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Consultants outline municipal income tax basics, feasibility costs; commission asks staff to retrieve prior study
Summary
Plante Moran consultants briefed the commission on municipal income tax mechanics, noting it requires voter approval, typical rates (often 1.0% residents / 0.5% nonresidents), and administrative and enforcement costs; they estimated a feasibility study would cost $25,000–$50,000. Commissioners directed staff to obtain a prior study for review.
Consultants from Plante Moran presented an overview of how a municipal income tax would work and what steps Mount Clemens would need to take to consider placing such a measure before voters.
Brian Camiller explained that a municipal income tax charges workers for wages earned in the city and typically requires voter approval under the state constitution. He described common structures — often 1.0 percent for residents and 0.5 percent for nonresidents — and noted that Detroit is an outlier with a higher rate due to a specific statutory arrangement. Camiller said the tax base is individual taxable income and that exemptions or adjustments (for veterans or other groups) can be written into an ordinance to shape the distributional effects.
Camiller emphasized implementation complexity: "It's a completely different system" to set up and operate, he said, noting software, staffing or outsourcing, and an audit/enforcement function would be needed. He warned of enforcement challenges — identifying who actually works in the city and ensuring compliance — and said some cities outsource administration or contract with other jurisdictions. He recommended a feasibility study to quantify potential revenue, behavioral response, and administrative costs before advancing a ballot question. "Just that feasibility study, I think, would be in the realm of 25 to $50,000," he said.
Commissioners asked about whether an income tax could be used to offset property taxes for residents; Camiller said it is possible to structure offsets but stressed it would require detailed accounting and public outreach because impacts vary by household and business. Commissioners raised concerns about potential business relocation, the administrative overhead of collection, and whether residents would support a tax without clear offsets. One commissioner noted a prior study from around 2014 exists; staff said a paper copy had been located and the consultant who did the earlier work could be contacted to update the analysis.
The commission did not move to refer a proposal or schedule a ballot question. Instead, the chair directed administration to retrieve the prior study and return with the document and updated information at a subsequent meeting so the commission can decide whether to pursue a formal feasibility study.
