Arbor Update

Ann Arbor Area Community News

City income tax idea meets skepticism

4. December 2004 • Murph
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Today’s Ann Arbor News has two articles on the proposed income tax (see previous coverage on AU), one discussing mostly negative reactions from commuters and residents, the other mostly negative reactions from the business community.

An estimated 68,500 commuters will head into the city each day to work by 2005 and would be affected by an income tax.

An estimated 68,500 commuters will head into the city each day to work by 2005 and would be affected by an income tax.

The City Council is considering placing the tax before voters as it struggles with an ongoing financial crisis. Ann Arbor officials say they’re faced with rising health care premiums and other costs, at the same time the state has cut funding to cities because of its own financial problems. Meanwhile, except for new construction or property that has been sold, city real estate taxes are capped due to Proposal A and the Headlee Amendment.

Leigh Greden is the only Councilmember cited in either article, and seems to see a completely different rationale for the tax than the News does.

Council Member Leigh Greden, D-3rd Ward, said an income tax is worthy of consideration for reasons other than raising money.

“If I decide to support an income tax, the goal would not be to raise revenue. The goal would be to shift the tax burden off of Ann Arbor taxpayers, and onto commuters,” he said. “When you have over 60,000 people driving in and out of the city every day, it costs Ann Arbor taxpayers money in roads, police and other services.”

Commuters quoted in the article challenge Greden’s assertion that they are a net drain on the city,

Beveridge said she doesn’t agree that commuters don’t contribute their fair share to the city.

“I do all my shopping in Ann Arbor. My dentist and my physician are in Ann Arbor. I lunch and dine in Ann Arbor. When you break it down, I probably spend that amount (a yearly city income tax) of money every week between grocery shopping and the business I do here.”

Michelle Isbell, who works at The Fitness Experience in the Arborland shopping center and lives in Azalia in Monroe County, said she also does most of her shopping and buys gasoline in Ann Arbor.

Business owners predict that the income tax will hinder relocation of businesses to Ann Arbor and hiring for those already here,

“It’s an environment where wages are basically flat, and this is a pay cut,” said John Edwards, president of Edwards Brothers Inc. Four hundred of the 500 workers at the book printer commute to their jobs in Ann Arbor. “Anything that results in a pay cut to employees, it puts me at a distinct disadvantage to my competitors,” he said.

Edwards estimated an income tax of half a percent would cost his employees $100,000 a year.

Other managers said approval of an income tax will add to Ann Arbor’s reputation as an appealing but ultimately difficult place to start a business.

For more on the State revenue sharing cuts mentioned, see AU post $440m State deficit looming.