Does anyone have any idea how much it costs a traditional newspaper to produce an article like this? They've listed 15 people in the "Credits" section at the bottom. Seems cost-prohibitive.
Written by Michael Sallah, Debbie Cenziper, Steven Rich /
Graphics by Ted Mellnik, Emily Chow, Laura Stanton /
Photos by Michael S. Williamson /
Editing by Jeff Leen, Steven Kress /
Research by Jennifer Jenkins /
Production by Chris George, Connor Jennings, Bronwen Latimer, Michelle Williams, Tim Wong
The "producers" are likely just management and several of the rest may in fact be unpaid interns trying to break into the industry.
But researched articles like this are expensive to produce. That's why PR firms are so successful. Reporters need others to find and research stories for them.
Production has a different meaning in publishing than in movies, which is what I think you're referring to.
In print, production is the act of taking the raw inputs (copy, graphics, layout) and getting it out the door. E.g., the print production managers I know manage the physical details of the print medium. There is a similar meaning in advertising. [1]
Looking at the resumes of the first couple producers, one's a designer, the other lists himself as "Nerd". So I think they are using the meaning from publishing: people who produce the final product.
True investigative journalism is a remarkably expensive process with little chance of recouping overall costs. Even after the initial draft, an extraordinary amount of fact checking and editorial requirements/standards are applied to the piece. Some of it's for reputation reasons and a lot of it is for legal reasons: slander suits aren't cheap.
I hope papers start providing full 'Credits' to what goes into a piece so as to better inform the reader how many people in the chain it takes to arrive at the final copy.
Apparently he owned this 197k property? Why didn't he borrow money against it or sell it?
Did somebody really just take the house, sell it for say 197k to pay his 134 dollar bill?
Sounds weird if this is possible. Probably he didn't own his house (even though it is stated in the article that he had bought it with cash earlier), I don't know why they could else foreclose on it.
I mean creditors don't have the right to your property if you just owe them money (it may be possible for them to force you to sell your property to pay off debts, but you get to keep the money left over)?
Issue is abuse of that system not the fact that it was by a private company operating for profit. Many prisons are run by for profit enterprises as well as hospitals. The way the program is run is the important thing not the type of enterprise handling the program.
Example: Small town with "speed trap" (not a for profit business) gives out excess tickets to raise money.
The DC local government is somewhat remarkable in how corrupt it is. It seems like every other day some major political player gets indicted for corruption of some sort.
DC is in some ways an anomaly; US citizens deliberately disenfranchised by the Federal Government. It's not surprising that they might be extravagantly corrupt.
And they should keep saying that. I agree that some portion of government operations are dubious. I believe the portion is pretty small. The people I know who work in government are there because they want to make a difference. They would be just as outraged by this as anybody. More so, really, because they see stuff like this as shaming public service everywhere.
I have no doubt that most low-ranking government employees believe they are doing good and I don't blame them. But it doesn't matter and it doesn't change the fact that they are involved in extracting money from people with a threat of force. If you can't convince people to finance something, whatever it is, and you still collect money from them, you are stealing.
Ah, maybe the difference is that I live in a democracy, where we vote for people who set budgets, and often vote directly on the taxes ourselves. So the only people threatened by force here are those who try to be free riders on the system that the people have jointly set up. It may be different where you are.
No difference. Why do US citizens have to pay for wars and killing a great number of innocent people in them, or Guantanamo, or NSA, or TSA... when the majority clearly opposes it? Democracy is a nice myth, which gives surfs a false feeling of satisfaction and control, obscuring the reality, which is that you are being robbed. "You can always leave", as has been noted before, is another myth: yes, spend 5-6 years on the paperwork and then leave to yet another democracy that's gonna steal from you.
Look, I understand you believe in the idea, but the harsh reality is that you are being tricked into obedience by your rulers/owners. My country is no different. The standards of living may be lower, but the fact remains: no government ever truly cares about its citizens. It's nice to think they do, though. But look at the incentives. There are none.
In a democracy, the government and the citizens are not different parties; they are citizens and their incentive is that they have to live here as well even after they're no longer in power. To say governments never care about their citizens is silly, a government is not one mind, it's a collection of said citizens.
Theoretically. In practice, as soon as you get power, you have very little incentive to serve those who elected you and all the incentives in the world to make money from special interest groups. You can't fix that with any number of new rules and legislation. Instead, think about this: why do you need some people sitting in a pathetic building ruling over you? Why do you think society cannot do without them and what is it that only governments can do, but people and companies can't?
> In practice, as soon as you get power, you have very little incentive to serve those who elected you and all the incentives in the world to make money from special interest groups.
Special interest groups are citizens teaming up to push their agenda, those are people who elected you. Special interest groups are not inherently bad nor are they automatically against the will of the electorate. Many are actually representing the electorate.
> Instead, think about this: why do you need some people sitting in a pathetic building ruling over you? Why do you think society cannot do without them and what is it that only governments can do, but people and companies can't?
There you go again treating government and people as if they're different things. You're presenting a false choice, it's not government rule vs freedom from it, it's government rule vs local warlord rule. Power abhors a vacuum and government is our solution to that problem, it's how we live civilly together. It's not nor will it ever be perfect as no human system is, but it's vastly preferable to the alternative.
