Moose

Wed, Mar 3, 2010 : 1:18 p.m.

Some folks just can't get enough of that "budget book". What's the matter the other threads get a little warm for ya? Continue the bliss...

AlphaAlpha

Sat, Feb 27, 2010 : 3:22 p.m.

"As to the argument about reducing spending, where are the numbers showing that the city has not reduced spending? " John? Page 117 of the Ann Arbor 2010 Budget Book clearly shows city expenditures have risen dramatically since 2007, from about $238 million on 2007, to a requested $351 million for 2010. A 47% increase in four years. Excessive? Likely so...

Mr. DB

Wed, Feb 24, 2010 : 1:11 a.m.

It is because of the UM that levying a city income tax seems attractive: 1 - UM is the largest employer in Ann Arbor 2 - UM is definitely expanding both in terms of student and employee population 3 - UM just bought the Pfizer complex which was a huge source of tax revenue for the city 4 - Recent UM admin hires such as the AD, or the EVP for Medical Affairs has raised a few eyebrows. 5 - A good number of UM employees live outside of Ann Arbor 6 - A good number of UM employees make above 100k 7 - Who cares? UM will transfer the cost to the students' tuition 8 - Who cares about tuition? Students get to take out subsidized loans which cannot be forgiven in bankruptcy court 9 - UM gets a lot of money from federal grants, athletics and other sponsorship activities So let nobody deceive you, the City of Ann Arbor and the UM are one entity. The City does not want be struggling while UM is thriving. In addition, if the UM keeps up its "good" work academically, it "may" just bring more companies to the city. But with the current trend of non-profits paying employees competitive salaries, who wouldn't want to tap that? If you think shifting the cost towards students is OK, with no job prospects after graduation, students would rather go to a cheaper school. Do what is best for the students. It is your call.

John Q

Tue, Feb 23, 2010 : 8:26 p.m.

Not to flog the representation issue but you still haven't addressed how an income tax on commuters is any different than a sales tax that affects commuters? Or a property tax increase on people who own a vacation home in another community? In Michigan, many communities have large chunks of their tax revenue coming from second homes whose owners have no say in local property tax votes. "Taxation without representation" makes for a rallying cry for anti-income tax proponents but appears to be selectively applied based on what's been stated so far. As to the argument about reducing spending, where are the numbers showing that the city has not reduced spending?

Jack Panitch

Tue, Feb 23, 2010 : 7:58 p.m.

It is completely expected and normally anticipated "taxation without representation," i.e. not worth wasting any more time worrying about. Anytime a nonresident enters another jurisdiction to work, he or she can expect to be subject to that jurisdiction's tax, if any, without being able to vote in that jurisdiction's elections. This phenomenon is in no way analogous to the taxation without representation of the American revolution, i.e., the King of Ann Arbor can't force an Ypsilantian resident to pay tax on compensation for services performed in Ypsilanti. If, however, that same Ypsilantian journeyed to Ann Arbor to ply his trade, he would fully expect to be subject to the tax without complaint, though he could not vote in local elections.

Mike Lincoln

Tue, Feb 23, 2010 : 6:25 p.m.

A point I'm making, to close the circle, is that rational actors will tend to maximize their own self interest, apart from any altruistic adjustments. If Ann Arbor/Michigan has extremely burdensome taxes, in particular property taxes, that will have a long term effect on recruitment, business growth, and population. An income tax may make that adverse effect worse. I understand that all cities are different, and that taxing systems are not homogenous. I propose that cities and states should have broad-based taxing covering multiple types of activities (income, property, sales of goods). These jurisdictions will be able to have low rates and a more fair, satisfying system for any given level of expenditures. They will be more resilient when short-term distortions, such as a real estate value crash, unexpectedly occur. This appears to be the case in Salt Lake City I would also observe that, at least on this blog, the emphasis of many posters is to increase revenues, not reduce spending. I find enthusiasm for spending cuts to be under-represented, but again, as I said yesterday, the polling place may tell a different story. To correct the comment on "bogus" taxation without representation, John Q is correct that an income tax on commuters is legally allowed. He is not necessarily correct in saying the imposition of such a tax is without (local, city-based) representation. After all, taxation without representation is the claim made on the license plates of (famously liberal) Washington DC. It is a correct claim, although there is a legal, Constitutional basis for their non-representation.

John Q

Tue, Feb 23, 2010 : 5:42 p.m.

The taxation without representation claim is bogus. The local income tax is authorized by state law and if someone has a problem with it, they can contact their state representative and ask that it be repealed. Would you make the same charge against the local sales taxes in Boulder or SLC? I'm sure many Michigan communities would want to be able to levy a local sales tax but there's never been support in Lansing for that and I see little chance of that happening now. The debate over "pots of money" is largely overstated. Other than the greenbelt/parks millage, there's no large pots of money that can be reallocated for other uses, even with voter approval. The other pots are for roads, garbage collection, pension, AATA and debt service. It's unrealistic to think that you could drop those costs, it was even legal to do so, and divert those dollars elsewhere. You can view the breakdown here: http://www.a2gov.org/government/financeadminservices/assessor/Pages/MillstobeLeviedfor2008-RealProperty.aspx

John Q

Tue, Feb 23, 2010 : 5:29 p.m.

