6 ms·

100k Detroit homeowners illegally taxed $600M still waiting to be compensated

87 points by dataflow 5y ago

gruez 5y ago
>The Michigan Constitution prohibits property from being assessed at more than 50% of its market value. Why is this even a thing? Is it some sort of feel good measure to placate mathematically illiterate voters? The clause is pointless. If everybody's property is assessed at 50% of market value, then property tax rates would have to be 200% to make up for it. At the end the tax you pay is still the same.
- cardamomo 5y ago
  - gruez 5y ago
    You're missing the point. Nothing I said negates the fact that people were over-assessed. I'm simply pointing out that the clause in the Michigan constitution makes no sense. Can you let that sink in for a minute?
    - dear_watson 5y ago
  - Sohurt00 5y ago
    I can, but what of it? I exist at point A, not point B. I can’t influence point B from A. Our culture at large refuses to blink from “the hustle.” What does lingering in ennui and frustration achieve while? If people want change it’s going to be on the level of quitting jobs en masse and working for each other at both points A and B, because letting outsiders guide agency through market hype is the problem. You want to make sure a community has enough and is free from people feeling they’re free to treat others however? Go do it. You want more of the same? Let the JIT machine keep creating bag holders. This sit and reflect thing is no different than thoughts and prayers.
  - cowsandmilk 5y ago
    What is there to say the people wouldn’t have been charged the same amount if assessed at 50% and the city then set a higher tax rate to get the revenue needed? The 50% assessment cap is meaningless for taxes paid when the rate is just double what it would be at 100% assessment.
- pjbeam 5y ago
  As a somewhat related aside I find the use of mills and other archaic units in this space to be kept around for no other reason than to confuse people.
- einpoklum 5y ago
  I'm guessing that it's a technicality. i.e. instead of saying "the property tax rate for a house with value X is Y*X", they say "the property tax rate for a house with value X is 2Y, but house value assessment for market-value X is X/2". Possibly because the 2Y legislation was difficult to change. > At the end the tax you pay is still the same. So, no. That is, IIUC, the tax rates are what they are based on the 50% assessment.
  - gruez 5y ago
    >> At the end the tax you pay is still the same. >So, no. That is, IIUC, the tax rates are what they are based on the 50% assessment. I don't get it. You admit that the tax rates would be higher (presumably 2x higher) to compensate for the 50% assessment, but claim that the tax won't be the same at the end?
- semiquaver 5y ago
  Property tax law has a logic all its own. You’ll find that in nearly every US jurisdiction assessed value is a percentage of market value, often a very small one. Saying it makes no sense is tilting at windmills, it’s just one of hundreds of legal fictions that sound silly out of the context they developed in. For example, most deeds to property identify the purchase price as “one dollar and other good and valuable consideration“, whatever the actual price was. The important thing here is the injustice that was done to these people and the city’s refusal to make it right.
  - deleted 5y ago
    [deleted]
  - brianwawok 5y ago
    My property here is accessed at roughly market value. Partially because my state has the following law in the constitution > Indiana property tax caps limit the amount of property taxes to 1% of property values for homesteads (owner-occupied), 2% for other residential property and farmland, and 3% for all other property Previous places I have lived without this law, things worked differently.
  - antisthenes 5y ago
