Ypsilanti City Income Tax - Ann Arbor

The City of Ypsilanti has taken the question of enacting a city income tax to the ballot twice: in the November 2007 Election, the question was defeated by a 2-1 margin after a heated campaign. The question was again placed on the ballot for the May 2012 Election, and again saw heated debate before being defeated a second time, again by a nearly 2-1 margin.

In each case, the income tax would have been 1% for city residents and 0.5% for non-residents, and would expire after five years. In 2007, the Council had approved a 2-mill rollback of property taxes that would take place if the income tax was approved, and the measure was proposed to be temporary, sunsetting after 5 years. In 2012, noting that the dramatic property value declines that had resulted from the national subprime mortgage collapse and ensuing recession were not likely to rebound quickly, the Council did not include an expiration on the income tax, and it was accompanied by a question for a Water Street Debt Retirement Millage, instead of a property tax reduction; that millage was defeated by a similar margin.

2012 Ypsilanti City Income Tax Question

Ballot Language

Positions

2007 Ypsilanti City Income Tax Question

Ballot Language

The following language appeared on the November 2007 ballot for City of Ypsilanti voters:

imposes an annual rate of income tax of 1 % annually on corporations and resident individuals, and 0.5 % annually on non-resident individuals who are employed within the city.
allows a $1,000 exemption for each individual and dependent with additional cumulative exemptions for individuals over age 65 and for individuals with qualifying disabilities.
exempts income from pensions, Social Security, annuities, disability payments, and other qualifying sources of income
becomes effective July 1, 2008, and
expires July 1, 2014

Positions

Advocates of the tax, including the group Campaign for Ypsilanti's Future, say that recent and on-going reductions in State revenue sharing, as well as loss of industrial tax base, require new sources of revenue. City spending has been "cut to the bone", claim advocates, and further spending cuts will increasingly impair quality of life. An income tax would help diversify the tax base, they say, by capturing revenue from commuter employees of Eastern Michigan University and other major employers.

Opponents of the tax, including the group Stop City Income Tax, claim that the tax would discourage investment in the city by placing an extra burden on residents and property owners. Further, they point to projections released by the city government to show that the tax will not solve the city's financial woes - assuming no further changes in the city or State funding processes, in five to six years the city's budget will likely be back at its current state. Opponents of the tax ask why residents should be asked to pay a new tax that will not permanently solve the problem, and advocate instead additional budget cuts.

On October 8, 2007, the Ypsilanti Area Chamber of Commerce Board voted to recommend a "no" vote on the ballot item.

Lawsuit

In late September 2007, Stop City Income Tax, joined by Councilmembers Brian Robb and Trudy Swanson, filed suit against the city, asking the Washtenaw County Circuit Court to declare the ballot language invalid. The suit claimed that the ballot language is misleading, inaccurate, and was placed on the ballot improperly.