The idea that people can live peacefully without a form of government is just silly, someone has to enforce rule of law and it can't be someone's private security force or the guy with the most goons wins every time. Either the people choose a government or someone will choose one for them, or decide to rule himself.
I certainly grant that things are not perfect here.
Regarding your particular questions, in May 2003, 79% of Americans thought the Iraq war was justified, so the majority clearly didn't oppose it. Most now believe it was a mistake. Only 41% of citizens agree with the president's plan to close Guantanamo. A majority of Americans think the TSA is doing a good job. I think the majority of Americans are wrong on all of these things, but they are undeniably popular opinions.
I, personally, am not being robbed. I am also not being tricked into obedience. Your insistence to the contrary, entirely ignorant of my actual situation, is arrogant foolishness. I've lived on four continents, and I'm quite happy with what I have here.
Could it be better? Sure. Is it at risk from powerful interests? Definitely, especially at the federal level. But I also see many causes for hope.
Fine, you feel you're not being robbed. I know quite a few people from the US who feel that taxes are theft. Granted you agree they have the freedom to believe in whatever they want, how do you justify the fact that if they don't pay taxes, they will go to prison (not right away, but eventually, if they decide to resist, even if peacefully) or have their property alienated? Democracy isn't the answer, because they don't believe in one. If you say they have to pay because they use services a government provides, then it's also very debatable: they certainly may not want to pay for some of them (military?) and surely they don't have any alternative because government monopolistic behavior prevents any competition in certain sectors of the economy. Saying they have this freedom to believe in whatever they want when they don't have the same freedom to act according to their beliefs is identical to not granting them any freedom at all.
I justify that by pointing out that they are free riders. There are surely people living on backwoods property that pay little to no tax, because they are effectively not part of our various collective enterprises. Godspeed to them.
But if people want to enjoy the benefits of living in a city, state, and country, to participate in an economy, those benefits come with obligations. Sure, they may not want to pay for things. But if they can't get others to agree that the government should not do those things, or at least should run them on a cost-recovery basis, then it's too bad.
They certainly have the freedom to move to someplace without effective government. E.g., Waziristan or Somalia. They will be much freer there. Of course, warlords will be free to rob or kill them, so it may not be entirely to their tastes, but then, we aren't guaranteed perfect choices, just the opportunity to make better ones.
As a side note: you feeling that you're not being robbed has nothing to do with what actually happens, which is extracting money by a threat of force. You may not think about it this way, but it becomes painfully obvious once someone refuses to pay. To me, the refusal to see this is akin to a Stockholm Syndrome. No offense though, I did not mean to discard your argument using this comparison. I may add this is what it looks like to me subjectively.
I understand you believe you have some magic power to judge my motivations and behaviors based on zero actual knowledge, a little theory, and a lot of arrogance. To which I say: have fun. Just don't expect me, or anybody, to take you seriously when you're doing that.
"All because he didn’t pay a $134 property tax bill." [1]
What is the scope of the problem here?
Ok:
"Others weren’t as lucky. Tax lien purchasers have foreclosed on nearly 200 houses since 2005 and are now pressing to take 1,200 more, many owned free and clear by families for generations."
Out of home many?
"The retired Marine sergeant lost his house "
Obligatory "and he was a good guy who fought for his country" added in for extra emotion (in addition the picture of course of a respectable citizen).
All this is sad and most certainly an interesting read. But it seems more suite for Taibbi in Rolling Stone.
Would be nice if in addition to writing emotional appeals they enlisted the help of someone (say a think tank) that could do further analysis and come up with some suggestions as far as reform that are backed up by research and in writing.
[1] Noting that this dates back to 2006 and yes if you ignore simple notices bad things happen. Don't pay your insurance bill? You won't have insurance if there is a fire. Etc.
The problem is, privatizing a state function -- collecting property taxes -- into a profitable enterprise. Ok, the guy owed $134, explain how under any reasonable financial theory, how this should be worth $5000 or $197,000. Why not a lien against his military pension? Why not negotiate a payment plan? Even the IRS has the courtesy to do that.
Let's take the best possible return, say 20% annual return, and let's say he owed this for 10 years, then at best, he'd owe $848. I don't see how a firm purchasing a $134 debt from the state can justify such a huge penalty/return.
Good points and agree. But I think when you get into "at best he'd owe $848" then you don't provide proper disincentive to prevent the behavior of ignoring tax bills and other notices.
As an aside as someone who has gone through significant pain trying to collect money from people that owe varying amounts (over the years) it's a process that given a bigger stick (not "ordinary" penalties) would go a long way.
Noting also that this played out over many years. He didn't just miss a payment of $134 and boom someone profits $5000 or $197,000.
"Noting also that this played out over many years."
Not so. The article states the liens can be sold after a year and foreclosure initiated after an additional 6 months. In several of the cases listed, the original home owner was in hospice care or otherwise unavailable.
I don't disagree that the city needs a way to recoup unpaid taxes. But, there has to be a better way than this.