    > You’ll find that in nearly every US jurisdiction assessed value is a percentage of market value, often a very small one. That's definitely not the case in my municipality (North-East USA). Tax assessments are as close to market value as you can get, considering that they are only being appraised every 5 years (I think, it may be 3 years). So there's obviously some lag if the market booms or busts. But overall it's pretty damn close to market prices and averages out over the long term.
    - np_tedious 4y ago
      I am also in the northeast and my assessed value is under 1% of actual market value. https://www.tax.ny.gov/research/property/equal/rar/index.htm https://www.tax.ny.gov/research/property/equal/rar/index.htm There are also many firms to dispute your assessment and lower your property tax bill. They do aggressive mass mailing and are able to claim very specific reductions. They then take a percentage (usually half) of first year savings.
- maxerickson 5y ago
  The increase of the taxable value of residential properties is capped at 5% (or inflation if it is lower). When a property is sold, it resets to the assessed value. The 2x factor increases the taxes paid by people who own properties with a taxable value less than the assessed value.
- jollybean 5y ago
  Yes, that part is ridiculous. But once you normalize for all of that, then, assessing at 85% is really like assessing for 170% which would be bad. Also - in a situation of rapidly deteriorating home values, the state may be short sighted, in wanting to pay it's bills, trying to extract some value. It's really sad because you generally don't see entire neighbourhoods go to nothing in most of the modern world.
  - sitkack 5y ago
    I did a tour of Detroit back in 2011, shortly before one of their large house auctions all for unpaid property taxes. Some of these basically destroyed houses were being charge 400-600 a month in property tax. The city continuing to tax Detroit neighborhoods like this is one huge contributing factor to the decline of Detroit.
    - jollybean 5y ago
      That's probably the tip of the iceberg of corruption and stupidity.
jokoon 5y ago
Article 25 of the declaration of human rights says that people have the right to shelter. It's so odd that in the 21st century, we still believe that some people somehow deserve their poverty, because we would rather listen to economical indicators rather than seeing people being homeless. Countries might be modern and developed to reduce poverty, but there are still societal beliefs that some people should not be helped. I'm happy I don't live in the US, because I would probably be homeless or an addict if I did, and there would be hordes of people claiming it's "survival of the fittest" and that it's fair game, because life involves competition, which is a fallacy of nature. The nazis actively promoted social darwinism, and the nazis are gone, but sometimes I feel like social darwinism is alive.
einpoklum 5y ago
Reminds me of how Flint, Michigan people got their pipe water replaced with lead-polluted Flint river water, and the water systems have not been fixed to this day (there was some work, but much remains to be done), nor have the people responsible been charged with any serious offenses. And IIANM, they're not getting healthcare for their lead-exposure-related condition either. Anyway... > Most of the surveyed residents prioritized cash payments as compensation. But that’s likely not going to happen because Mayor Mike Duggan’s administration insists that state law prohibits the city from providing cash payments or tax credits to any of the overtaxed residents. 1. I doubt it. 2. Even if that were state law, the mayor must uphold his federal and state constitutional obligations in spite or this law. > Activists say they disagree and are calling on Michigan Attorney General Dana Nessel to give her legal opinion. We're talking about 100,000 people. If they just twiddle their thumbs and expect some government lawyers to side with them, they'll probably be waiting a whole lot longer. They should organize, lay siege to city hall and the mayor's house, and threaten further escalation, until the money is deposited in their accounts and whatever other additional measures have been taken.
