I think the title is confusing people. A more descriptive title might be, Supreme Court to decide if county can seize and sell $40k condo as penalty for $2k unpaid taxes, without giving back the excess value. It's not in question the government can penalize you for unpaid taxes by taking your property.
In defending their power to do that the state has made an argument which seems convincing that they maybe ought to be permitted to hold-back legitimate and reasonable costs associated with the sale, but I don’t think has made a convincing case that they can just keep whatever excess value there is without there being a takings clause violation. I expect them to lose hard on this.
>In defending their power to do that the state has made an argument which seems convincing that they maybe ought to be permitted to hold-back legitimate and reasonable costs associated with the sale, but I don’t think has made a convincing case that they can just keep whatever excess value there is without there being a takings clause violation.
If the government can self-fund by targeted asset seizure, rather than allocation from the legislature, you create an incentive for abuse. Want to grow your team? Find another home to possess, have them work on it. I'm very skeptical of this idea. We've seen it go wrong with other forms of asset seizures, with traffic enforcement, etc. Sadly you are probably right that it's legal.
If private capital is no longer safe from unreasonable seizures in the course of simple settlements against debt that requires a strait forward liquidation… the system is getting pretty close to permanently fucked. Not as in slippery slope… as in “fucked”.
This isn’t woke this isn’t neocon, this isn’t even a left or right… this is “capitalism as a system is built upon the respect for the value of a person’s capital” sort of stuff. If the court doesn’t rule either extremely narrowly in favour, or outright against… the precedent set by this could be devastating to … basically everyone. “Oh sorry that mobile phone contract worth a couple of grand means we a private company now have the power to force you to sell your house and keep the profits of doing it ourselves and paying lawyers to sue you to force you if you refuse”… nothing here feels like this is unique to the state, I don’t see why they should have this power and no one else by following their arguments… this would set a dangerous precedent and I really hope they get told to pound sand, with prejudice.
Edit: Also I want to clarify. I understand that lawyers are going to do their job and argue for their clients. This is about the system as a whole. It makes sense that the government would try to do this, and makes sense to try and pay lawyers to argue the case.. it does not make sense to undermine the fundamentals of capitalism to treat debtors as an underclass like criminals who deserve nothing and can be legally robbed by anyone they owe a debt to.
Look… I agree… but I can also understand the logic behind the fundamental concept of civil asset forfeiture. When you have a trunk full of drugs or cash and no one to point the finger at… it makes a twisted kind of sense to empower the state to simply sue the objects in question and allow the system to move forward efficiently.
What civil asset forfeiture had become is a god damn evil monstrosity… but the seed it grew from isn’t inherently damned… it’s the precedent and case law that has turned it into a twisted monster that is perpetuating abuse of the citizens of the United States of America.
Its mostly the incentives spurred by the Drug War federal decision to let individual LE agencies keep a share of proceeds of federal-law seizures they execute (most state forfeiture laws direct the proceeds to state general funds, so LE agencies don’t directlt profit from them) which created the problem, because it turned civil forfeiture into a funding stream detached from local government priorities for the agencies who participated.
A representative of this tax office said that the office does not turn a profit on these tax sales, it loses money. Which is believable because this woman was given 5 years to pay the $2300 bill or sign up for a repayment program. There are repayment programs that require a person to pay as little as 3% of their income per year. The county wasn't pushing her out the door to get their hands on her wealth, they tried repeatedly over multiple years to get her to make an effort and she never did anything.
What I would guess will happen is that the court will rule that keeping the excess equity is unconstitutional, but assessing fees equal to the cost of running the program is not, so they will raise the fees to compensate. Which will be good for some and bad for some, but feel more reasonable overall.
Yeah, so, if the tax office applied specific penalties for the delay, accounted for cost of sale, and deducted those specific costs, assessed with due process and challengable on their own merits, before refunding any excess value, that would be one thing.
But “we don’t profit in net from this practice so we should be free to keep arbitrary and unlimited excess proceeds from every individual subject regardless of the actual bill and reasonable costs in the specific case” is simply not a viable takings clause argument as I see it. And I think the Supreme Court majority is less favorable to the government on taking clause issues in general than I am...
A $40k condo that the owner only wasn't upside-down on because part of the seizure process was zeroing out the mortgage, unless the government's lawyer was just flat-out lying on NPR this morning.
[EDIT] To be fair, it might have sold for more than the mortgage balance in an ordinary sale, but I'm not sure it's reasonable to demand the government put in extra effort to maximize sale price, in cases like this. I do think this practice deserves some scrutiny, but IMO this is a pretty poor exemplar-case and the details seem to be rather overstated in much of the coverage and reactions.
