DETROIT – Detroit plans to use a portion of its $60 million budget surplus to offset a projected $42 million decline in corporate tax revenue this fiscal year, Mayor Mike Duggan announced Monday.
City officials attribute the revenue drop to two factors: a provision in former President Trump’s tax legislation that may apply to municipal corporate income tax and ongoing trade tariffs.
The tariffs alone could cost Detroit $26 million in lost revenue.
“We are seeing the early signs of corporate tax slowdown,” Duggan said. “The tariffs are cutting into manufacturing profits, and Detroit is dependent on those. In the last six months, corporate profits in the manufacturing sector have dropped by approximately 50%.”
Glenn Stevens Jr., executive director of MichAuto at the Detroit Regional Chamber, emphasized the need for stability in the auto industry.
“The ongoing tariff situation—all the ups and downs, all the changes—has significantly impacted businesses operating in Michigan,” Stevens said.
Duggan’s solution involves creating a $42 million corporate income tax reserve fund for the current fiscal year, using money from last year’s surplus to cushion the shortfall.
While corporate tax revenue has declined, other revenue streams remain stable, according to Duggan.
“Our other revenue sources are performing well,” Duggan said. “Personal income tax, property tax, and gaming taxes are staying in good shape. This is specifically a corporate income tax issue, and we’re taking steps to protect the city.”
The Detroit City Council is expected to begin reviewing the mayor’s proposal on Tuesday. Sources familiar with the matter indicate the measure is likely to receive approval.