Foreclosed Homes in Michigan Surged, Tax Burden Slid Down

by Peter Vernon on States

The number of foreclosed homes in Michigan is still surging and the unemployment rate is still climbing up, but at least one factor – personal income taxation – is not rising for residents of the state.

According to a report from the Senate Fiscal Agency, tax burdens have been falling substantially over the ten-year period since 1999 in the state. Michigan has plunged from 16th to 30th in a chart of states with the highest local and state tax burden per resident.

The income, use and sale taxes that Michigan residents pay now account for a much lower percentage of their personal earnings. In a chart ranking the tax burden per resident as a portion of personal income, the ranking of Michigan fell from 14th to 20th over the ten-year period.

Meanwhile, the number of bank owned foreclosures in Michigan in the first quarter this year surged to 18,604 units, accounting for 40.68 percent of total foreclosure filings in the state during the quarter. In a chart of foreclosed homes by state, Michigan ranked sixth during the period, with one foreclosure posting for every 99 homes in the state.

Total foreclosure filings statewide shot up to 45,732 filings, a spike of 37.8 percent from one year earlier and an increase of 10.7 percent from the previous quarter.

In March, the number of bank owned foreclosed homes in Michigan shot up year-over-year to 5,715 units, accounting for 32.29 percent of the 17,700 foreclosures filed in the state. Although total March filings marked a sharp jump of 43.5 percent year-over-year, the filings were lower by 11.6 percent when compared to the previous month.

Over the past years, the personal income tax collected by the state of Michigan from every resident ranged from $10,000 to $12,000. Last year, the collection per taxpayer has dropped to $6,000.

On the other hand, while the tax burden for residents has been cut down, the sharp reductions in tax revenues have caused deficits in the budgets for schools and other state programs. General fund revenues have fallen from almost $10 billion in the fiscal year 2000 to about $7 billion in 2010 and the state is facing a deficit of $1.7 billion.

In the meantime, the continued surge in fixer uppers for sale and other foreclosed homes in Michigan can be seen as a necessary corrective measure to cure the housing market, as well as opportunities for both investors and owner occupant buyers.

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