From Quicksand to Growth: The Case for Bold Tax Reform in Detroit 

• Michigan’s decline in personal income ranking is largely attributed to its failure to attract young talent, while cities like Grand Rapids thrive by investing in amenities that draw the next generation and fuel economic growth. 

• Detroit’s high property tax rate is seen as a major obstacle to growth and development, prompting local leaders to prioritize lowering taxes to attract new residents and investment. 

• Detroit can address its systemic tax problems and promote growth by adopting a balanced mix of Land Value Tax, a targeted local excise tax, and reformed tax abatements. 

View the full session recording below.

During the 2026 Detroit Policy Conference, Bedrock’s Jared Fleisher  discussed how Detroit’s struggle to attract young talent is driven by high property taxes and insufficient amenities addressing and raised solutions for how to solve it.

Fleisher opened the conversation with an eye-opening statistic: “Michigan used to be a top 10 state in terms of personal income and is now 40th in the nation.” Wondering why such a significant decline occurred?

“We do not attract young talent; that is the engine of economic growth. Business follows talent. That high-wage, high-tech business in a modern economy follows talent. If you don’t have talent, you don’t get the kind of growth that lifts wages across the state,” Fleisher said.

Compared to many other cities, Detroit does not prioritize offering what people want.

“Place matters,” Fleisher said. Starting from nothing, Austin, Texas, now offers bars, restaurants, and live music, which attract young people. “Talent started going there. Business followed. Virtuous cycle,” Fleisher said.

Serving as a bright spot for Michigan, Grand Rapids is a “magnet for talent for the next generation. Grand Rapids is beating Chicago in the net migration battle,” Fleisher said.

What is Grand Rapids doing right? Civic leaders are “doubling down” and “transforming the entire riverfront, developing a new amphitheater, new soccer stadium, new housing, trails, bar, restaurants, and hotels.”

“At 82.2 mills, Detroit has the highest property tax rate among major U.S. cities. This is not the list you want to be on top,” Fleisher said.

Given this alarming statistic, lowering property taxes is a top priority for Mayor Mary Sheffield, Detroit City Council, and Michigan legislators.

Isn’t this a city spending problem? Fleisher doesn’t think so. “Of the 82 mills, the City of Detroit itself accounts for less than one-third of the total. More than two-thirds of taxes are levied by other jurisdictions for schools, higher education, county services, and regional parks.”

Tying in why lowering property taxes matters, “Property taxes in Detroit are a fundamental barrier to new growth and development,” Fleisher said. This prevents people from wanting to move into the city, only reaffirming Michigan’s need to attract young talent.

“Now, because property taxes mean you can’t develop, almost every project gets a tax abatement. It’s either that or nothing,” Fleisher said.

In the end, “you’re not generating property taxes for the city. It’s a systemic problem. If your taxes are so high that everybody has to get an abatement, what are you? It’s like being stuck in quicksand,” Fleisher said.

Fleisher says there are three policies that can solve this problem.

Land Value Tax (LVT): Fleisher reflected on what happened in 2023: “Detroit unveiled a proposal to increase the tax on vacant land to reduce taxes on occupied properties.” However, “the tax on land had to be so high to get the kind of targeted reduction we wanted on homeowners that it resulted in unintended consequences.”

To address this problem, Fleisher recommends LVT be part of the solution. “That way, you don’t have to tax the land so much that you run headlong into the argument of ‘that’s too much.’”

Local Option Excise Tax: Fleisher pointed out that there has been recent attention on the pros and cons of a citywide local sales tax. However, there are major drawbacks. A local sales tax would require a constitutional amendment, is regressive, and could change consumer behavior on large purchases.

Instead, Fleisher suggests  a more focused excise tax limited to the greater downtown that would “avoid the need for a constitutional amendment, avoid concerns with distorting behavior, follow national best practices in deriving revenue from center-city entertainment and visitor districts, solve concerns about regressivity, and be easily administrable.”

Tax Abatement Reform: “Tax abatements are an essential tool to make development feasible in Detroit.” However, tax abatements only provide significant relief for a relatively short term, creating a looming “cliff” for homeowners and developers.

Fleisher suggested that reducing the abatement level and extending the duration would yield immediate revenue for the City, make development more financeable, mitigate the abatement cliff, and yield a similar present value.

“A win in making our tax structure more efficient and pro-growth—and, make no mistake, growth is the ultimate answer for Detroit.” 

This session was sponsored by Blue Cross Blue Shield of Michigan.