2023 House Bill 4966

Taxation: specific tax; land value tax; provide for.

A bill to provide for the authorization and levy of a specific tax in lieu of certain ad valorem property taxes for purposes of improving equity in the taxation of property and to encourage the development of property within the boundaries of certain cities and local units of government; to prescribe the powers, duties, and jurisdictions of those cities and local units of government, and certain local and state officials, in the authorization and levy of the specific alternative tax and for the administration of this act; to limit the levy of certain ad valorem property taxes and exempt certain property from the collection of certain ad valorem property taxes within cities and local units of government qualified to levy the specific alternative tax; to regulate the levy, collection, and distribution of the specific alternative tax within the jurisdiction of each city or local unit of government qualified to levy the specific alternative tax; to create and provide for the modification of certain credits and exemptions against the specific alternative tax in certain circumstances in order to enhance the equitable purposes and objectives of this act; to provide for the exemption from certain taxes; and to provide for the powers and duties of certain state and local governmental officers and entities.

House Fiscal Agency Analysis

House Bills 4966 to 4970 would create the Land Tax Equity Act. The bill is intended to allow the city of Detroit to put the option of an LVT before the city’s voters. Supporters of the bill argue that the current property tax system in Detroit overly burdens homeowners and others who develop their property while incentivizing speculators to sit on undeveloped or blighted lots on which the property taxes remain very low. They contend that instituting an LVT would benefit residents and small businesses by allowing the property tax burden to be shared more equally by all and would incentivize speculators to develop their vacant or blighted property. Some raised concerns that bill would lead to the government picking winners and losers by raising taxes on some businesses that use undeveloped land, such as scrapyards or parking lots, and lowering taxes on others. Supporters of the bill countered that the same LVT rate would be levied on all land in the city (as is required by the uniformity clause17 of the state constitution). Opponents of the legislation argue that it is being rushed and not enough time has been given to consider the potential complex economic effects of creating an LVT. They contend that there are other, more proven ways of achieving the desired goals, such as local sales or excise taxes or a capital gains tax. They also argue that, while the bill aims to be revenue neutral, there is no way to guarantee that beyond the first year of the tax.

Introduced in the House

Sept. 12, 2023

Introduced by Rep. Stephanie Young (D-16) and two co-sponsors

Co-sponsored by Reps. Karen Whitsett (D-4) and Tyrone Carter (D-1)

Referred to the Committee on Tax Policy

Sept. 27, 2023

Reported with substitute H-2

Oct. 4, 2023

Substitute H-2 concurred in by voice vote

Amendment offered by Rep. Kristian Grant (D-82)

1. Amend page 8, line 27, after “(2)” by striking out the balance of the line through “government” on line 28 and inserting “The governing body of a qualified city, or the governing body of a qualified local unit of government upon the request of the governing body of a qualified city,”.

The amendment passed by voice vote

Amendment offered by Rep. Cynthia Neeley (D-70)

1. Amend page 14, following line 13, by inserting:

“(9) A qualified city is subject to an audit under section 10g of the general property tax act, 1893 PA 206, MCL 211.10g, in the same manner as all other assessing districts, and administration of the land value tax under this act must comply with section 10g of the general property tax act, 1893 PA 206, MCL 211.10g. Any aspects of the administration of this tax that do not comply with section 10g of the general property tax act, 1893 PA 206, MCL 211.10g, must be submitted to the state tax commission by the qualified city for review and approval by the state tax commission.”.

The amendment passed by voice vote

Oct. 11, 2023

Amendment offered by Rep. Abraham Aiyash (D-9)

1. Amend page 7, line 21, after "date" by inserting "after September 1, 2024".

The amendment passed by voice vote