Yeah, barring some compelling argument otherwise, I'd think the mortgage-holder is the one owed money here, and since it seems like most states make this system work without keeping profit from sales, I'm skeptical that compelling argument exists.
> Minnesota is among roughly a dozen states and the District of Columbia that allow local jurisdictions to keep the excess money, according to the Pacific Legal Foundation, which is representing Tyler at the Supreme Court.
Thank you for the link. It helped understand what was going on. I originally wondered how a case like this kept going against the lady all the way to the Supreme Court. But now I see it isn't so cut and dried. It seems to come down to whether or not you can "abandon" real property to the point that you have no ownership interest anymore, and if so, how long does that take?
Turns out I live in a state that allows this practice, so I'll have to pay attention to this case.
One thing not everyone realizes is how distributed and diverse the property tax systems and processes are. They arent national, they arent state-level, they might be city or county or township level. Some tax bills are paid by mortgage companies escrow services, some are not.
Sometimes, you dont get your property tax bill. Some times it gets lost. Some times you pay and the check gets lost. Some times they have working or non-working electronic payment systems. Bills change quarter to quarter, so you cannot necessarily push the payment, as the amount isnt consistent (though I've never seen it go down, only up.)
I've heard locals joke (cant verify) that modern-day "carpetbaggers" (outsiders who arent truly locals) might not get their bill and end up with a lien when they dont pay on time.
How are these kind of sales done, in practice, in the US?
Over here (Norway) the process is something like the following:
- Creditor has to send warnings multiple times, then go through a debt collection agency
- Debt collection agency tries to contact / get the debtor to pay.
- If nothing works, they go to court and can get wage / pension / benefits garnishment, but also petition for foreclosure and seize any assets of value.
- The local sheriff (guess that's the closest term) can then vacate the property, and seize any assets, like vehicles, etc.
- The items are then sold off at auction, usually starting at a price/bid which equals to the outstanding debt. Unfortunately these auctions aren't that well marketed or advertised, so there's a good chance the assets could sell for less than the going market value.
Creditors are given what they're owed from the sale, and if there's anything left, debtors get the surplus money. It's not uncommon for friends / family of the debtor to bid on these things, if it goes that far.
It seems they sent warnings for several years before seizing the property, all without any response. The local government claims there were programs she could have used to pay off the debt over a period of a decade, in order to keep the property, or she could have sold it herself. She already wasn't living in it, so no eviction of an occupant occurred.
Debt collection agencies are more common with private creditors & bills, or with unsecured debt. Typically, the entity engaging the agency gets only pennies on the dollar (they usually sell the debt, and the right to pursue it, to the agency). No point in doing that, in this case, since the entire value could be recovered.
As I understand it, yes, this was sold at auction, and, as part of the seizure process, the property's mortgage was nullified—without which action, the (auction) sale price would not have covered the remaining balance on the mortgage.
She abandoned the property, didn't live in it, and didn't pay taxes for years. That said it doesn't give the government the right to take all of the excess profits from selling the house.
There is property in east Texas. No water, no roads, no electricity, no police nor fire department. You are truly on your own. You pay for nothing and you pay for everything.
You don’t pay property taxes to own the land. You pay taxes for all those services modern civilised society wants.
The consequences of having zero property tax are (maybe unintuitively) extremely awful. Ignoring all of the arguments regarding commons and market liquidity, you essentially cede enormous amounts of power to large landholders who can cheaply (relative to the average citizen) monopsonize local real estate markets.
EDIT: Maybe in practice oligopsonize, but either way on a long timescale you can say goodbye to widespread freeholding.
This same SCOTUS recently ruled that women don’t have a constitutional right to privacy nor medical autonomy because they cherry-picked a time when state tradition curtailed their ability to abort a pregnancy.
The founding fathers oversaw a tradition of property taxes in the USA.
> Property taxes in the United States originated during colonial times.[64] By 1796, state and local governments in fourteen of the fifteen states taxed land
It's utterly immoral to allow people to own land. Land is a unique asset that belongs to society and letting anyone think otherwise was a massive mistake. The government allows people to enter into perpetual leases, but that's it. Private ownership is useful as an incentive to create things. Land isn't created so it can't be owned.
Ownership of land is an illogical concept anyway. The government doesn't own the land either, it is merely protecting it from intruders and enforcing the law it wrote. There are lots of stories about aboriginees being surprised that they could sell something they believed they didn't own.
