, it seems like they only ran one. But the spiral binder on the report is pretty cool. You really have to see it to appreciate it.

I apologize.

I apologize because it’s hard to act like an adult when I hear presentations like this. The Blue Ribbon Finance Commission Chairperson repeatedly threw up his hands and said something needs to be done. Does this something have to make sense? I doesn’t seem like it. Doing something is more important than doing nothing.

The Plante & Moran representative said that an income tax is not a cure. It’s meant to only buy the City some time. Some time for what? Some time until we go into receivership? Some time until the Water Street Project pays off in twenty-five years? Some time until people put their money where theirs mouths are and buy American cars to boost Michigan’s flailing economy? Maybe it’s only to buy some time until the right people can come along and actually fix this.

It’s frustrating because you hear the same, tired, old excuses. The Headlee Amendment is killing us. That’s true, but it went into effect in 1979. Proposal A is no picnic either, but it went into effect in 1994. Visteon’s demise is really a blow, but are we surprised they are packing up and moving out of town after losing money for three straight years including $1.5B last year and $1.2B the year before that? EMU isn’t pulling their weight either, but they’ve been in town not pulling their weight since 1849. And finally, the State certainly isn’t any help. But with the Big Two crushed by legacy costs, and former-Governor Engler’s tax cuts and the phase out of the Single Business Tax, are we really surprised the State can’t properly fund its cities any longer?

And now you’re coming to me asking for a couple hundred bucks because the City missed all the signs? That takes guts.

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