Can anyone explain to me how a city like Detroit can have super high property taxes but the suburbs are less?

Question

Not knocking Detroit (I grew up there). But, I always thought the safer the environment and more pricey the homes, the more the property taxes. Homes in Detroit are selling for pennies so how are the property taxes so high compared to neighboring suburbs with more expensive homes/better schools?

Answer 1

You've answered your question yourself.   With the drubbing that the RE market has taken in Detroit, property tax rates have gone through the roof for the remaining properties as the city struggles to maintain services with a reduced base.  The cost of protective services (Fire & Police) tends to rise as crime moves in to neighborhoods with large numbers of unoccupied homes.  This compounds the problem for the city.

Answer 2

They raise taxes in the inner cities to support the crumbling infrastructure, support the welfare people, and they spend it on policing, etc.

Answer 3

First, you can't go by selling price to get tax bills.  Property taxes are based upon appraisals, which in many places may be up to 3 years behind the market.  Second, city school systems tend to be more expensive on a per student basis, so that adds to the higher property tax rate.  If the suburbs are safer, then, by extension, they would probably have to spend less on public safety (less crime means fewer officers needed, etc.).  Infrastructure costs in the suburbs also tend to be less, which saves money.  finally, it may be possible that Michigan like many other states has a local income tax.  If so, people living in the suburbs probably are wealthier then people living in the city, pay higher income taxes and thus reduce the demand for property taxes to fill the gap.

Finally, are you comparing tax rates with tax bills.  If you are discussing tax rates, it makes sense that tax rates in the suburbs are lower, since the houses are more expensive.  for example, make believe there are two towns, each with 5 people in them and the towns spend $5/year.  If the property appraisals in Town 1 was a total of $100,000 and the appraisals in town 2 were $200,000 total (and make believe all house in each town are appraised for the same - $20,000 in town 1 and $40,000 in town two), the tax rate in town 1 would have to be twice as high as town 2, but everyone would actually pay the same amount ($1) - the tax rate in town 1 is $1 per $100,000 while the tax rate in town 2 is 50 cents per $100,000.

Needless to say, you have to compare a lot of things before making the judgement that the rates aren't equal.

Answer 4

The taxes collected or collectable is the total value of the homes times the tax rate.  If the value of the homes is very low, then the tax rate is high to be able to raise enough money to supporr the local government.