- nullc 5y ago
  > replaced with lead-polluted Flint river water, XKCD386: The river water was not lead-polluted. The river water replaced Detroit sourced water which had been treated with orthophosphate, which inhibits corrosion. Without the corrosion inhibitor lead was leached from water pipes (largely in lateral lines and in people's homes). > nor have the people responsible been charged with any serious offenses https://en.wikipedia.org/wiki/Flint_water_crisis#Criminal_prosecutions https://en.wikipedia.org/wiki/Flint_water_crisis#Criminal_pr...
  - coryrc 5y ago
    > Fifteen criminal cases have been filed against local and state officials,[17] but only one minor conviction has been obtained, and all other charges have been dismissed or dropped. But the guy with authority (local elected mayor, not the state emergency manager) and the engineers/technicians/??? who made the choice not to use corrosion inhibitor, which actually caused the problem, haven't been charged (or the Glasgow guy get let off?) to go after political targets instead and state people who failed to properly detect the mess the locals created.
PopAlongKid 5y ago
Do I have the math right here? $600 million divided by 100,000 homeowners is $6,000 each on average, over 6 years' time is $1,000 per year overcharge on property taxes. I'm wondering specifically about the foreclosure rate. Were the foreclosures strictly due to not paying the extra $1K per year? Or were they due to not paying any amount of tax due (including the bulk of it which was not an overcharge). The article doesn't say. [edit]: now I re-read a bit, the article actually does not state how many total taxpayers were affected, only those that were foreclosed on. There is also one anecdote at the end about how one person was over-taxed $4,000.
bachmeier 5y ago
The subtitle is much more important than the title: > An estimated 100,000 Detoiters lost their home to foreclosures because of over-assessments
- PopAlongKid 5y ago
  Were the foreclosures due strictly to the over-assessments, or due to not paying any property tax at all?
johnohara 5y ago
>The illegal, inflated property tax assessments resulted in an estimated 100,000 Detroiters, most of them Black, losing their homes to foreclosure. Should be "contributed to," not "resulted in." Many lower income Americans saw their dream of home ownership become a nightmare because they simply did not understand adjustable rate mortgages, or if they did, had faith in the argument that in 5 years years a booming economy would provide them with an income commensurate with the substantial increase in their mortgage payment. The real estate bubble made people feel wealthier when their home values increased (which they were taxed on) but the expected rise in income never materialized. Worse, homeowners covered their shortfalls with revolving credit and home equity loans. 2010 was 12 years ago, but millions of Americans still suffer the consequences of the 2008,2009 financial disaster and may well continue to do so the rest of their lives. Stories like this make me ill -- which was probably the intent.
- PopAlongKid 5y ago
  >2010 was 12 years ago, but millions of Americans still suffer the consequences of the 2008,2009 financial disaster and may well continue to do so the rest of their lives. True, but don't forget that some of those millions also received tax-free loan forgiveness and walked away from their under-water properties with relatively little harm (mainly emotional distress from being a debtor for a while and having to move).
  - johnohara 5y ago
    "Walking away" was literal in many cases. I remember seeing homes with a pile of "all our belongings" in the driveway scheduled for removal by contracted help loading dumpsters. Toys, bikes, exercise equipment, couches, headboards, etc. A huge pile after the family walked away 5 days prior. It's one thing to talk about it, it's quite another to watch the dumpster get hauled away with handlebars sticking out the top.

