In the Summer of 2013, the city of Detroit, Michigan filed for Chapter 9 bankruptcy, making it the first major city in United States history to do so, claiming that the debt had climbed to nearly $20 billion. Detroit has been hit harder than any other city over multiple recessions as much of their economy depended on the automotive industry. When the industry took a huge hit and people started moving to the suburbs, Detroit has faced an ongoing financial crisis.
Now, Detroit is trying to get a chunk of that money back, and they’re calling in some tabs that companies have run up on them. The city is planning to file more than 500 lawsuits against businesses (especially banks) that Detroit says have not paid taxes for more than five years. The amount of unpaid taxes has reached up to $12 million according to Detroit officials.
Detroit sent out demand letters to these companies, pointing out how much they owed the city for the property taxes that they have skipped out on. The companies are getting a chance to pay off their debt, and they only have a couple of weeks to do so before Detroit starts the lawsuit process against them.
Each lawsuit demands around $20,000 from properties both commercial and noncommercial, but Detroit did not say which companies were specifically being targeted in these suits. Detroit Treasurer and Deputy Chief Financial Officer David Szymanski says that the companies not paying their taxes has placed a burden on the taxpaying citizens of Detroit.
Szymanski said that “We are working to improve city services for our residents, and to do that – we need everyone who does business in this city to pay their fair share.” The money that Detroit would get from these lawsuits would help pay for increased police protection and school systems that have been struggling.
Many of the properties that did not have taxes paid were foreclosed on by banks, so the city didn’t get to collect any taxes from the auctioning of the properties. If they had, Detroit wouldn’t need to be filing these lawsuits in the first place. Companies were getting away with not paying taxes under past mayoral cabinets, but that’s not the case under Mayor Mike Duggan.
Individuals with one or two properties won’t have to worry about lawsuits, and neither will non-profit organizations. These suits are only for big dollar corporations that have skipped out on taxes. Szymanski confirmed this by saying “We are not talking about the family that has fallen on tough times, those struggling to decide whether to feed their children or pay their taxes.”
City officials were very careful about not singling these types of people out, instead targeting “those who tried to make money without paying what they owed. We are standing up for our property owners who paid their taxes and played by the rules.” For Detroit residents, this is a very welcome change from previous regimes, as companies were allowed to do what they wanted while Detroiters got the shaft.
It seems like the little guy is finally getting theirs, and it’s going to get expensive for the corporations that took advantage of them for years.