|Detroit faced major challenges even before the Great Recession, with the loss of manufacturing jobs in the auto industry and the hollowing out of the urban core (“white flight” into the ring suburbs robbed Detroit of its tax base going back several decades). The financial crisis and subsequent economic crash sent these problems into overdrive. But lately a new meme has arisen from supporters of the emergency manager ruling: Scapegoating the citizens of Detroit by characterizing them as a bunch of tax cheats. A report in the Detroit News asserted that only half of city property owners pay their property taxes, leaving $246.5 million uncollected annually. This figure represents the highest rate of unpaid property tax among major U.S. cities.
Rather than demonizing “deadbeat” homeowners, however, we should examine who actually evades responsibility for paying taxes on those properties. Detroit has been ravaged by an unending foreclosure crisis. Predatory loans trapped borrowers into monthly mortgage rates they couldn’t pay, with lenders particularly targeting lower-income minority areas like Detroit. Many of those homeowners are gone now, evicted from their properties. It is a pattern that has sunk property values, making the high property tax rates in Detroit even more unsustainable. But it also has turned banks into the real deadbeats, depriving the city of revenue.
In a foreclosure, the property reverts back to the bank, which then becomes responsible for all maintenance and upkeep, as well as any fees. Some banks simply ignore these responsibilities and refuse to pay taxes or keep the vacant property in good order. The more clever banks stick evicted homeowners with the bill.
Across the country and particularly in Detroit, banks have engaged in “walkaways,” where they start foreclosure proceedings but then find them too costly to complete. They choose not to finish the legal steps to foreclosure, leaving the properties vacant. Banks that walk away from homes do not have to notify the city, or even the borrower, that they have abandoned the foreclosure process. Borrowers kicked out of their homes then find themselves still responsible for property tax payments.
We know this kind of behavior has occurred all over the country, leaving foreclosure victims stuck with the “zombie title” to an old property for years. And Detroit is ground zero for the phenomenon. A 2010 report of the Government Accountability Office found 500 bank walkaways in just four Detroit zip codes.
Blast from the Past. At Daily Kos on this date in 2012—Dude, where's my $10 trillion?:
|With the year-end expiration of the Bush tax cuts and the looming "sequestration" of $1.2 trillion they agreed to during their debt ceiling hostage-taking last summer, the message from Republican leaders is the same as it ever was. Taxes (especially for the rich) must not go up, defense spending must not go down, and the increasing national debt is all Barack Obama's fault.
The coming "fiscal cliff" brought Dick Cheney, the same man who as vice president boastedthat "Reagan proved deficits don't matter," back to Washington this week to get Congressional Republicans "ginned up" to prevent the $600 billion Pentagon sequester. Meanwhile, the GOP leadership team of Mitch McConnell (R-KY), Jon Kyl (R-AZ), John Boehner (R-OH) and Eric Cantor (R-VA) sent a letter to President Obama to demand a replacement for the defense cuts, one which of course must not include "tax increase proposals that face bipartisan congressional opposition." And on the campaign trail, would-be Romney running mate and former Bush Office of Management and Budget Chief Rob Portman (R-OH) warned that "we're going broke."
Of course, the United States is not going broke. But thanks to the Bush tax cuts and the wars in Iraq and Afghanistan, by 2020 the U.S. Treasury will be roughly $10 trillion poorer than it would otherwise have been. And these guys supported all of it.
On today's Kagro in the Morning show, Greg Dworkin went in-depth with a doc's-eye view of Medicare changes on tap under the ACA, and alerts us to his long-awaited interview on Australian 60 Minutes. After some royal baby babbling, amazing stats from Harvard on women & guns. Walterboro, SC: the new capital of #GunFAIL? Radley Balko's WSJ article, excerpted from his book, "Rise of the Warrior Cop." Did WSJ not want any discussion of how they suppress mass political dissent? Finally, the Detroit bankruptcy, starting with a background piece by David Dayen, "How Deadbeat Banks Pushed Detroit to the Brink."