At least you're recognizing the differences between the two states. One element you glossed over is that the local sales tax goes directly to the city. Ann Arbor has no such revenue stream. Sales tax is collected by the state and a portion of that is returned to the city. The state has been sharing less and less of that, even before the economy bottomed out. The problems you identified with property tax differences isn't caused by the Headlee amendment, it's caused by Proposal A, which was approved in 1994. That was approved to protect seniors and others who stayed in their homes for the long-term against what excessive increases in property taxes due to rising property values. That was a big problem as the housing bubble inflated property values. It also shifted the tax burden from schools largely away from local school districts to the state. Almost all residential property owners saw a huge decrease in local property taxes after Proposal A due to the shift from property taxes to sales taxes for school funding. Some are pushing for a repeal of Proposal A or a return to local school funding. I'm not sure either are solutions and I don't think there is any solution that will address the problems that Proposal A intended to address without causing the distortions that followed. But in this period of declining values, much of the differences in property values are being wiped out.

Mike Lincoln

Tue, Feb 23, 2010 : 5:28 p.m.

Responding to the poster commenting on bashing arts and green...you're probably thinking of someone else. I don't think I mentioned arts or green initiatives in Ann Arbor or anywhere else. I think they're great activities, and, as you noted, Salt Lake does those sorts of things too. Regarding the fact that SLC and Boulder (for example) have other revenue streams, that's exactly one of the points I'm trying to make: basing virtually all city revenue on a distorted (by Headlee) and single stream of revenue, property taxes, is bound to be an idea that turns out badly. Bad because the tax base is too narrow, and bad because a narrow tax is necessarily "unfair", at least to someone. In the case of Michigan, that'd be new homeowners in a city like this, with relatively high real estate values. I think that the solution is not necessarily an income tax on non-represented commuters. Taxation without representation isn't just. For example, how do most people feel when they rent a car in a remote city and pay an extra hundred dollars in use taxes? They feel taken advantage of. You can argue that commuters consume city services, as a method of justifying the tax. But so do city residents consume services, and they wouldn't put up with paying taxes without a say-so. The better solution, I would propose, is multifactorial: 1. A range of prudent spending cuts, especially on non-essential projects, including a careful analysis of privatization of services, and realistic action on what may be non-sustainable benefits costs and salary practices. Given today's economy, and its effect on everyone, I am afraid that some of those cuts must unavoidably "hurt" someone or some project. 2. Breaking down budgetary barriers between "pots" of city money so that money can flow from low priority (but rich) pots to high priority pots that are poor. I read the city councilman recently explaining why the pots couldn't be breached, but that's just re-stating the status quo of budgetary rules and laws. Don't we elect these folks to come up with new lawful solutions by thinking creatively? 3. Broadening the tax base. If that means getting permission to levy local sales taxes (I would argue that's a fairer tax on commuters, and would include their use of restaurants, shops, and parking), so be it. If it means pushing at the State level to address this Headlee amendment and its grotesque results, then people should move on that.

Mike Lincoln

Tue, Feb 23, 2010 : 5:08 p.m.

Utah has a flat income tax rate of 5%, see http://incometax.utah.gov/rates.php, close but a bit higher as compared to Michigan's 4.35% rate. Utah sales tax is levied by cities, up to a couple of percent (it varies by jurisdiction), on top of a state 4.7% rate. The total in Salt Lake City is something like 6.6%, if I recall correctly, again comparable to Michigan's total rate. The Michigan tax system seems very distorted to me. For one thing, this Headlee amendment makes the property taxes very high for anyone buying a home in an atypically (for Michigan) expensive district such as Ann Arbor. This is because of the "reset" of taxable value to SEV, and because the State millage and county millage are based upon the need to generate revenue from a (comparably) much less "valuable" stock of housing than that within Ann Arbor proper. Like proposition 13 in California, Headlee seems to hurt younger or new buyers, in favor of protecting the established homeowners. I recall reading the effect of Headlee is very pronounced in the commercial market for large properties such as Briarwood Mall. When I look at the total tax burden between Michigan and western jurisdictions I know, I see comparable total sales taxes (regardless of how it is divided), comparable income taxes, and dramatically higher property taxes in Michigan. That's a big disincentive to live here, and an income tax levied by the city would just make that disincentive higher. Any tax is likely to be unpopular. The solution to that unpopularity is to 1) make citizens confident that the city is being prudent in its spending decisions (I've seen many questioning that prudence, even on these pages), and 2) insure that the tax base is adequately wide. It seems to me that Headlee, for example, artificially narrows the tax base, focusing the base upon new, younger buyers in expensive neighborhoods or cities, and shifting it away from corporate properties onto residents in general. That means property tax rates much be high, an undesirable thing for people who might like to spend their money on, say, a grand old house as opposed to flat screen TVs, expensive autos, or other goods subject to sales tax.

John Q

Tue, Feb 23, 2010 : 9:54 a.m.

While I don't think Mike intended to undercut his own arguments, his selection of Boulder and Salt Lake City show that Ann Arbor's situation is much different than those two cities. Boulder's property tax revenues are lower compared to Ann Arbor because the city levies numerous local taxes: http://ci.boulder.co.us/index.php?option=com_content&task=view&id=3164&Itemid=394 The city gets 3 times as much revenue from sales taxes as it does from property taxes: http://www.bouldercolorado.gov/files/Finance/Budget/2010_Approved_Budget/Fund_Financials_2010.pdf Boulder also spends a portion of its funds on arts-related projects.

John Q

Tue, Feb 23, 2010 : 8:48 a.m.