The article talks about the real problem: fundamentally you're right, these people should have paid their bills, the problem is they're not given an opportunity to properly make up for their mistakes and the "punishment" does not fit the "crime". After the bill isn't paid the lien is sold to investors who increase the owed amount by an order of magnitude (so that the person really can't pay it now) and drag them through court, to the point where they have no choice but to lose their home. The system sort of worked (as the article noted) when foreclosures were done through the tax office, however now the investors can do it (which is where the fees come from). The core idea is sort-of okay, the problem is how corrupt it has become and how much abuse there is. Vulnerable people (as the article notes) are not given a chance to fix the problem, they're buried in further debt that they have no way to escape from.
"After the bill isn't paid the lien is sold to investors who increase the owed amount by an order of magnitude "
What is the time period that that happens though? Isn't that an important factor in all of this? Plays out over years? How many chances (and over what time period) could the homeowner have been able to rectify for a more reasonable amount of money?
Not disagreeing with your main point or that the punishment not fitting the crime (or opportunists) etc.
The article states that the investor can foreclose on the house 6 months after purchasing the debt. Skip to "Outsiders come to buy liens" in the article for a full summary of why it's such a problem.
I guess I have a wider problem with this "problem".
The fact is there aren't really people out there (other than some community activists) who have a brain and can help people like this to navigate the system without charging the rates that attorney's charge. Which seems to be the answer to anyone's problem. Get an attorney to tell you your rights and write a letter so people take you seriously. This is in a sense one of the reasons that poor and/or uneducated people get shafted so often. They have no way to communicate and people don't take their problems as seriously to boot.
Of course even if you created an office of "ombudsmen to the normally shafted" that office might simply drown with those that weren't deserving and simply wanted to take advantage of any thing they could to dodge legal process.
So the owner goes delinquent on taxes for a year, then gets multiple notices that a tax sale will take place, then the tax sale takes place, then they have six MORE months to make good on the bill... then a hideous, unforeseen tragedy takes their home away overnight.
That's why the examples are all of people who were absent or had medical problems - because there are multiple opportunities to correct the problem.
As they mention, there have been simple reforms in other jurisdictions to prevent this sort of predatory behavior (not selling liens at all, especially if the owners are seniors or disabled, and putting limits on legal fees).
It sounds like it's basically an oversight, but nobody in government has bothered to fix it because the people affected are predominantly poor and black.
Can someone point me to the laws and regulations that allow this? Someone who owns their home completely (with no mortgage) can lose the entirety of the home due to unpaid taxes? Even if the value of the home far exceeds the tax debt?
Well, it's generally been the case that the government could seize property due to failure to pay property taxes. The problem is that the government here is, bizarrely, selling the liens to "investors" rather than just collecting the taxes owed.
It has always seemed to me that property taxes are a completely incorrect idea; far more onerous than, for instance, the estate tax. Have there been any serious efforts to get rid of them?
Property taxes are very progressive and we should absolutely have more of them (fair ones, not like the one in this article where you lose your home if you fail to pay some trivial sum).
The reasons are best described in the article below, but in summary, we all pay to defend and enhance your property (by supporting the police, roads, local services, etc). It's fairer for property owners to take a larger share of this burden since they alone get the benefits from it, like the ability to sit in the garden and enjoy the view or the increased value of the property when the government builds a road to it. Land taxes also raise revenue without deterring productive work (unlike, say, income tax).
To answer your direct question, since property owners are overrepresented (they vote more often and are far more likely to be politicians), yes of course they've tried to get rid of progressive property taxes. eg. This in Nevada:
Why not just go the whole hog and tax all property.
eg you buy a laptop, you have to pay the government a tax each year to keep it.
Why just apply it to houses? May as well just prohibit people from owning property.
Personally, I think such taxes are a massive disincentive for people to do well. As soon as you have enough money to buy a house, you are penalised for it.
Luckily in the UK, we don't have property tax, although we do have other taxes just as disgusting and unfair - stamp duty, inheritance tax, council tax.
In effect we do have a property tax on laptops, but for convenience you pay it up front (VAT @ 20% of the value). It pays for all the same things such as helping the police to defend your laptop from being stolen, and paying for the ports and roads along which your laptop was imported (as well as the national debt which was increased when you imported it).
Council tax is the UK property tax. It's a very low-rated and regressive tax, but it's a property tax.
True. When I lived there in the 80s, I remember getting fairly hefty annual bills for excise tax on my car. I don't know if they still do that or what classes of property were routinely taxed at the time.
This is the law in Utah and was applied to all businesses up until a few years ago. I don't think they ever tried to property tax the personal possessions of individuals, though that was the law.
You were required to declare your chairs and desks and tables, calculators, paper and pens, books, bicycles, cameras and computers, and everything and look up its market value and then pay the usual tax just as if it were real estate. You were required to do it every single year. And it's still the law for property above an exempt amount, but no longer applies to every paperclip like it used to.
That law is crazy, of course. Real estate is a big expensive immovable item that creates limits on the level of corruption and record keeping headaches so it's the best target for property taxation. Maybe really big vehicles like cars and airplanes and boats could be targets, too, if they have a home base, but even then you can see problems.
And finally, Henry George [0] points out that the ideal property tax to promote investment, limit corruption and cheating, allow fair administration, limit any kind of dead-weight loss [1], and generate reasonable revenue would be a tax on land value only. Buildings, improvements, vehicles, and personal property should be exempt and only the land's location, area, and fixed geology/hydrology/soil conditions should matter.
