Editorial: Don’t turn landlords into tax snitches
Private business owners should not have to serve as Detroit’s income tax enforcers. Demanding that landlords cough up detailed personal information of their tenants is an unreasonable request and an affront to privacy.
Bedrock Management Services, an arm of the Dan Gilbert empire, is refusing to comply with the demand and likely faces a lawsuit.
Unlike many landlords in the city, Gilbert has the resources to fight the request, and hopefully he will do so successfully.
Detroit says it needs to know who is occupying rental space in the city so that it can enforce its 2.4 percent residential income tax. It believes, and is probably right, that a large number of people who live in the city — particularly those occupying lofts and apartments downtown — are using suburban addresses to avoid paying the higher tax rate. Non-residents who work in the city are assessed at 1.2 percent.
In all likelihood, the scofflaws aren’t as much trying to avoid the residential income tax as they are exorbitant automobile insurance premiums, which are often two to three times higher in Detroit than what suburban motorists pay.
To root out those who aren’t paying their fair share, the city is demanding Bedrock and selected other landlords provide a list of their tenants, along with their social security numbers, employer and other personal information so the city can cross check the data against its income tax rolls.
Bedrock contends it can’t release information that was given to it in confidence without the permission of its tenants.
That’s a reasonable defense. Tenants have an expectation of privacy when they disclose their personal information in a contractual relationship with a landlord. And landlords may also have good reason to keep their tenant list private, particularly if they are leasing to high profile individuals.
Rather than turning landlords into tax compliance officers, the city should continue to attack the reasons residents are avoiding officially declaring themselves Detroiters.
That starts with pressuring the city’s legislative delegation to get behind reform of Michigan’s no-fault auto insurance system, which is the main driver of Detroit’s high premiums.
It also should consider lowering the residential income tax rate to match the non-resident rate. At 2.4 percent, Detroit imposes the highest local income tax in the state. It is a disincentive to live in the city.
Lowering the rate, or getting rid of it altogether, would encourage population growth in Detroit and ultimately generate more revenue.
In the meanwhile, the city should back off this intrusive action to force landlords to violate the privacy of their tenants.