Salt Lake City highlights itself as a green city and one of the top 25 arts destinations in the country. Ironic in light of the bashing on Ann Arbor for its initiatives in this area. 33% of Salt Lake City's revenues comes from sales tax. Only 48% of revenue comes from property tax. That highlights how reliant Salt Lake City is on other revenue streams. It also highlights the fallacy of trying to compare two cities in two different states when they have very different revenue streams and responsibilities that guide expenditures. http://www.slcgov.com/finance/2010budget/budgetbook10.pdf

John Q

Mon, Feb 22, 2010 : 11:31 p.m.

"My bottom line is simply that, on a property tax basis alone, the cost of living in Ann Arbor is much higher compared to the West, and without obvious service benefits received " You left out the detail that Salt Lake City levies a local sales tax, a restaurant tax and that Utah has a progressive state income tax with levels much higher than you'll pay in Michigan for income tax. The state fuel tax is also higher in Utah. Salt Lake City can also levy impact fees for new development. Michigan cities are not allowed to levy impact fees. All those revenue streams allow Salt Lake City to have a lower property tax levy than Ann Arbor. http://www.slcgov.com/ED/pages/business/bus_taxes.htm

Regular Voter

Mon, Feb 22, 2010 : 11:06 p.m.

How refreshing it seems to me it would be to have a whole lot of Mike Lincolns voting alongside me for a bunch of Mike Lincolns running for city office and rectify this inexplicably wrongheaded desire that Ann Arbor has to hurt itself and its citizens.

Mike Lincoln

Mon, Feb 22, 2010 : 8:58 p.m.

BYU is located in Provo, about 50 miles from Salt Lake City. Like many universities, it is tax exempt. Salt Lake City has both a large, tax-exempt university and a large, tax-exempt world church headquarters complex, a kind of small-scale Vatican. Ann Arbor is not alone in having tax exempt properties within its boundaries. As to Utah and Colorado being net "beneficiary" states in comparison to their Federal tax dollars paid, that doesn't explain the tax differential. Most land in those states is Federally owned (or owned by a Native American nation). Therefore the Federal owner pays money to maintain that land, run National Parks, and connect the people's land via roads that further national commerce. In the case of the Native corporations, there is substantial welfare assistance that most liberal Ann Arborites would not disparage. However, none of that excess Federal money supplements the city budgets. Income tax proponents say that Ann Arbor property taxes would go down, although I don't think anyone has said how much. In our case, a 1% income tax would amount to about $3,000 per year, so property taxes would have to go down a fair bit. Also, a 1% tax would be the camel's nose in the tent, so to speak, and easily increased. I'd be surprised if Ann Arbor property taxes went down more than a few mills. The rosy predictions of beggering 50,000 commuting neighbors to benefit over-taxed Ann Arborites seem poorly founded from what I've read. While 45 to 50 mills of property tax may be fair (and even not far out of line from national per capita or per household norms) in most Michigan jurisdictions, Ann Arbor has the great benefit of a nationally priced housing market in now-impoverished Michigan. Therefore Ann Arbor can reap 2-3 times as much per property than, say, St. Louis Michigan, where I grew up, and where the most expensive house in town might be $100k. Yet the core services Ann Arbor should provide are essentially the same as those in, say Jackson or St. Louis I suspect this long-term bonanza has simply resulted in city budget bloat as successive administrations funded non-core projects and let the staff numbers, salaries, and benefits bloat. What surprises me is (having moved from conservative Utah) is how eager it seems Ann Arborites are to have their taxes increased, and how curiously uninterested they seem to be in curtailing, and how strident they are that one must not even examine, potential excess city spending. Perhaps, however, the polling booth will tell another story, as compared to the AnnArbor.com blogs. I understand a city income tax must be approved by the voters.

johnnya2

Mon, Feb 22, 2010 : 8:08 p.m.

"he taxes on an equivalent house in the Ann Arbor city limits would have been north of $14,000/year. " So in your situation the property taxes would go DOWN and then be replaced by an income tax. This would make the value of your home increase due to lower property taxes. I would also say comparing something in SLC or Boulder is not the same thing. Both those states happen to get more money from the feds than they give, while Michigan gives more than it gets back.

Lokalisierung

Mon, Feb 22, 2010 : 6:49 p.m.

"So even if a small sop of a reduction is given to property-tax paying residents, the total take is still designed to be higher" Yes, disigned to be higher becasue (who knows the actual stats) tens of thousands of people that do not live here come her to work....taxing them and not the property owners. Is BYU tax exempt? I guess that would make sense if it's kind of a church.

Mike Lincoln

Mon, Feb 22, 2010 : 5:53 p.m.