Higher rate income tax certainly does. Tax bands certainly provide a big disincentive for bothering to get a better job/raise.
Inheritance tax is very unfair. If you are rich enough, you'll plan around it and avoid it. But if you're not rich enough, your kids will not only lose their parents, they'll be sent a bill from the government. Which at best is a tad insensitive.
Add to that the fact that the thresholds for inheritance tax haven't been raised properly, so that someone with a 1 bedroom apartment in London will be subject to inheritance tax, it all seems pretty unfair, and perverse for the government to effectively profit from peoples death.
>Tax bands certainly provide a big disincentive for bothering to get a better job/raise.
You know that your entire income isn't taxed at the highest bracket's rate, right? So, for example, the highest bracket is 39.6% for income above $400k. If you make $410k, $10k is taxed at 39.6%, and the rest of your income is taxed at a lower rate.
I understand greed, and as much as I loathe it, I also understand the mindset that looks at money as a score, but I've never understood this mindset that is unable to recognize the "score" is not absolute, and taxation does not have a 1:1 impact. Progressive taxation renders the scale non-linear.
Given a hypothetical luxury good with a price of $500,000 under a current taxation regime, which do you think is more likely in a regime with, say, 50% higher taxes: That the luxury good ceases to be produced, or that its price is lowered to the point where a similar number of people as before could afford it?
I don't look at money as a score. I look at my salary as the value of my labor. I sell my labor to maximize the value of my effort. I.e. I am looking to maximize my compensation and minimize my effort. It's pretty much how everything on the market works.
To answer your second question is impossible - we don't know the shape of supply and demand curves nor do we know the initial rate of taxes. E.g. if the original taxes had been 1% then it's just going to bump the price a little bit. If the original taxes had been 50% then it ceased to be produced.
But if you want to know the general relation of taxes and supply and demand consider how things are going to progress as you keep raising taxes. Do you seriously believe prices are going to fall as the taxes raise?
I think if you cut everyone's income of fiat currency by half, the effect is not that everyone is 50% poorer. I think if you cut everyone's disposable income of fiat currency by half, the effect is not that they can afford 50% fewer luxury goods. And I don't think any of the uber-wealthy sit around and think "You know, I was going to make an extra billion in the market, but since I'd have to give up 20% to capital gains, I'll just stick all my money in a non-interest-bearing account instead.".
JFYI - if you take every US billionaire's (all 400+ of them) money (about 1.9T) and split it among everyone in the US (300M) you get about 6300 dollars per person. It's not a lot of money. Might pay your rent and utilities for a year. And then it's gone. It's not their income, it's their whole net worth. So I'd stop fantasizing about money of uber-rich. There is not that much and it does not matter.
What matters is the people who are actually paying the bulk taxes and making investments.
I'm not "fantasizing" about anything. I'm familiar with those numbers, thank you. They change nothing. Nothing I've said even depends on or has any direct relation to them.
Well, that is a little consolation for you, true, the government lets you keep a little bit to keep you from rebelling and keep you placid.
However, I feel that I'm already paying the government FAR more money than I should be, so I'm simply not bothered about trying to make them more money.
Your position is not unreasonable, nor inexplicable, just unusual. For the majority of people, income tax seems to be an annoyance rather than an active disincentive to work.
You know that the effective tax rate still raises?
For simplicity sake, consider that first 100K are taxed at 10% and next 100K at 20%. If you made 100K your effective tax had been 10% i.e. you owed 10K to the government, however if you made 200K, even though the first 100K is still taxed at the same rate, your effective rate is 15% because you now owe 30K out of 200K.
Inheritance taxes aren't an issue if the estate is valued - this is after all expenses, debts, etc. have been taken care of- at less than $5.25 million.
Numbers vary, but it's definitely fewer than 5% and possibly fewer than 1% of households that need to do anything at all to avoid the estate tax. And these are people who have benefited immensely from services provided by the government (if only the services that keeps people from stealing their wealth!) and are really doing quite alright; adjusting the tax code to make them do even better seems unfair.
Secondly I have never heard of anyone who didn't want to make more money because of their tax bracket. I do not believe this phenomenon exists, and even if it did, it wouldn't strike me as all that much of a problem in a population with unemployment as high as our own.
You can get around it by 'gifting' things to your kids, as long as you then don't die for 7 years after etc etc.
On your last point, it certainly does exist. What I think happens is people like me don't bother trying so hard, because I'll be damned if I'm going to give the government more money.
However, people who are already making much more than me, just hire a good accountant to 'make the problem go away' - eg register offshore companies etc etc
Are you seriously saying, that when the UK government had a higher tax rate of 97% in the 60s/70s, you would have been more than happy to do that extra overtime work, and would have gladly received your 3%??? Crazy
Anything over 49% is slavery, and will end up crippling the country rather than raising more tax revenue. Which is why it was absolutely right and proper that the current government reduced the top rate from 50% to 45%.