87 points by dataflow 5y ago

>The Michigan Constitution prohibits property from being assessed at more than 50% of its market value. Why is this even a thing? Is it some sort of feel good measure to placate mathematically illiterate voters? The clause is pointless. If everybody's property is assessed at 50% of market value, then property tax rates would have to be 200% to make up for it. At the end the tax you pay is still the same.

cardamomo 5y ago
- gruez 5y ago
  You're missing the point. Nothing I said negates the fact that people were over-assessed. I'm simply pointing out that the clause in the Michigan constitution makes no sense. Can you let that sink in for a minute?
  - dear_watson 5y ago
- Sohurt00 5y ago
  I can, but what of it? I exist at point A, not point B. I can’t influence point B from A. Our culture at large refuses to blink from “the hustle.” What does lingering in ennui and frustration achieve while? If people want change it’s going to be on the level of quitting jobs en masse and working for each other at both points A and B, because letting outsiders guide agency through market hype is the problem. You want to make sure a community has enough and is free from people feeling they’re free to treat others however? Go do it. You want more of the same? Let the JIT machine keep creating bag holders. This sit and reflect thing is no different than thoughts and prayers.
- cowsandmilk 5y ago
  What is there to say the people wouldn’t have been charged the same amount if assessed at 50% and the city then set a higher tax rate to get the revenue needed? The 50% assessment cap is meaningless for taxes paid when the rate is just double what it would be at 100% assessment.
pjbeam 5y ago
As a somewhat related aside I find the use of mills and other archaic units in this space to be kept around for no other reason than to confuse people.
einpoklum 5y ago
I'm guessing that it's a technicality. i.e. instead of saying "the property tax rate for a house with value X is Y*X", they say "the property tax rate for a house with value X is 2Y, but house value assessment for market-value X is X/2". Possibly because the 2Y legislation was difficult to change. > At the end the tax you pay is still the same. So, no. That is, IIUC, the tax rates are what they are based on the 50% assessment.
- gruez 5y ago
  >> At the end the tax you pay is still the same. >So, no. That is, IIUC, the tax rates are what they are based on the 50% assessment. I don't get it. You admit that the tax rates would be higher (presumably 2x higher) to compensate for the 50% assessment, but claim that the tax won't be the same at the end?
semiquaver 5y ago
Property tax law has a logic all its own. You’ll find that in nearly every US jurisdiction assessed value is a percentage of market value, often a very small one. Saying it makes no sense is tilting at windmills, it’s just one of hundreds of legal fictions that sound silly out of the context they developed in. For example, most deeds to property identify the purchase price as “one dollar and other good and valuable consideration“, whatever the actual price was. The important thing here is the injustice that was done to these people and the city’s refusal to make it right.
- deleted 5y ago
  [deleted]
- brianwawok 5y ago
  My property here is accessed at roughly market value. Partially because my state has the following law in the constitution > Indiana property tax caps limit the amount of property taxes to 1% of property values for homesteads (owner-occupied), 2% for other residential property and farmland, and 3% for all other property Previous places I have lived without this law, things worked differently.
- antisthenes 5y ago
  > You’ll find that in nearly every US jurisdiction assessed value is a percentage of market value, often a very small one. That's definitely not the case in my municipality (North-East USA). Tax assessments are as close to market value as you can get, considering that they are only being appraised every 5 years (I think, it may be 3 years). So there's obviously some lag if the market booms or busts. But overall it's pretty damn close to market prices and averages out over the long term.
  - np_tedious 4y ago
    I am also in the northeast and my assessed value is under 1% of actual market value. https://www.tax.ny.gov/research/property/equal/rar/index.htm https://www.tax.ny.gov/research/property/equal/rar/index.htm There are also many firms to dispute your assessment and lower your property tax bill. They do aggressive mass mailing and are able to claim very specific reductions. They then take a percentage (usually half) of first year savings.
maxerickson 5y ago
The increase of the taxable value of residential properties is capped at 5% (or inflation if it is lower). When a property is sold, it resets to the assessed value. The 2x factor increases the taxes paid by people who own properties with a taxable value less than the assessed value.
jollybean 5y ago
Yes, that part is ridiculous. But once you normalize for all of that, then, assessing at 85% is really like assessing for 170% which would be bad. Also - in a situation of rapidly deteriorating home values, the state may be short sighted, in wanting to pay it's bills, trying to extract some value. It's really sad because you generally don't see entire neighbourhoods go to nothing in most of the modern world.
- sitkack 5y ago
  I did a tour of Detroit back in 2011, shortly before one of their large house auctions all for unpaid property taxes. Some of these basically destroyed houses were being charge 400-600 a month in property tax. The city continuing to tax Detroit neighborhoods like this is one huge contributing factor to the decline of Detroit.
  - jollybean 5y ago
    That's probably the tip of the iceberg of corruption and stupidity.

jokoon 5y ago

Article 25 of the declaration of human rights says that people have the right to shelter. It's so odd that in the 21st century, we still believe that some people somehow deserve their poverty, because we would rather listen to economical indicators rather than seeing people being homeless. Countries might be modern and developed to reduce poverty, but there are still societal beliefs that some people should not be helped. I'm happy I don't live in the US, because I would probably be homeless or an addict if I did, and there would be hordes of people claiming it's "survival of the fittest" and that it's fair game, because life involves competition, which is a fallacy of nature. The nazis actively promoted social darwinism, and the nazis are gone, but sometimes I feel like social darwinism is alive.