Boulder's the size of Ann Arbor, with a similarly sized state university, the University of Colorado, and 6 mills of property tax on total value, equivalent to 12 mills on a 50% SEV. Salt Lake City proper (the taxing jurisdiction) is ca. 270,000 persons, about twice the size of Ann Arbor, with a similar sized University that also pays no taxes. There are also twice as many roads in Salt Lake, twice as much garbage, twice as many properties, and other expense sources too. So I don't think we're talking about completely non-comparable cities here. What we are talking about is completely non-comparable tax rates. Now the whole purpose of the income tax proposal is to increase total revenues, and avoid painful budget cuts. So even if a small sop of a reduction is given to property-tax paying residents, the total take is still designed to be higher. In any event, taking into account and excepting the State's 6 mills, Ann Arbor taxes would have to be reduced by 2/3 to equal Boulder's or Salt Lake's. If anyone thinks there will be more than a token reduction in Ann Arbor city property taxes under an income tax regime, they're naive. I maintain that Ann Arbor fails to deliver the services that many other, similar sized university cities manage to deliver, despite its drastically higher tax rates. Furthermore, it fails to do that while undertaking few apparent efforts to downsize the city payroll expenses that certainly make up most of the budget. Rational minds, especially those who are on the margin of staying or going, will pay attention to that. I know that I have. The difference in property taxes between Ann Arbor and Salt Lake City (for example) is equivalent to a getting a new car (a large and nicely equipped new car) every 3 years, for free. Add a one percent income tax on top of that for a two earner professional couple, and you've got a couple of nice vacations thrown in on top, just for moving. City managers and councilmen who are proposing this tax must think that most Ann Arborites don't know about Ann Arbor's apparently poor budget cost-effectiveness, and perhaps they're right. I don't care to analyze every detail about the city budget; I'm a short timer, and there are other experts on that. However, in selecting a car, a cantelope, or a cable internet company, I will go with the factors that are transparent to me: price-quality-performance. Ann Arbor fails on that objective test.

larry

Mon, Feb 22, 2010 : 5:48 p.m.

John Q, I have NO idea what you're taking about.

Lokalisierung

Mon, Feb 22, 2010 : 5:20 p.m.

"Property taxes alone are two to three times what they are out West, and that's without an additional income tax heaped on top." Again, stop saying the income tax is "heaped on top." it is a LAW that if there was an income tax, property taxes would go down. Now I don't cliam to be an expert on SLC but it's much much larger than Ann Arbor. It doesn not basically share half the town with a college that pays it no Proprty tax. Completely different situation. You're comparing a town with a professional basketball team with Ann Arbor.

Mike Lincoln

Mon, Feb 22, 2010 : 5:11 p.m.

As I said, I'm probably a short-timer here and so don't analyze the city budget much, except for my bottom line. Property taxes alone are two to three times what they are out West, and that's without an additional income tax heaped on top. I don't know whether the value of property in Ann Arbor is simply so very low that little revenue is derived, or that school spending per pupil or other city spending is excessively high. If high school spending exists, then I suspect that reflects high public employee compensation and benefits. I have an opinion that some other Ann Arbor city spending I've heard about (art murals on structures, a new city hall in the current economy, etc) seems quite superfluous. My bottom line is simply that, on a property tax basis alone, the cost of living in Ann Arbor is much higher compared to the West, and without obvious service benefits received (and few of the great outdoors benefits like skiing and mountains). Other high property tax states have compensations, like no state income tax (e.g., Texas, Tennessee, Washington state). Even in these places, property taxes are still a bit lower than in Michigan. Speaking only for myself, I can clearly understand that cost signal, and factor that into our decisions. Like the frog in a pot of water, if the (tax) heat increases gradually, perhaps the native Ann Arborite doesn't notice. But an outsider, or someone making a decision on the margin, certainly will. I suppose that's my main observation: the point, made by some committed Ann Arborites on this thread, was that people will not make rational decisions regarding taxes. They have dismissed the idea that business or individuals would not move to Ann Arbor, or move out, in response to higher taxes. Perhaps many will not, but some of those "on the margin" certainly will. Marginal effects are quite important in economics, as a U of M professor taught me long ago. The Midwest has a number of disadvantages these days, and adding another may not help in the long run.

Jack Panitch

Mon, Feb 22, 2010 : 4:46 p.m.

P.S. The allocation issues would involve only nonresidents. Residents probably would be taxable on their worldwide income, due to their resident status, i.e., there would be no allocation issue for an Ann Arbor resident working part-time in Saline, because residency serves as a basis for taxing all income earned anywhere.

Jack Panitch

Mon, Feb 22, 2010 : 4:37 p.m.

Following through on Mr. Vielmetti's citation and relating back to the issue James S. raised, the City would have full authority to tax nonresidents working for the UofM. Their presence here working is all the nexus the City would need. The political subdivision status of the UofM would be irrelevant in that regard. Moreover, it appears as though the UofM would be under a duty to withhold. Difficult issues would be posed by telecommuters and other folks working partly inside and partly outside the City. Good record keeping would be a must.

Lokalisierung

Mon, Feb 22, 2010 : 4:21 p.m.

"I confess I can't understand where all the tax money goes in Ann Arbor." More than 60% of property taxes go to schools.

Mike Lincoln

Mon, Feb 22, 2010 : 4:15 p.m.

I confess I can't understand where all the tax money goes in Ann Arbor. I suspect a fair bit of it is wasted on projects that many other cities would consider superfluous, or upon excessive numbers of city workers and upon their compensation plans. In Salt Lake City, we paid ca. 7 mills on our home (since we were taxed on 100% of value, that'd be equivalent to 14 mills on a 50% SEV). This included both the county and city taxes, but not any share for the State of Utah, which only collects sales and income taxes. Discounting that 6 mills of the Ann Arbor property taxes goes to the State of Michigan, it seems that total city and county taxes here are about **twice or three times** the level of Salt Lake. Salt Lake has good schools, excellently paved and maintained streets, a vibrant and vigorous downtown, and a high level of services. Boulder Colorado, where I have relatives, also has excellent services and schools, and has a city tax rate of 6 mills on 100% of value (equivalent to 12 mills on a 50% SEV). Where does all of Ann Arbor's millage revenue go? There are unpaved streets in the middle of town, and paved streets that are returning to unpaved status rapidly. Responding to this property tax signal, we have decided not to buy a home here, despite banking a substantial profit on our Salt Lake sale. The taxes on an equivalent house in the Ann Arbor city limits would have been north of $14,000/year. I have to confess that the prospect of an additional income tax makes our return West next year even more likely. While I don't follow city news closely, it seems like Ann Arbor city politicos are not looking for opportunities to prioritize their budgets nearly as assiduously as they are looking for revenue enhancement. My family plans to respond to their signals, as I suspect other people on the margin of staying or going will do. It also seems to me that Ann Arbor, whether for statutory reasons (such as budget segregation rules and targeted millages) or perhaps simply sheer folly, continues to mal-prioritize its spending.

snapshot

Mon, Feb 22, 2010 : 4:13 p.m.

