When Taxation is Eminent Domain..Part Two, Detroit

On January 21, 2013, this Blog wrote about a situation in which taxation may be so overburdening that the activity is effectively a taking. Small property owners have little opportunity to challenge a tax assessment. The costs, efforts and delay are so excessive that almost no residential owners challenge the City of Detroit over assessments.

Apparently the Michigan State Tax Commission has the same concern. On its own volition, the Tax Commission is reviewing whether the City of Detroit potentially over-assesses properties.

The net effect of this occurrence is that the properties are being "taken" by the activity of over-assessing! 

http://www.detroitnews.com/article/20130409/OPINION03/304090326 

Detroit is a shimmering example of how not to run a big city tracing a generations-long slide of depopulation, declining revenue and political dysfunction. It taxes too much, spends too much, and makes too many promises to employees and retirees that it cannot afford to keep, especially now.

And Monday's events, capped by the first meeting of the city's Financial Advisory Board since Orr's arrival at City Hall, show just how untenable Detroit's predicament truly is. Inflated property values cannot compensate for a cash burn that consistently outstrips revenue collection, further weakening the city's meager credit rating and its ability to borrow.

The cash-strapped city, judging by the groundbreaking reporting of my colleagues at The Detroit News, appears to be assessing property for far more than it is worth. The repercussions of a state review could exacerbate Detroit's already-dismal financials, depending on the conclusion of the investigation ordered by the Tax Commission.

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