Property taxes add liquidity to the market, and lower prices on everyone, as the cost to own real estate is not zero. Negative side effects that areas with no property taxes include
* blind investments into endless real estate development projects that have no tenants or structural quality (China, Dubai)
* extremely high prices for anyone entering the real estate market (old European monarchies, where a family might have owned the same real estate for centuries)
* lack of funds for upkeeping and maintaining what's considered a shared property (facades, sidewalks) while maintaining fancy interiors (Eastern Europe)
Property tax is primarily a disincentive to buy lots of land you can't do anything with and sit on it (metaphorically). That's a good thing- it means the incentives will push land into the hands of people who are actually going to do something with it (making it worth paying the property tax)
Absolutely. If we had reasonable property taxes in CA, we wouldn't have a housing shortage, and middle-class people would be able to live in SF again. But try explaining this to the average voter...
>Property tax is primarily a disincentive to buy lots of land you can't do anything with and sit on it...
No. Property tax is primarily a means for localities to raise revenue. If what you were saying were true, then developed land, including primary residences, would have no associated property taxes. It'd be exempt.
Regardless of the intent, property taxes do serve both purposes. Developed land must provide a return above and beyond the property tax rate in order to be profitable. That includes primary residences, where the return is... not easy to measure in dollars.
Many counties in Texas do tax business property. I know I have to pay business property taxes every year to my county.
Here, generally, personal income taxes are replaced with property, sales, and business (franchise) taxes. You pay taxes, as a person, on your vehicle, real property, and per taxable transaction. But, you do not pay it on your income.
In the UK you don't have property tax, and this gives rise to the concept of leasehold land. Instead of paying rent to the government you end up with people paying rent to a private company. Instead of getting better local infrastructure as a result of your rent, you enrich the family that purchased your land over 200 years ago.
Comprehensive (UK-focussed) site dealing with arguments against a property tax in the form of a tax on the imputed rental value of land: http://kaalvtn.blogspot.co.uk/
(Note that property owners would NOT take a larger share of the burden; as with council tax, responsibility for payment would fall to tenants, to the greatest extent that market forces will permit. For council tax, that is currently "tenant pays all of it". No reason to assume a land value tax would be different.)
I don't think I like that idea. Sounds like a good way to throw Native Americans, Amish, and others who can't or don't wish to participate in the traditional labor force off of their land.
disclosure: I am an ordinary, average, white, property owner, not Amish (Atheist, actually).
At some point, you cannot realistically expect your interests as a class if you refuse to participate in the political system, for better or worse.
The notion that we can be isolated within a nation and refuse to take collective responsibility is a dream that has never had much foundation in reality.
A property tax will also make sure that the landowning class either makes productive use of their land or loses it, rather than hoarding it as an anti-competitive measure.
Excellent reply, and your position is completely reasonable. I would submit, however, that there is more variability in how and where people choose to live than your views can completely accommodate.
Absolutely! A land value tax (on the base value of the unimproved land) is an idea that goes back hundreds of years. It has many attractive properties when compared to other taxes like sales and income tax. It's a shame it hasn't really ever taken off.
>Property taxes are very progressive and we should absolutely have more of them.
The naivete, here, is of course, that the wealthy don't have more resources to protect themselves against property taxes or reduce their burden, or deal with enforcement, or mitigate corruption by the state.
In reality though, there is no "rules scheme" you can construct that will be as progressive as you want. You'll tack on more rules to tweak it to satisfy your conscience that you're not hurting the poor. The wealthy will hack this and find a loophole, and even if they don't, the burden isn't so terrible for them. Slight infraction by the poor will be come down upon disproportionately by the government (because the cost of enforcement against the poor is lower because of lowered risk of having it fought in the courts) and 'an example must be set'.
Although your property tax was designed to be 'progessive', it instead, wound up being a barrier that is difficult to surmount. It is naive to think that the state will be this hyper-logical ultra-fair machination. It's not, and it never will be.
Instead of socially engineering through the state, everyone would have been far better off if you helped the poor by reaching into your own pocket. But, of course if one is selfish, that's not going to happen - and it's far easier instead to project one's own selfishness onto other people, extrapolate onto all of society and use the state to run your charity for you.
Property is harder to hide than other forms of wealth. You can hide your money in an offshore bank account. It's pretty hard to hide land. If there's a piece of land, someone should be paying the land tax on it (if whoever owns it is hiding, the people can grab it back).
So land tax is fair and progressive (the more land you own, the more tax you pay).
Gaming the property tax system is not a binary proposition. How do you assess its value? How does the state choose whom to go after?
Did you even read the WaPo article? Do you not see how the existence of a property tax has come around to hurt exactly the most vulnerable population (and in this case, through no directed malice) I promise you, people living in Palisades (the richest part of DC) are not worried about property tax liens because they can pay people to deal with paying the taxes (either legally, say hiring an admin, or extralegally). It's not progressive because the bureaucracy and the hammer of the state causes a greater fundamental inconvenience to those of less means than to those of greater means.
As to the hammer, do you think the DC government would have sent "armed US marshals" to recover the house if it were in the Palisades? Why or why not?
It's not the tax that's the problem. It's a law which lets them seize the land for a few dollars in unpaid tax. That's just a heinous law. What's the next step? Repossessing kidneys for small unpaid medical bills?
Many countries have land taxes which work reasonably well. There can be some proscribed formula (based on a regression on nearby property). Or they can do valuations. There'll always be problems, but it's not more evil than many other taxes (unless they enforce it by stealing property).
