Supreme Court will decide if all home equity may be forfeited for unpaid taxes
apnews.com
apnews.com
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.
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...
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.
https://en.wikipedia.org/wiki/Civil_forfeiture_in_the_United...
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.
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.
Federal taxes, other than those on income, maybe, but this is not about federal taxes.
[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.
https://pacificlegal.org/property-rights/home-equity-theft/ (contains map of states that allows this practice)
https://pacificlegal.org/case/mn_home_equity_theft/ (case story)
Turns out I live in a state that allows this practice, so I'll have to pay attention to this case.
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.
Then a NY Tax & Finance department employee bought the house for pennies on the dollar at auction...
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.
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.
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.
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.
I don't know. How would you define ownership?
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.
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.
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.
I'm curious how you would define ownership?
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.
I'm still curious about yours.
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.
Would you say that you did not "own" this land, you were just renting it?
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.
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.
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.
Taxes paid when purchased, taxes paid on maintenance, taxes paid on fuel, yearly personal property tax, yearly registration (tax), insurance (tax)
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.
You don’t pay property taxes to own the land. You pay taxes for all those services modern civilised society wants.
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.
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.
[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.
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.
EDIT: Maybe in practice oligopsonize, but either way on a long timescale you can say goodbye to widespread freeholding.
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
https://en.m.wikipedia.org/wiki/Property_tax_in_the_United_S...
Maybe this is a bad analogy, but it’s the only argument that makes sense to me.
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.
I think for property tax cases like this, once you forfeit the property the debts are cancelled.
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)
Wouldn't this be a debtors prison?
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?