I can't tell if a lot of these folks agree or disagree with the author. I disagree with him. Businesses enjoy the traffic and easy access our city provides. There is also the talent pool provided by the educational system. Both these items are paid for with property taxes. This guy doesn't even live in the city and his business isn't located in the city. It's easy to talk a good game of "moving" when there is no cost associated. If one of those business moved outside the city the workers would incurr increased commute costs, travel time, etc. The employees would probably persuade the employer not to move because it would be more expensive for them. Plus the employer would see a reduction in property taxes as would the employees. Simply moving is not simple, I know. Any real business person knows. Establishing a new location isn't even comparable to relocating an existing location. The residents of Ann Arbor better wake up because their jobs, retirement, and way of life are being threatened and unless they want to pay about 30% more in property taxes, they better get their butts out to vote for an income tax.

John Q

Mon, Feb 22, 2010 : 4:12 p.m.

"Is this true?" It's not true and your repeated postings on every comment thread doesn't make your statements any more true than the first time the falsehood was posted.

AlphaAlpha

Mon, Feb 22, 2010 : 3:34 p.m.

Thank you Mr. Vielmetti.

AlphaAlpha

Mon, Feb 22, 2010 : 3:16 p.m.

"Just a little thought for all you Ann Arbor people thinking youre going to get rich by taxing the employees of the University. I've been doing a little digging into the standing of the University and as I see it. The University is classified as a Municipality. (Along with Wayne State and Michigan State.) My understanding of a Municipality puts it like any other city in the state of Michigan. It seems that Ann Arbor is unable to place an income tax on the wages of the employees at the University. That would be like Ann Arbor trying to tax Pittsfield Township because their neighbors. Now I could be wrong? But it might be something people look into before trying to spend money you may never receive." A municipality? Is this true? If so, end of income tax debate.

logo

Mon, Feb 22, 2010 : 2:27 p.m.

If the income tax ever makes to the ballot there will be residents who look at the trade offs and decide it will be good for them with the property tax break, others will oppose it anyway. People who work in the city but do not live here will campaign against it and give money to defeat it. But if it does pass they will willingly enjoy the benefits of going to A2 parks, maintained streets, etc. The writer is correct that when negative posters mention other cities they talk about Flint or Detroit but not Grand Rapids or Grayling. There are 22 cities in Mi. with an income tax. There are probably a 1000 in the nation.

Lokalisierung

Mon, Feb 22, 2010 : 2 p.m.

"Resident of Philadelphia is 4% Non-resident Philadelphia is 3.5% That is far more than the 1% and 0.5%" You're right these rates are completely different. Anti Income Tax people rattle off the same arguments everytime that have no real realtion to our situation. First they talk about "the other cities with IT like Flint Detroit Saginaw," Wihotu mention those cities were ruined by White Flight and the Collapsing auto industry. Nor do they mention all the other cities in the state with a 1% income tax that are just fine. Then they complain they're being taxed more, eventhough 50% of them admit they live in the cioty and would save money. Then they say No one is going to take an engineering job in Ann Arbor becasue trhey stand to lose $300-900 dollars a year. What a joke.

AlphaAlpha

Mon, Feb 22, 2010 : 1:34 p.m.

"Just a little thought for all you Ann Arbor people thinking youre going to get rich by taxing the employees of the University. I've been doing a little digging into the standing of the University and as I see it. The University is classified as a Municipality. (Along with Wayne State and Michigan State.) My understanding of a Municipality puts it like any other city in the state of Michigan. It seems that Ann Arbor is unable to place an income tax on the wages of the employees at the University. That would be like Ann Arbor trying to tax Pittsfield Township because their neighbors. Now I could be wrong? But it might be something people look into before trying to spend money you may never receive." A municipality? Is this true? If so, end of income tax debate.

John Q

Mon, Feb 22, 2010 : 1:26 p.m.

"My understanding of a Municipality puts it like any other city in the state of Michigan. It seems that Ann Arbor is unable to place an income tax on the wages of the employees at the University. That would be like Ann Arbor trying to tax Pittsfield Township because their neighbors. Now I could be wrong? " You are wrong.

a2citizen

Mon, Feb 22, 2010 : 12:53 p.m.

But V, we DO have federal income taxes...and I don't think those are going away anytime soon. And James S., can you point to any online sources for this information? This would be very interesting (and an even better reason to vote No if it ever comes to a vote) if true.

James S.

Mon, Feb 22, 2010 : 3:53 a.m.

