Moral Hazard in Detroit's Housing Crisis


A new study, worth reading, by Detroit News, finds that almost half the owners of the city’s 305,000 properties skipped out on paying their share of property taxes. “The News reviewed more than 200,000 pages of tax documents and found that 47 percent of the city’s taxable parcels are delinquent on their 2011 bills. Some $246.5 million in taxes and fees went uncollected[…]” 

That’s nearly a quarter of a billion dollars in lost revenue to the state. The moral hazard here is articulated by Fred Philips, who owes over $2,600 in unpaid taxes on his home. “Why pay the taxes?,” Philips asked. “Why should I send them taxes when they aren’t supplying services? It is sickening. … Every time I see the tax bill come, I think about the times we called and nobody came.”

It seems that the maintenance of law and order in Detroit is disintegrating a breakneck-speed. 

Leola Wesley who paid $810 in property taxes last year–the only resident on her 32-parcel block who paid–questions what services she gets for her taxes, Detroit news reports. 

“It makes me not want to pay,” said Wesley, 85, who would move from her home of more than 20 years if she could afford it. “If nobody else is paying, why should I?”


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