News Story

Detroit Still Sending Tax Notices 15 Years After Company Closed

City wants money for fire permits, gas storage, building occupancy and awnings for long-abandoned business

Most business owners regret that time of year when taxes are due. But how would you feel if the government was still requesting money more than a decade after the company had closed?

That's what has been happening to a couple of former Detroit residents. Rose Bogaert and her husband operated a metal straightening company, Detroit Straightening Services Inc., for 28 years. They said high taxes and low services from Detroit eventually forced them to close.

The couple no longer owns the building. Rose said she thinks the city took it over and demolished it.

But Detroit still wants tax money.

Fifteen years after they left the city, Detroit still periodically sends out tax notices to Bogaert, who now lives in Dearborn Heights. She said they have received 10 or 12 tax bills since they left. The latest was sent Aug. 1, for $181 on behalf of the fire department.

"We left Detroit and everything we owned in it," Bogaert said. "For years, they have been sending us bills on fire permits, taxes and anything else you can think of. It has been 15 years since we have been in that building and they still come."

The Bogaerts sold the lot they owned across the street and eventually abandoned their building (pictured nearby). The City of Detroit website has no record of taxes owed on the property.

On the latest bill (pictured nearby), Bogaert wrote on the bill that she sent back to the city: "We do not own this building and have not been there in more than 15 years."

"This is another warning about trying to make a go of it in Detroit," said Michael LaFaive, director of the Morey Fiscal Policy Initiative at the Mackinac Center for Public Policy. "The marriage of high taxes, regulation and poor services creates every sort of mischief. It's instructive that the city has the resources to go after those who have long ago fled, but not the resources to keep all its lights on today."

Michigan Capitol Confidential reached out to the treasury division of the finance department for the city, which is the number listed on the tax bill, but the phone rang without anyone answering. A call to Cheryl Johnson, finance director, eventually reached a mailbox that was full.

Bogaert said she and her husband wanted to stay in the city, but high taxes, lackluster services and numerous break-ins eventually forced them out in 1998. Detroit has the highest income tax in the state and among the highest property and business taxes in the nation. It also charges a litany of fees to businesses. Over the years, three people were shot on the property in two separate incidents, she said.

"For this great experience we got to pay high taxes, personal and property, on over-assessed property," Bogaert said. "There were taxes on our heaters, compressor, gas tanks stored in the building (oxygen, acetylene, map and propane). There also were taxes on our awnings and industrial rates on our water."

The entire tax system in Detroit needs to be revamped, said Steve Thomas, another long-time Detroit business owner.

"From top to bottom, Detroit's tax system is broken," Thomas said. "It is a punitive system that punishes achievement, rewards failure and is prone to abuse. The city's underlying economic problems will not begin to heal until Detroit's tax system is overhauled."

For nearly three decades, Bogaert and her husband did what many small businesses do — they scraped by.

The couple straightened metal: Tools, dies, beams, bolts, automotive parts, shafts, plates and more. Bogaert said she did everything from accounting and payroll to driving the lift truck and cleaning the toilets. In the end, it wasn’t enough.

"There were [constant] safety inspections by the state and the city," she said. "It was next to impossible to get affordable insurance to cover all our losses. A 12-year-old boy driving his drunken mother ran into a piece of steel we were moving with the proper safety precautions and (they) won a $20,000 settlement. When our lift truck was stolen, that was the end."

Since they left, Bogaert estimates they have received 10 or 12 requests for taxes and fees. She said she used to call the city, but "they ignored me so I just ignored them and threw them away."

Detroit wanted money for fire permits, for inspections and gas storage, awning permits (long after the aluminum awnings had been torn down), building occupancy and personal property fees.

"The hostility showed to entrepreneurs by the city and many of its residents makes doing business there a difficult prospect," LaFaive said. "People shouldn't ask why so many businesses have left, but why any have stayed."

(Editor's note: This story has been slightly edited since its original posting.)

Michigan Capitol Confidential is the news source produced by the Mackinac Center for Public Policy. Michigan Capitol Confidential reports with a free-market news perspective.