Maybe the government will send in SWAT teams to collect unpaid land tax bills from poor people, and a friendly note to rich people; but that's not because it's a land tax. How do you think they treat unpaid parking tickets?
The advantage of taxing the use or consumption of a scare resource (land) instead of income should be obvious. If Bill Gates wants a mansion, he's making it harder for normal people to buy a home. If Bill Gates makes a billion dollars selling some operation system, he's presumably creating jobs, and making a lot of people happy (since they can get on the internet without buying an expensive Mac, or having to figure out how to configure their modem using Linux). (Note - some rich people make their money by being parasites, but capitalism works because this usually isn't the case).
Finally, there's the stabilising effect that a land tax has. Property is a huge investment, driven by unsophisticated retail investors (who may be putting most of their life's savings into a single home), prone to stupid fluctuations, which can destroy the lives of normal people when it does something funny. Taxing it helps keep it a little rational (as the taxes will encourage people to avoid it when it starts heating up).
1. >It's not the tax that's the problem. It's a law which lets them seize the land for a few dollars in unpaid tax.
What happens if they refuse to pay the tax, then? As an agent of the state, how do you make them pay? You might send them some letters with warnings. Of course then they might continue to shirk the law. You can ratchet up the tax, by charging interest. Ok, but that's a number. They still refuse to pay. How do you make them pay?
2. your logic is questionable:
>Property is a huge investment, driven by unsophisticated retail investors (who may be putting most of their life's savings into a single home), prone to stupid fluctuations, which can destroy the lives of normal people when it does something funny. Taxing it helps keep it a little rational (as the taxes will encourage people to avoid it when it starts heating up).
Having children is a huge investment, driven by unsophisticated people, prone to stupid fluctuations, which can destroy the lives of normal people when it does something funny. Taxing childbirth helps keep it a little rational (as the taxes will encourage people to avoid sex when it starts heating up)
Does that sound like reasonable public policy?
And aside from the policy ethics I strongly doubt your model that property taxation is a significant 'tempering agent'. If you're going to call the buyer an 'unsophisticated retail investor', it's unlikely to presume that they will have a 'sophisticated' concept of property taxation, either, especially when the government can change its parameters at will.
Finally, if you're going to argue that property taxation is supposed to be a detterent for people who you are codedly calling 'unsophisticated' (whether or accurate or not, that reads to me as 'poor people') to 'rash' purchases, well, thank you for demonstrating my point that it's tax with regressive outcomes.
If you can show me a citation indicating that property tax keeps housing prices 'rational', I'd give it a second thought.
OK, in extreme circumstances then seizing the land, selling it, then giving any residual (after taxes are paid) back might be necessary. The problem in this thread is, the residual didn't get given back, and it doesn't seem they followed due process.
> Having children is a huge investment, driven by unsophisticated people, prone to stupid fluctuations, which can destroy the lives of normal people when it does something funny
There's no "child bubble", in which people all want to have children when the price of children goes up. I don't follow the analogy. Wait ... you mean it's a financial risk? Good point, maybe children should be taxed, but since having children isn't always voluntary, and there's no way you can stop a person who can't afford the tax from having a kid (at least, no ethical way), then it's' probably not such a great idea.
> And aside from the policy ethics I strongly doubt your model that property taxation is a significant 'tempering agent'.
Basically, yes a tax on value reduces volatility. Maybe. It's a credible idea, though it would be nice to have some more research. Transaction taxes are not such a great idea. Tax breaks on houses increase volatility.
And it's not a tax with regressive outcomes. Really poor people rent. I'm just saying "unsophisticated" to mean "people who don't trade for a living". Most people who invest in housing aren't professional real estate investors.
Maybe I'm not as impassioned as I should be, but I just see this as a question of how best to provide common services.
For instance, if I had 5 acres in the middle of nowhere, I might be expected to chip in to a fund to keep a fire on my land from spreading to adjacent BLM property. However, my acreage is likely to be taxed more or less based on the quality of the view, or another similarly cosmetic factor in land value. Why not just calculate my share of the public fire suppression expenses based on area? Assuming, of course, that sufficiently many of my neighbors feel compelled to intervene in cases of wildfire.
>why not just calculate my share of the public fire suppression expenses based on area?
remember:
> there is no "rules scheme" you can construct that will be as progressive as you want.
What you propose may be 'fair'[0], in the context of providing services*. But that is not the goal of progressivism, which is redistribution of wealth and creation of an more outcomes-equal society (a concept I'm personally not opposed to, if the state doesn't do it).
[0]but even fair in your example isn't quite correct. Because area is not proportional to fire risk. Let's say I live in the valley, where a stream runs through, the vegetation is green, and the area never gets hit by lightning. And my rich neighbors a mile away are on the mesa, which has a great view, but is brown and always dry, and up high, so lightning hits there regularly? Should area be a fair assessor of fire risk? Is it fair to have me subsidize the fire protection of the rich people who live closer to where fires happen? (this is a simplified description of the very real LA county fire system where rich people live out on the hills where there are far more brushfires)
I'm not actually opposed to progressive taxation either, by other means.
I can think of a few solutions* to your counterexample though, and that's the point. There's no reason to expect a solution to be fair in all cases, or perfectly fair in any. I'd only argue that there is often, or perhaps always, a more equitable and direct way to provide for common services than property taxes.
