IDEAS home Printed from
   My bibliography  Save this paper

Detroit Property Tax Delinquency---Social Contract in Crisis


  • James Alm

    () (Department of Economics, Tulane University)

  • Timothy R. Hodge

    () (Department of Economics, Allegheny College)

  • Gary Sands

    () (Urban Planning Program, Wayne State University \end{minipage})

  • Mark Skidmore

    () (Department of Agricultural, Food and Resource Economics, and Department of Economics, Michigan State University)


As the country reemerges from the real estate crisis, the City of Detroit, Michigan continues to struggle, and is currently in the midst of bankruptcy proceedings. Falling property values have led to significant reductions in property tax revenues. In addition, the rate of property tax delinquency in Detroit is 48 percent, resulting in uncollected tax revenues of about 20 percent. This high rate of tax delinquency results from a confluence of factors including limited tax enforcement, feelings of tax inequity, and failure to provide public services, all of which have contributed to a breakdown in the social contract between the City and its residents. In this paper we develop a theoretical model of the individual decision to become delinquent on one's property tax payments. We then use detailed parcel-level data to evaluate the factors that affect both the probability that a property owner is tax delinquent and, conditional upon delinquency, the magnitude of the delinquency. Our estimates show that properties that have lower value, longer police response times, are non-homestead (non-owner occupied residential properties), have a higher statutory tax rate, have a higher assessed value relative to sales price, are owned by a financial institution or by a Detroit resident, are delinquent on water bills, and for which the probability of enforcement is low are more likely to be tax delinquent These findings can be used to inform policies targeted at improving tax compliance within the City.

Suggested Citation

  • James Alm & Timothy R. Hodge & Gary Sands & Mark Skidmore, 2015. "Detroit Property Tax Delinquency---Social Contract in Crisis," Working Papers 1508, Tulane University, Department of Economics.
  • Handle: RePEc:tul:wpaper:1508

    Download full text from publisher

    File URL:
    File Function: First Version, January 2015
    Download Restriction: no

    References listed on IDEAS

    1. Agnar Sandmo, 2012. "An evasive topic: theorizing about the hidden economy," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(1), pages 5-24, February.
    2. James Alm & Benno Torgler, 2011. "Do Ethics Matter? Tax Compliance and Morality," Journal of Business Ethics, Springer, vol. 101(4), pages 635-651, July.
    3. Joel Slemrod, 2007. "Cheating Ourselves: The Economics of Tax Evasion," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 25-48, Winter.
    4. Timothy R. Hodge & Mark Skidmore & Gary Sands & Daniel McMillen, 2013. "Tax Base Erosion and Inequity from Michigan's Assessment Growth Limit: The Case of Detroit," CESifo Working Paper Series 4098, CESifo Group Munich.
    5. Kirchler,Erich, 2007. "The Economic Psychology of Tax Behaviour," Cambridge Books, Cambridge University Press, number 9780521876742, May.
    6. Allingham, Michael G. & Sandmo, Agnar, 1972. "Income tax evasion: a theoretical analysis," Journal of Public Economics, Elsevier, vol. 1(3-4), pages 323-338, November.
    7. Heckman, James, 2013. "Sample selection bias as a specification error," Applied Econometrics, Publishing House "SINERGIA PRESS", vol. 31(3), pages 129-137.
    8. James Alm, 2012. "Measuring, explaining, and controlling tax evasion: lessons from theory, experiments, and field studies," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(1), pages 54-77, February.
    9. Sigelman, Lee & Zeng, Langche, 1999. "Analyzing Censored and Sample-Selected Data with Tobit and Heckit Models," Political Analysis, Cambridge University Press, vol. 8(02), pages 167-182, December.
    10. Alm, James & McClelland, Gary H & Schulze, William D, 1999. "Changing the Social Norm of Tax Compliance by Voting," Kyklos, Wiley Blackwell, vol. 52(2), pages 141-171.
    11. Bradley, Sebastien, 2012. "Property Tax Salience and Payment Delinquency," School of Economics Working Paper Series 2012-9, LeBow College of Business, Drexel University.
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Alm, James & Hawley, Zackary & Lee, Jin Man & Miller, Joshua J., 2016. "Property tax delinquency and its spillover effects on nearby properties," Regional Science and Urban Economics, Elsevier, vol. 58(C), pages 71-77.

    More about this item


    property tax; delinquency; tax compliance;

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:tul:wpaper:1508. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Rodrigo Aranda Balcazar). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.