einpoklum 5y ago

Reminds me of how Flint, Michigan people got their pipe water replaced with lead-polluted Flint river water, and the water systems have not been fixed to this day (there was some work, but much remains to be done), nor have the people responsible been charged with any serious offenses. And IIANM, they're not getting healthcare for their lead-exposure-related condition either. Anyway... > Most of the surveyed residents prioritized cash payments as compensation. But that’s likely not going to happen because Mayor Mike Duggan’s administration insists that state law prohibits the city from providing cash payments or tax credits to any of the overtaxed residents. 1. I doubt it. 2. Even if that were state law, the mayor must uphold his federal and state constitutional obligations in spite or this law. > Activists say they disagree and are calling on Michigan Attorney General Dana Nessel to give her legal opinion. We're talking about 100,000 people. If they just twiddle their thumbs and expect some government lawyers to side with them, they'll probably be waiting a whole lot longer. They should organize, lay siege to city hall and the mayor's house, and threaten further escalation, until the money is deposited in their accounts and whatever other additional measures have been taken.

nullc 5y ago
> replaced with lead-polluted Flint river water, XKCD386: The river water was not lead-polluted. The river water replaced Detroit sourced water which had been treated with orthophosphate, which inhibits corrosion. Without the corrosion inhibitor lead was leached from water pipes (largely in lateral lines and in people's homes). > nor have the people responsible been charged with any serious offenses https://en.wikipedia.org/wiki/Flint_water_crisis#Criminal_prosecutions https://en.wikipedia.org/wiki/Flint_water_crisis#Criminal_pr...
- coryrc 5y ago
  > Fifteen criminal cases have been filed against local and state officials,[17] but only one minor conviction has been obtained, and all other charges have been dismissed or dropped. But the guy with authority (local elected mayor, not the state emergency manager) and the engineers/technicians/??? who made the choice not to use corrosion inhibitor, which actually caused the problem, haven't been charged (or the Glasgow guy get let off?) to go after political targets instead and state people who failed to properly detect the mess the locals created.

PopAlongKid 5y ago

Do I have the math right here? $600 million divided by 100,000 homeowners is $6,000 each on average, over 6 years' time is $1,000 per year overcharge on property taxes. I'm wondering specifically about the foreclosure rate. Were the foreclosures strictly due to not paying the extra $1K per year? Or were they due to not paying any amount of tax due (including the bulk of it which was not an overcharge). The article doesn't say. [edit]: now I re-read a bit, the article actually does not state how many total taxpayers were affected, only those that were foreclosed on. There is also one anecdote at the end about how one person was over-taxed $4,000.

bachmeier 5y ago

The subtitle is much more important than the title: > An estimated 100,000 Detoiters lost their home to foreclosures because of over-assessments

PopAlongKid 5y ago
Were the foreclosures due strictly to the over-assessments, or due to not paying any property tax at all?

johnohara 5y ago

>The illegal, inflated property tax assessments resulted in an estimated 100,000 Detroiters, most of them Black, losing their homes to foreclosure. Should be "contributed to," not "resulted in." Many lower income Americans saw their dream of home ownership become a nightmare because they simply did not understand adjustable rate mortgages, or if they did, had faith in the argument that in 5 years years a booming economy would provide them with an income commensurate with the substantial increase in their mortgage payment. The real estate bubble made people feel wealthier when their home values increased (which they were taxed on) but the expected rise in income never materialized. Worse, homeowners covered their shortfalls with revolving credit and home equity loans. 2010 was 12 years ago, but millions of Americans still suffer the consequences of the 2008,2009 financial disaster and may well continue to do so the rest of their lives. Stories like this make me ill -- which was probably the intent.

PopAlongKid 5y ago
>2010 was 12 years ago, but millions of Americans still suffer the consequences of the 2008,2009 financial disaster and may well continue to do so the rest of their lives. True, but don't forget that some of those millions also received tax-free loan forgiveness and walked away from their under-water properties with relatively little harm (mainly emotional distress from being a debtor for a while and having to move).
- johnohara 5y ago
  "Walking away" was literal in many cases. I remember seeing homes with a pile of "all our belongings" in the driveway scheduled for removal by contracted help loading dumpsters. Toys, bikes, exercise equipment, couches, headboards, etc. A huge pile after the family walked away 5 days prior. It's one thing to talk about it, it's quite another to watch the dumpster get hauled away with handlebars sticking out the top.