Just a little thought for all you Ann Arbor people thinking youre going to get rich by taxing the employees of the University. I've been doing a little digging into the standing of the University and as I see it. The University is classified as a Municipality. (Along with Wayne State and Michigan State.) My understanding of a Municipality puts it like any other city in the state of Michigan. It seems that Ann Arbor is unable to place an income tax on the wages of the employees at the University. That would be like Ann Arbor trying to tax Pittsfield Township because their neighbors. Now I could be wrong? But it might be something people look into before trying to spend money you may never receive.

voiceofreason

Mon, Feb 22, 2010 : 12:11 a.m.

John Q, You have to be kidding me. That is the most blatant attempt to obfuscate an issue I have ever seen. You could join the firefighters union with that type of issue circumvention. Put this tax on the ballot already so we can vote it down already. Make the City Council do some actual work for a change. No more of this "we can please everyone" garbage. If the City Council is unwilling to "ruffle some feathers" and "knock some heads together", they will be removed from office and replaced with individuals who are capable of displaying competency in this area. Vote out the flakes in 2010!

larry

Sun, Feb 21, 2010 : 9:36 p.m.

The MBT (or whatever you want to call it) is one of the highest in the country. And Granholm raised it anyway. The bottom line is TAX. That's all Granholm and company (and the present government) can think of as a solution to everything. It DOES NOT work. I hope you get that some day.

John Q

Sun, Feb 21, 2010 : 8:55 p.m.

"We all know (or do we?) what happened to Michigan when Governor Granholm further raised the Small Business Tax in MI" Please tell us. Explain to us since the following things you said are wrong: 1. There is no "Small Business Tax" in MI nor has there ever been one. 2. The old "Single Business Tax" was replaced by the Michigan Business Tax (MBT). 3. The MBT surcharge was the result of Republican lawmakers opposing the Governor's proposal to spread the sales tax to services. It wasn't Granholm's idea. Any other false information you want to spread?

larry

Sun, Feb 21, 2010 : 6:27 p.m.

We all know (or do we?) what happened to Michigan when Governor Granholm further raised the Small Business Tax in MI (which already had one the highest tax rates). These government officials never seem to get it (why should they -- they won't lose THEIR jobs). After all, this tax would increase the source of THEIR INCOME...at OUR EXPENSE. Convenient.

AlphaAlpha

Sun, Feb 21, 2010 : 5:45 p.m.

Any thoughts on what plan B will be, if a tax increase offer is declined by the customers?

logo

Sun, Feb 21, 2010 : 5:04 p.m.

Tidge: The city council has nothing to do with the Public Library, (or the schools) the library has its own board and millage. The council has already said they would not sell bonds to fund a conference center. I imagine leaf and Christmas tree pickup are in a "bucket" the solid waste fund. Swimming pools are probably in the general fund. But the pools and golf courses and many of the parks are used by township residents, many of them probably work in the city but pay nothing. Most of the townships don't have much in the way of parks so they come to A2. When I was on the parks commission back in the 90's the city did a survey in the parks. I remember that in some of the parks half the users did not live in A2. An income tax is not revolutionary, they occur in 24 Michigan cities and in cities in other states.

tidge

Sun, Feb 21, 2010 : 4:42 p.m.

"Because there are wage earners in Ann Arbor who pay nothing. If I work and live in Ann Arbor and my property taxes go done equally, I have the same tax burden. IF you work in Dexter, but work in Ann Arbor, you pay nothing (I am talking to a lot of UM employees). Does that make sense to you?" Non-resident Ann Arbor workers pay *nothing*? Not a cent in state income tax? Not a cent in *gasoline taxes*? Not a cent for parking? If the property taxes being paid by residents are going into "buckets" or "pockets" they don't want or don't use (Conference Centers, Public Libraries, leaf pickup, X-mas tree disposal, swimming pools, etc.) the answer isn't to tax non-residents who happen to work within the city limits. It isn't as if the folks who simply work in Ann Arbor are exactly benefiting by some of the AA council priorities.

a2grateful

Sun, Feb 21, 2010 : 3:17 p.m.

Agree. Put it on the ballot... Actually it already is on the ballot in terms of mayor and council elections. Should be an interesting primary. : )

Dalouie

Sun, Feb 21, 2010 : 2:54 p.m.

Some here just keep going back to the same false talking points. Downtown is one of the keys to the success of Ann Arbor. The if you want more businesses in town they need parking. The parking structure has been needed for years. But that is only part of the story. The DDA is mandated by the state to only spend money in the downtown. Their money can't be spent on the Stadium Bridges. Besides, the city is set to fix the bridges later this year. Or take the new court house. Read the article that was here last week. The city has to move out of the county courthouse, the county ended the city courts lease. The courts had to move. But the city saves a bunch of rent to put toward the new courthouse and police station so the impact on the operating budget is only $275,000 per year. They also use some DDA money that can be spend in the downtown. Smartly done. Or how about the sculpture? Remember that none of the money was from the general fund, none of it could go to pay for police or fire salaries but still it gets thrown back up in every debate here. Get the facts then talk about it. The city has been efficient and is doing what needs to be done to keep the city on track for the future. Voters should have a chance to vote on more revenue.

AlphaAlpha

Sun, Feb 21, 2010 : 2:16 p.m.

"The appropriate comparison is other Michigan cities and many Michigan cities with public and private universities and colleges within their borders levy a local income tax." The appropriate comparisons would also include total taxation levels, regardless of the nature of those taxes, as well as how efficiently those taxes are spent by the people who comprise the governments in those cities. Are we seeing efficient use of current taxes in Ann Arbor?

John Galt

Sun, Feb 21, 2010 : 1:18 p.m.

