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Add a bedroom (or a castle), hold the taxes

January 19, 2010 - Jim Anderson
Build it, and you’ll pay no tax.

That’s the promise of a proposal from Republican gubernatorial candidate Mike Bouchard, who wants a moratorium on property tax increases for Michigan homes and businesses that make remodeling additions.

Bouchard’s plan would freeze property taxes on property with new construction that adds to the taxable value of buildings. Higher property taxes would take effect only when renovated homes and businesses are sold.

Property owners would have a one-year opportunity to take advantage of the incentive. New home construction would be exempt from property taxes for 12 months or until the homes are sold, whichever comes first.

The initiative has earned the support of the Michigan Association of Home Builders and the Associated Builders and Contractors of Michigan, according to Bouchard.

Any proposal that promises to add jobs deserves a closer look.

Bouchard says the idea can’t wait until the next election, and Sen. Alan Sanborn, R-Richmond, plans to introduce a bill.

A curious thing, at this point, is that the proposal is being touted as a gift for common folks.

“This is trickle-up economics,” Sanborn said. “It helps the little guy. It jump-starts the economy. It helps people who are upside down in their mortgages and feel stuck in their homes right now. It incentivizes them to fix up their homes, put people back to work.”

So, under this plan, people at the end of their financial ropes are going to pour money into homes they already can’t afford? Hard to figure.

More likely, it will be great timing for people of fantastic means who want to "upgrade" their camps and abodes, free forever of any property tax burdens ... just speculating, we’ll have to see how the bill is written.

Bouchard, Oakland County sheriff, claims the property tax freeze won’t reduce revenue for local governments because “they’re not getting it now anyway.” That assumes, of course, that absolutely no remodelings or additions would take place anywhere, anytime in the state of Michigan without Bouchard’s plan.

The construction sector could use the boost, no doubt. But to call this “trickle-up economics” is an eye-roller, at best.

The boon for builders is for one year only. The tax breaks, which impact local schools and governments and local “little guy” taxpayers, could extend for decades upon decades.

An alternative strategy might be to exclude, say, the first $60,000 of a couple’s earnings from state income tax, and then raise rates above that threshold accordingly. That sounds like trickle-up economics — and far from what Bouchard and Sander have in mind.


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