*I choose the BLM as a neighbor purposefully. The rich people in your example would almost certainly prefer to fund their own municipal utility than settle for the type of response I would expect the state or county to provide.
I think by attempting to patch the system, you are merely shifting the corner cases which are unfair. And the more byzantine the rules system is, the fundamentally unfair it is to the politically and economically disposessed, because their ability to deal with the bureaucracy (and the rules system) is diminished. To wit: the more rules you have, the more difficult internal consistency becomes, and the government will naturally tend to bin individual citizens into whichever category they can extract the most revenue from, instead of doing due research into the highest efficiency for the taxpayer. The responsibility to identify the deductions falls on the taxed. This becomes regressive, as the ability of the wealthy to argue for and appeal their binning category to the one that is 'rightful' in your byzantine system, is greater than that of the poor.
And the unfairness will always over time become skewed towards the wealthy and powerful (municipal authority:'well obviously we are authorized to make exceptions like X as precedented by our rules system in code ZZZ, subparagraph Q; if we give an advantage to corporation Y by implementing change T, it may not necessarily be in the spirit of total fairness - but we will create jobs! and thus it will be in the public interest'). If fairness is your dominant value, the only perfectly fair and sustainable solution is zero. If progressive redistribution is your dominant value, you will wind up with a lot of difficulty over the 'how much is enough' question, and the implementation will almost always find a way to be anti-progressive.
Agreed: we're stuck with a byzantine tax code for the foreseeable future, and it will continue to be monumentally unfair. But that fact doesn't stop us from taking real property value out of the equation altogether, at least in unincorporated areas.
Would you at least agree that things don't have to be quite so complicated once you get out of the city?
The government tried collecting the taxes, and the owners did not (perhaps because they could not) pay. So the government auctions off the house to make good on the debt.
What else could the government do, put the homeowner in debtor's prison?
You are correct, they buy the lien and have to foreclose later.
I'm still curious what myname would propose as an alternative collection scheme. The article mentions that Michigan stopped doing tax lien sales, so I checked up on what they do now:
https://www.tax-sale.info/html/index/page/general
SPOILER: > The properties are then sold by deed at auction.
Not much of an improvement over the lien process; just a faster foreclosure.
What is also crazy about it is that the government is apparently not setting a high enough price for the liens. If they correctly priced the 'option' that the lien wouldn't be paid and the buyer could foreclose, then it wouldn't be so attractive for the predatory buyers. So the government is allowing itself to get ripped off too.
Well, theoretically the price of the lien should never be bigger than the price of the debt. The price should be (debt x odds of getting payed). These are usually bought in bulk
But of course, with this "new method" it makes sense to be higher.
The local county government can put a lien on your real property for failing to pay your property taxes, in some places, even for not mowing your lawn (an exaggeration of property maint. codes). In Texas, investors can buy a "Tax Deed" at auction. The property owner has two years to buy the lien back, for a defined price, IIRC the taxes owed + 50% for each year. After the 2 yr repayment window, the purchaser of the tax lien gets the title to the property.
Are tax liens different from other kinds? It's my impression that if e.g. a lender repossesses, they sell the house, pocket what you owe plus fees, and have to give you the rest back. It's strange to think it would be different for unpaid property taxes. Was Coleman truly "left with nothing" or did he get a portion of the sale proceeds?
The rights of the tax lien holder trump any other claims, AFAIK. That's one reason that mortgagors want you to escrow your annual property taxes with them.
edit: IRS liens in effect before the sale go with the property, and can delay the new owner in getting a title policy.
It's not a coincidence that this is happening to mostly elderly people who otherwise own their properties in the clear, people who are often burdened with serious health problems.
There is a simple fix. Require the liens to be paid off when there is a change of ownership. The city knows what it is owed, and that it will get the money eventually. If the city needs the money today, it ought to be able to borrow the funds (not all that different that accounts receivable factoring). Throwing people out of their homes over small amounts is inhumane.
I was referring to the generally sociopathic attitude they tend to adopt toward The Poor.
BTW, this is a privatized operation wherein predatory debt collectors buy the liens, foreclose the property, and then flip it at a huge profit. Just another example of government acting as stenographer for the financial industry.
The principles emphasize process over outcome. So it's not that they want people to lose their homes, but if things happen the 'right' way and that's the outcome, so be it.
Actually, they don't emphasize process, they emphasize who does it, and what is done. Objectivism prefers the government not to handle most anything, but would never advocate people losing their property over a minor tax bill - that is theft, a very big no-no in Objectivism.
Well, property is sacred in Objectivism and "stealing" is a deadly sin. I'll leave it up to you to decide whether taking someone's home over a tiny unpaid tax bill would be considered stealing. (Hint: it is.)
Fair enough. Atlas Shrugged was such an awful book I couldn't make it past the first few pages. However, I have enough experience with Rand's followers and their "got mine, screw you" attitude to see how a shitty book can get turned into a political movement. See also Mein Kampf.
> I was referring to the generally sociopathic attitude they tend to adopt toward The Poor.
Do you really expect anyone to engage with you when you call a well-known author a sociopath without justification? Might as well call her a child rapist while you're at it.
