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In a nutshell
- Local government officials have responded to Michigan’s tax limitations, which constrain growth in the property tax base, by seeking, and often receiving, increases in tax rates. From 2004 to 2020, the average county rate increased 17 percent, the average city rate increased 14 percent, and the average township rate increased 21 percent. Most local governments had higher tax rates in 2020 than they did in 2004.
- Tax rates increased for reasons other than just constraints on the tax base (e.g., some local governments had population increases or needed to expand service provision). Whatever the reason, local governments cannot perpetually increase tax rates; statutory caps and taxpayer tolerance create upper bounds.
- Policymakers must address the root problem with Michigan’s local finance system – Michigan depends too heavily on the local property tax to fund local government services. A municipal finance system with alternative tax options could ease the burden on the property tax.