Soon there will not be any private business or industry to tax. You will then be free to tax each-other to pay your own salaries (government and university) to provide services to each-other. Most of the 'economy' of Ann Arbor exists through taxing others (out-of-city university students, university employees--paid through taxes, government employees-paid through taxes). How much of it is actually based on private business? As long as Ann Arbor can exist through involuntary extortion of taxes to feed thier coffers, they will be able to continue the charade. But the country as a whole is reaching the point where there are not enough private enterprises left to fund the game. Capital is leaving the State and country to more rewarding locations. The harder you squeeze, demonize, tax and regulate companies,--the more companies will go under or relocate. The city (Federal and State, too) needs to earn to live within their means, like private individuals.

a2grateful

Sun, Feb 21, 2010 : 1:15 p.m.

Three sure things: 1) Death; 2) Taxes; 3) More of the same team Hieftje folly with more taxes, w/less City protection and service

John Q

Sun, Feb 21, 2010 : 1:01 p.m.

What other Big Ten cities do outside of Michigan has little relevance to the discussion. Taxation and revenue is different in every state and cities outside of Michigan may be able to tap revenue streams that Ann Arbor can not (local sales tax, etc.) and vice versa. The appropriate comparison is other Michigan cities and many Michigan cities with public and private universities and colleges within their borders levy a local income tax.

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Sun, Feb 21, 2010 : 12:55 p.m.

A PILOT program won't work in Michigan especially with the UM. It will work with a private university like MIT or Harvard. Council has been addressing the expenditure side for a long time. If you caught the last budget session you saw that they are saving $23 million per year with the reorganization of the bureaucracy. The city has 25% fewer people working there. Seems like A2 is doing a lot better than other cities. Passing this in A2 would be different than other cities. No other city requires the six mill rollback. Most families would not see an increase or only a moderate one. Services are being cut across the state and many cities have or are planning on putting tax increases on the ballot. Voters here should get to make the decision.

SBean

Sun, Feb 21, 2010 : 12:42 p.m.

I also favor Brian Kuehn's suggestion. Mr. Wajda not only doesn't represent local business owners, he doesn't represent the perspective that opposes an income tax in an informed way, nor does he provide supporting info for the decisions he made for his own businesses. A number of the comments have been much more informative. Thanks to their writers for taking the time.

Grumpy

Sun, Feb 21, 2010 : 12:21 p.m.

Does Madison, WI have an income tax? Or for that matter, any other Big 10 town with large swaths of land off the tax rolls such as Columbus, Bloomington or W. Lafayette, IN, Champaign, State College, PA, or Iowa City? The reason for our high taxes is UM right? However, that may also be the price we pay for our town not being in the gutter like other rust belt towns.

NorthMaple

Sun, Feb 21, 2010 : 12:13 p.m.

Instead of potentially alienating private business just to tap the UM employment base for tax revenue, why not just approach the U to start a PILOT (Payments in Lieu of Taxes) program? Many of the elite universities give in such a manner. PILOT Programs

AlphaAlpha

Sun, Feb 21, 2010 : 12:12 p.m.

There are a several huge concerns regarding a proposed income tax. First, Plant Moran based their study on 75,000 (!) non residents working in town. PM says UM has 20,000 of those, the 55,000 additional jobs is an estimate. 55,000 additional non resident workers? Think about that. Careful estimates suggest the actual number is lower. This is important. 55,000 is a guess, provided to PM by the city administrator, who favors an income tax. With fewer workers than estimated, revenues would not meet expectations, a 'surprise' which would cause another 'crisis', requiring additional action. Second, the tax shift would not be revenue neutral; the city claims it needs more revenue, that means higher net taxation. The brief property tax drop Proposal A created? Long gone. Third, perhaps most significantly, new taxes of any kind are very difficult to enact during periods of economic downtrends. Council should know this; perhaps they do and all of this debate is a diversion? Not one Michigan city has enacted an income tax in the time since citizen approval for it became required. This fact is profoundly important to the discussion. There is no reason to expect that it is different this time.. There is a growing perception that city workers, as a class, are becoming a privileged group, with wages and benefits substantially greater than the average citizen's. As demonstrated elsewhere on this site, the average city employee is compensated at nearly twice the rate as the average US civilian. This causes many citizens to be quite reluctant to increase their net contribution to city revenue. Council would do well to address the expenditure issues now; they appear remarkably irresponsible proposing a solution with little chance of success.

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Sun, Feb 21, 2010 : 11:38 a.m.

The city has done a lot to cut expenses over the years but they are still in this state and every city is hurting with many asking for a tax increase. Some facts. If an income tax passed in A2 it would trigger a six mill reduction in property taxes. Most homeowners would break even. Workers who live in the city would pay 1%. Those who don't would pay 1/2% and it could be set to give low wage earners a break. Business would get the tax break too even if they have a lease, most include the taxes as a pass through. Renters would not get a tax break but the majority don't earn as much as homeowners and the tax could be structured to give lower incomes a break. Unless the rental market was a lot tighter than it is now rents would go down or moderate as the landowners rental costs went down. Many seniors with lower income and medium to high property taxes would see a reduction overall. Homeowners with one wage earner would often see a reduction too. A2.com needs to run some charts to show people what their total tax burden would be if an income tax passed. In any event it should be on the ballot to let the voters decide.

Jenna Thom

Sun, Feb 21, 2010 : 11:21 a.m.