From a simple arithmetic perspective, a land "owner" that doesn't pay at least the guard labor necessary to protect the land, will eventually lose that land. If we assume that military expenditures are paid by working income tax payers, then the guard labor would no longer be paid by its beneficiary and over the long run this disequilibrium will be eliminated through a revolution or war. In the latter case, the attacker values the land more than the "owner" and therefore it is "profitable" to acquire it by expensing the full amount of guard labor to "defend" it from the weaker army of the original owner.
> Ownership of land is an illogical concept anyway. The government doesn't own the land either, it is merely protecting it from intruders and enforcing the law it wrote.
I don't see how this doesn't extend to all property. If it does, perhaps ownership is "logically" impossible, so we're going to need a new word to mean what everyone's using "ownership" to mean now, because it's a useful word.
If we're going with Locke, you better be using all your land productively if you want to retain ownership.
[EDIT] For those who've not read him (the Second Treatise is, if not great philosophy, at least a clear, engaging, relatively-quick read, and is the work of his that comes up the most) Locke notices, as many have, that land ownership is kind of screwy under many otherwise-liberal frameworks of political and economic thinking, and justifies it by proposing that adding labor to land is what renders it fit for private ownership, by improving it (in terms of productivity or utility-to-people) beyond its "natural" state. Like most of the rest of the work, this comes off rather as Locke deciding which things he likes first, then going back and constructing the reasoning to justify them under his "natural law" framework, while studiously ignoring any branches of that reasoning that may head any direction he doesn't like—but, regardless, that's his take: input increasing productivity/utility is what justifies private land ownership.
Are there any other possessions subject to an unlimited amount of tax? Arguably you don't own land, you just rent it from the government. However, logically speaking, you should only be paying tax based on the value of the ground and nothing else. The current scheme is rather perverse. I do work, earn income, pay income tax. Buy a house, pay transfer tax, then pay tax on it again as my property value goes up. Buy tree seedlings, pay sales tax. The same dollar is taxed for income, taxed again for sales, then taxed a third time after I plant them thereby increasing the value of my property. No wonder our society is dividing into people who own nothing and pay nothing and people who own everything and do everything they can to pay nothing.
Keeping X requires constant resources to defend X that scale with the value of X due to competition for X. Governments (among other things) are for collective security and efficient defence of your X.
Thus by ongoing support of your ownership of X a government grants you an ongoing service which you pay for via taxes.
Without a state you must directly pay costs / use resources to prevent someone else who wants your X from taking it.
In nature ownership does not exist. Any being that is able to can consume what they are able from another. In nature energy is constantly spent on this for yourself and trying to prevent this happening to yourself.
Governments evolve for mutual benefit of their constituents much like multicellular organisms evolve for mutual benefit of their constituent cells .
> No wonder our society is dividing into people who own nothing and pay nothing and people who own everything and do everything they can to pay nothing.
Notice in your body certain cells seem to get a better deal than others? Why is that? Could it be objective proof that collectives that treat members equally are by evolutionary competition not as viable and those that do not? Yes! The evolutionary stable strategy seems to be to grant benefits to constituents just better than their next best viable option. This of course is only necessary but not sufficient.
I'm just trying to live on it. I find the entire concept of using a fundamentally scarce resource like land to generate profit by being a middle-man perverse.
It's not for profit though. Presumably there are city services involved (fire, police, emergency), civil utilities (water and sewage perhaps, electricity), and state defense. You're paying to live in that environment created by the government around that parcel, not just on that parcel.
Property taxes, and hopefully all forms of wealth taxes, are unconstitutional and local towns / state must find an alternative method of funding themselves such as higher income tax, sales, VAT, etc.
Maybe there's a legal argument in the Constitution, I'm not a lawyer. What is baffling me is the idea that if you must pay a tax on something you don't own it. It seems like more of a philosophical claim than a legal one, but I can't imagine any basis to claim that it's true.
I think it comes from people operating on different definitions. The word own, at least as I learned it, means you alone have control of the thing, and it can't be taken from you unless you agree to give it away.
Other people seem to have a different definition, and I can't easily put it to words. Something like "you have some control of this thing and you can keep that control as long as you meet some list of conditions".
I find it hard to argue against calling that something closer to renting than owning.
Can you point to any object, maybe outside of your body or intangible asset within your mind, that you "own" by this definition? That debtors and the courts can under no circumstances seize? If not, I would say your definition is bogus.
How about things that nobody knows you have? These would probably tend to be smaller things just because its easier for them to go unnoticed, and if nobody knows about them, they wouldn't have any reason or ability to take them from you.
This can't be a satisfying answer, otherwise you could "own" your land now, by your understanding, as long as it's done through enough overseas shell corps and so on. And still have to pay property taxes as per usual.
