Downriver benefits when Detroit is the economic center of southeastern Michigan. It is important that Downriver community leaders realize this correlation, and show interest in Detroit's economic revitalization. To the extent that Downriver officials can, they should support actions which would improve Detroit's economic climate.

How can Detroit improve its economic climate? First, Detroit must lower its property tax burden, the highest in the state and the fifth highest nationwide among the largest cities in each state. The 1987 Detroit property tax rate was 82.08 mills, an amount equal to an annual 4.1 percent tax on the market value of property. [12] In contrast, the average property tax rate for cities statewide was 63.44 mills. Detroit property taxes exceed the statewide average by 46.6 percent. [13]

Economist Patrick Anderson, a member of the Mackinac Center's Advisory Board, has noted that "Detroit has become caught in a destructive cycle where rising taxes shrink the tax base, and the response of the government to the shrinking tax base is to further raise taxes. Unless this cycle is broken, the city will continue to lose jobs and residents." [14] To reemphasize, high property taxes in Detroit are a disincentive to economic development and must be reduced.

Second, Detroit should utilize an enterprise zone approach, rather than property tax abatements, as an economic development strategy. An enterprise zone approach would reduce taxes, regulations and other government burdens on economic development in one of the nation's most economically distressed areas. This would create the open, free-market climate most conducive to entrepreneurship investment, job creation and economic growth.

Abatements favor large corporations at the expense of smaller firms, and impose a disproportionate tax burden on residents and other property owners. If abatements are utilized in Detroit, it should only be as an economic strategy of last resort.