Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the City Income Tax topic
No spam. Unsubscribe anytime.
Consultant outlines mechanics and trade‑offs of a Mount Clemens city income tax, recommends feasibility study
Summary
A Plante Moran consultant told the Mount Clemens commission a municipal income tax is legally allowed but requires voter approval and significant administrative setup; he recommended a $25,000–$50,000 feasibility study to estimate revenue and distributional effects.
Brian Camiller, a consultant with Plante Moran, presented an overview of how a municipal income tax would work and the practical steps Mount Clemens would need to take to pursue it.
Camiller said a city income tax typically levies a small percentage on residents' taxable income and a lower rate on nonresidents who work in the city. "The city income tax idea is really good as an idea," he said, but he emphasized the legal and operational realities: "It is allowed in the amended constitution. In order to do this, requires voter approval." He explained common structures (for example, 1% for residents and 0.5% for nonresidents in many cities, with specific exceptions such as Detroit's higher rates) and the need for exemptions or adjustments to address equity concerns.
The consultant outlined potential advantages — unrestricted revenue and diversification beyond property tax and state revenue sharing — and drawbacks: startup costs for software and staffing, ongoing audit and enforcement obligations, potential business relocations, and the political challenge of persuading voters. Camiller warned that a new tax is not a simple flip of a switch: "You're not equipped at this present time... It's a completely different system." He said some cities outsource collection but that option depends on capacity and willingness of other jurisdictions to take on the work.
On next steps, Camiller recommended a feasibility study to estimate how much revenue is realistically available and how an income tax would interact with property tax relief. He estimated the feasibility study would cost about "$25 to $50,000," and urged the city to begin public education early if it chose to proceed.
Why this matters: an income tax would change how the city raises operating revenue, could shift tax burdens between residents and nonresidents, and would require administrative capacity and public approval before implementation. Commissioners asked staff to locate the prior 2014 study for comparison and to consider an updated feasibility analysis.
Next steps: staff was directed to obtain the earlier study and follow up with a proposed scope and cost for a feasibility study; no formal decision to pursue an income tax was made at the work session.