To clarify, I was talking about something like a photograph that you carry with you, little knick knacks like that.
As for land, if you could actually hide the physical body of land from people, then sure, it could sort of apply there. I don't think I meant "hiding" by legal means though. I mean if nobody can physically see it or look it up in a database to know it exists.
Realistically, we mostly don't own anything by my definition. Does that mean my definition is wrong?
In any case, I'm not claiming that my understanding is correct, just that people have different understandings and mine happens to be what I mentioned above.
> The word own, at least as I learned it, means you alone have control of the thing, and it can't be taken from you unless you agree to give it away.
This definition sucks because it's not the case practically anywhere, and I don't think making up some new word for what everyone means by "own" just so the "more rational than thou" set can take the word "own" to mean this nearly-useless-because-practically-nonexistent phenomenon, is helpful.
I'm thinking more from the mindset of a child. As a child, all of my little posessions were mine, and I could share them (or not) as I saw fit.
At some point, you become exposed to the real world and realize that it's really difficult to own anything like that, especially in a world where so many things are financed or come with subscriptions and cloud connections.
But that first understanding of the concept still sticks.
Imagine you decide to go 'soul searching', bought up a sizable chunk of land, packed up on goods, gave away everything else, and decided to just live off your land for a couple of years. By the time you got back to society, you'd probably find that "your" land was no longer yours. Unless you decided to stop what you were doing, go earn some USD, and give it to the government - they would seize your land. So it's really no different than rent.
Incidentally this is not inherent. If tax were assessed in some way like min(5%_of_disposable_income, assessed_property_tax) then I think there'd be a much stronger argument of ownership, in spite of the fact that in the vast majority of scenarios there would be exactly 0 difference. But take our little scenario above. Just want to check out of society for a bit? You'd be absolutely free to do so, and when you came back your land would would still be your land. In fact it would never be taken from you except in some scenario where you broke the law, such as by tax evasion.
Imagine a world where there are no taxes whatsoever, incredibly however a functional government with courts and such still exists. You buy a piece of land and go soul searching for a few years and come back to find you no longer own the land. Somebody you did wrong in the past sued you and won a judgement, got a lien against your land and sold it to make himself partially whole.
Would you say that you did not "own" this land, you were just renting it?
A lot of things related to property ownership among other assets are ultimately philosophical. Although given that land (and other wealth) taxes have been around for something like six thousand years I don't see them going away soon.
So my town has basically no commercial activity so sales/VAT/etc. is out. And while I don't know what the laws are for a local income tax, it's certainly extremely rare and, even if it could be done legally, it would be a huge transfer from working people to those who were retired, etc.
Seems like quite the claim. I could conceivably see the argument against federal taxes, but state taxes? There’s no right to be free from taxes enshrined in the bill of rights.
Isn't this subject to the sort of argument that Lincoln used in his Cooper Union speech? The signers and drafters of the Constitution mostly came from states that taxed property. They ruled out a federal property tax, it is true.
Property taxes are not unconstitutional. Particularly state property taxes, which under even the most revisionist possible reading are very clearly not prohibited by the US constitution.
In fact, at least one type of property tax is specifically enumerated in the constitution (Section 9)! So the notion that the founding fathers believed property taxes were unconstitutional -- while also enumerating a specific type of property tax in the constitution -- is ridiculous.
IMO, if an extreme SCOTUS attempted to kill all forms of property taxes, a collective decision by legislatures and the executive to selectively ignore Marbury v Madison would be a more likely outcome than the end of property taxes.
In general: the idea that the judiciary can "strike down" unconstitutional laws is much more tenuous than most of the things that fringe constitutional theories consider to be unconstitutional. I think this is where fantasies like ending property taxes or sovereign citizen stuff fall apart: if we're going to stretch the meaning of the constitution that far, then why continue putting so much unenumerated power into the judiciary?
Also: taxing income without taxing property is ridiculously stupid public policy. We should be doing exactly the opposite: rewarding hard work and severely punishing lazy lay-abouts who sit around on generational properties instead of contributing to society by working and earning an income.
No. Section 9 literally uses the word “tax”, and states that a "tax or duty" may be imposed, drawing an explicit distinction between "tax" and "duty" and thereby directly addressing potential misunderstandings such as yours. Section 9 VERY explicitly and VERY carefully allows for a property tax which is not a duty. Why would the framers include this clause, as written, if they believed it unconstitutional for Congress to enact property taxes? At the very least you would expect an exceptional clause if that were the case. This strains credulity, to put it mildly.