You are comparing apples to oranges. The income tax in Philadelphia is MUCH higher than anything proposed for the city of Ann Arbor. Google it and see. Resident of Philadelphia is 4% Non-resident Philadelphia is 3.5% That is far more than the 1% and 0.5% for residents and non-residents proposed for Ann Arbor respectively. Most would not even notice 1%, where 4% would be noticed in their average paycheck. And their tax is not offset by a property tax reduction. It is in our charter where it says that the property tax must be lowered if an income tax is instilled. The council cannot do anything to change this on their own. The only people that can change that is YOU the voter in another referendum. So you can't compare the two cities. The lower income tax combines with the lower property tax rate is not comparable to a large income tax. A business that might move because of a large income tax might think it is a hassle to move for such a small income tax. Plus if they own their property and don't lease, they might actually benefit from the income tax with a property tax offset.

johnnya2

Sun, Feb 21, 2010 : 10:54 a.m.

" I don't understand how shifting the existing financial burden (from property owners to wage earners) is actually going to resolve the underlying problem " Because there are wage earners in Ann Arbor who pay nothing. If I work and live in Ann Arbor and my property taxes go done equally, I have the same tax burden. IF you work in Dexter, but work in Ann Arbor, you pay nothing (I am talking to a lot of UM employees). Does that make sense to you? The writer of the above letter makes a blanket statement about business when he is speaking for his situation alone. Let't talk about other businesses. It is more expensive to employ people in California. Apple, Sun, and Google all have headquarters there. Taxes had NOTHING to do with their decision. By the way, they are all highly profitable successful companies. Taxes in new York City are higher than most places, yet how many major corporations are based there? If you want something more locally, how does this grab you. More cars are built in Ontario than in Michigan. Why? The taxes in Ontario are higher, and the labor is pretty much a wash. The MAIN difference is health care. If he made the decision based on an income tax alone he is incompetent to run anything.

Jack Panitch

Sun, Feb 21, 2010 : 10:25 a.m.

@KJMClark: I didn't see anything "dishonest" about the letter at all. Mr. Wajda's whole point is that an income tax will tend to discourage businesses from locating here. It may not have been a balanced view-point, but it sure wasn't "dishonest."

Craig Lounsbury

Sun, Feb 21, 2010 : 10:13 a.m.

"I don't understand how shifting the existing financial burden (from property owners to wage earners) is actually going to resolve the underlying problem in balancing the books." I believe the theory is its not a revenue neutral shift. Its a revenue "enhancing" shift. For those who own property and work in Ann Arbor it may or may not be a good thing. It would depend on your income versus the amount of property tax you pay.

tidge

Sun, Feb 21, 2010 : 9:54 a.m.

My understanding is that the income tax is being proposed because of an existing/forecasted budget deficit and not because of a perception that property taxes in AA are too high. If that is the case, I don't understand how shifting the existing financial burden (from property owners to wage earners) is actually going to resolve the underlying problem in balancing the books.

KJMClark

Sun, Feb 21, 2010 : 9:11 a.m.

What part of "the law requires that Ann Arbor reduce property taxes if it institutes an income tax" does the writer not understand? Really, this is just a dishonest letter. An honest statement would compare the lower property taxes to the increase in income taxes. Pretending that the income tax proposal wouldn't lower property taxes and rents doesn't contribute to the conversation.

Jack Panitch

Sun, Feb 21, 2010 : 8:55 a.m.

First the disclosure: I used to represent the City of Philadelphia in business tax controversies before administrative and judicial tribunals. (I have worked in private practice, for a federal judge and for the Internal Revenue Service too, all involving tax controversies.) The point of the author's opinion is well-taken, but should be considered carefully. Most business executives would take a whole basket of factors into account when determining where to locate, not just taxes. For Mr. Wajda it made sense to locate his business in Delaware County to avoid paying taxes, all other factors remaining equal. For Comcast, it makes sense to locate in Center City Philadelphia and pay Business Privilege Tax on its gross receipts and net income and Wage Tax on its employees' wages. I'm not sure what side of this debate I'll eventually take. I don't have nearly enough information yet. I do appreciate Mr. Wajda's contribution to the discussion, though.

Craig Lounsbury

Sun, Feb 21, 2010 : 8:49 a.m.

"Truth is true no matter who utters it" while your correct, what is being uttered is an opinion. I agree with Brian Kuehn's sentiment.

A2_Jim

Sun, Feb 21, 2010 : 8:36 a.m.

Truth is true no matter who utters it

Brian Kuehn

Sun, Feb 21, 2010 : 8:32 a.m.

I do not understand why AnnArbor.com selected Mr. Wajda as the spokesman for the anti-tax side of the debate. He lives in Dexter and works in Romulus. A person who resides outside the City but works here would be a better choice. Or perhaps select a business owner who has located a business here. Mr. Wajda certainly has the right to express his opinions, I just do not think his voice should be elevated above those who will actually vote in Ann Arbor or who will be subject to the tax.

A2_Jim

Sun, Feb 21, 2010 : 8:29 a.m.

If I recall the National income tax was sold as being "only 1%" look where it is now. Stop the spending & remove the need for taxing us ever more - stop driving businesses out of the area & state!

stunhsif

Sun, Feb 21, 2010 : 7:41 a.m.

James, You are 100% correct. The problem with folks who want to increase taxes like adding a 1% income tax is they have no business experience and have never run a businesss. They may think 1% isn't much but when you already are paying a ton in taxes, it really is. And when you can move ( think renters who live in A2) and avoid the 1%, you most certainly will. Good letter!