State property taxes existed in the US for 100 years before and also during the constitutional convention. It strains credulity to claim that the framers intended for state property taxes to be unconstitutional while also not enumerating this fact and even specifically enumerating limits on taxation of certain types of property.
Furthermore, the legislative and executive actions of constitutional convention members, within their respective commonwealths and states, clearly demonstrate that the framers did not intend to prohibit taxation of property particularly by non-federal governments (or even by the federal government, for that matter, as long as funds were equally distributed). Again, it strains credulity to claim that a framer would write a constitution intended to prevent states from taxing property, and then go serve in a state legislative assembly or executive that approved taxation based on the value of estates or properties.
And we haven't even made it to the 9th amendment.
Again: I'm much more willing to accept that Marbury v Madison was a mistaken interpretation of the constitution than I am to accept the US constitution can be somehow interpreted to disallow state property taxes. To be blunt, if SCOTUS tried to do something this blatantly ridiculous and made-up, most state governments and courts would simply ignore the ruling.
On the contrary in a capitalist society wealth taxes are the most moral taxes. The reason is that capitalism is inherently self reinforcing, if you have money you can make money. This causes a feedback loop that accelerates wealth upward until you end up in a feudal state. So it is the moral duty of the state to push wealth back down to keep the system from collapsing.
Taxes need to be focused on passive sources of income like investments. Income that is generated by work that produced goods or services should be minimally taxed to encourage more of those activities.
> If you have to pay taxes on property do you really own that property?
A different way of looking at this is that I'm letting you own a piece of land within my borders and in exchange I'm asking you pay a tax on it and if that isn't agreeable find a different settlement.
Yea, that's a bad idea that's ben tried over and over again throughout history to really bad outcomes. It's call feudalism. It was a bad idea then, it's a bad idea now. No property taxes means property will just sit in families for generations b/c there's no incentive to sell and the money generated will be in the same hands perpetually. Really bad idea.
There is no such thing as private property in America. The government owns everything regardless of what you think is yours, because you paid for it and were given a paper that states you payed for it.
Is putting people in jail for not paying property taxes a better solution? If not, then wouldn't a "no" ruling here effectively make it legal to not pay your taxes?
Exactly that. She owed $2300, and they seized and sold for $40k. She says she's due the rest, and as of right now, the county has just kept the $37.7k.
Theres been more egregious cases of being under a dollar short on taxes, and the cities profiting to the tune of hundreds of thousands of dollars. Which makes for weaponized taking of only profitable properties and not ones that taxes are so far behind theres no equity left.
The thought that any other result could occur is insane because the owner could in theory sell the property themselves to pay for the tax debt. Forcing that decision upon you shouldn't result in stolen equity.
Say I do $500 worth of work for you and you pay me by giving me an old watch you had kicking around. If I discover that it’s actually a valuable watch and sell it, should I have to return to you the excess over $500?
Maybe this is a bad analogy, but it’s the only argument that makes sense to me.
I think giving versus taking materially changes the ethics of the scenario.
If someone gives you something as payment, no strings attached and no misrepresentation, then it's a fair play. They gave you a watch as payment, they didn't ask you to sell it and pay back the difference. The debt is settled even if the watch isn't worth enough, because it was the payment, whatever its value ends up being.
If you took the watch to repay a debt, then yeah, it's unethical not to pay back the difference. Thinking about it in the converse helps: if you took the watch and it wasn't worth enough to pay back the debt, you would probably insist they're still on the hook for the rest. Cuts both ways.
Similar questions have been litigated before, and the answer is not unequivocally no, contrary to what you might expect.
It depends on whether you knew that what you were buying was worth more and whether you bought/got it with intent to deceive the other person about its true value (which is a hard thing to determine in the moment)
If the only consequence for burglary were that the government forcibly took back what you stole and returned it to its rightful owner, then I'd say that's basically making burglary legal too.
Presumably the government would be able to collect justified costs as well as the back taxes in selling the property. So, you don't pay your taxes, they seize and sell your home, then you pay for them to do all that from the proceeds. Maybe in state law there's an additional fine that's reasonable. Seems to be a deterrent.
this case is where the home was sold for more than the tax bill and the difference wasn't refunded to the owner. the situation is a bit more complicated but its not about protecting the whole value of the home from being seized.
There's such a thing as a tax lien, so if you sell or transfer, the government can get its taxes then. Or, you know, refunding the excess value of the property, if the government forecloses on it.
Wasn't it clear in the article that the issue was not whether the county was justified recouping the unpaid taxes, interest and penalties, but whether it could keep substantial gains above and beyond the amount of the unpaid taxes, interest and penalties?