I can't really see Ayn Rand supporting the seizure of property over unpaid taxes. I'm not an Ayn Rand fan, but it's pretty easy to figure out what she does or doesn't believe in from her writings. And taxes are definitely in the "I don't care for that" category.
I am a (limited) Rand fan -- I think she inadvertently explored some interesting ideas, particularly about the limits and problems of wealth/power in The Fountainhead, lost on most of her acolytes though they seem to be -- and my suspicion is that Rand would be pretty much fine with this outcome if we could just get government actors out of the equation and have private parties taking homes from people.
For an example, consider an HOA taking a home from someone over unpaid fees.
(Incidentally, if one were looking for a crystal ball into what private/libertarian governance would actually start out looking like in the first world, I'd guess that the problems of HOAs would probably give a pretty good idea.)
> my suspicion is that Rand would be pretty much fine with this outcome if we could just get government actors out of the equation and have private parties taking homes from people.
Absolute nonsense....I can't think of a single Rand writing that would support this notion in the slightest. One of her primary principles was that the desire for the unearned was a "sin" (or whatever equivalent word she used).
Taking someone's home over a small tax bill is definitely unearned.
"Earned" is a slippery concept that can take some funny turns depending on who's using it.
If someone who's halfway through paying their mortgage stops making payment, has the bank earned the equity the borrower has put in? You might argue they haven't, but this isn't absurd.
If nothing else, advocates for the lender -- and, in general, libertarian voluntarists -- would argue that if both parties have agreed on the conditions, execution of them is justly earned.
And if you want Rand cite for that, read the Roark/Rand courtroom soliloquy where it's explained why it's OK for him to blow up a building (sure, other people may have put in sweat and equity, but that's nothing compared to his contract).
Well, why not the same thing for an HOA? Nobody held a gun to your head to move into a property that's part of a private collective. If Roark can uphold his aesthetic conditions, surely an HOA can uphold whichever please them, and ask for their fees, and blow you out of your building if you don't comply.
Now, if you think that there's a flaw here -- perhaps that "as agreed" is not necessarily the same thing as "earned" -- I might agree with you. Perhaps Rand even says something to that effect elsewhere. But at the same time, the entire climax of her second most famous book turns on a different principle.
(Also -- I have my doubts that anybody has any true claim to have earned most of what they have. We all have a heck of a free ride as far as life and resources go.)
'Well, why not the same thing for an HOA? Nobody held a gun to your head to move into a property that's part of a private collective.'
Exactly, and that's the difference. Nobody held a gun to you head to move into the HOA collective. You knew the terms and consented to them when you moved in. Conversely, you are held to the laws of the state by the force of, ultimately, guns.
I'm not a randian, so I can't speak with complete accuracy to what she (or objectivists) would argue. Personally, I would question the morality of such a contract. There could be problems if the HOA changed the rules of the contract afterwards (because in that case it would be acting as a government).
> If someone who's halfway through paying their mortgage stops making payment, has the bank earned the equity the borrower has put in? You might argue they haven't, but this isn't absurd.
It's pretty logically and mathematically definitive, only in present society with bankers gone wild could it be terribly questionable who owns what. Common sense is usually sufficient.
> And if you want Rand cite for that, read the Roark/Rand courtroom soliloquy where it's explained why it's OK for him to blow up a building (sure, other people may have put in sweat and equity, but that's nothing compared to his contract).
Honestly, it's been ages since I've read that book so I can't comment intelligently. That sounds pretty crazy, but I have a feeling you're taking a negative interpretation, although I may be wrong. I tend to find Rand's larger principles correct, if not practical, while I differ on some of the smaller ones (Food Safety / restaurant inspections come to mind).
>I can't think of a single Rand writing that would support this notion in the slightest.
I could see it if MAYBE the HOA had that as part of a written agreement consented to the homeowner at the time of home puchrase. Of course, that's exactly not how government works.
Say what you like about Ayn Rand, but she was hardly a fan of out-of-control government/private collusion to seize individuals property in a manner completely out of proportion to the size of their debt.
That was the flaw in her reasoning that big business and govt can and will be somehow separate entities. They never are. They are effectively the same entity. Look at chiefs and heads of regulatory agencies, they are often ex or future CEO of industries those agencies are supposed to police. Look at many military industrial contractors they often hire ex-generals and so on. And all this in the land of "law and order". Imagine in other countries with less "law and order".
For sure. Good point about the contractors hiring generals. There are lots of different revolving doors in different industries.
If you work at a major investment bank, why would you speak out against government regulation of your industry when you might need a bailout some year in the future?
If you work at a government regulator (e.g. the SEC), why would you regulate the industry too hard when they are going to be your biggest source of consulting fees after you leave your government employment?
For example, Bernie Madoff's brother was a director of SIFMA (Securities Industry and Financial Markets Association) for two years.
It's happening to elderly / vulnerable because anyone else, faced with losing their house over a $50 tax bill, would pay the tax bill. This isn't something that happens in a single day, or in the middle of the night.
I'm only familiar with the tax sale rules in one Connecticut town, but the include a provision for the (delinquent) taxpayer to pay their bill in full within 30 days of the auction to cancel the sale / lien.
This has nothing to do with anything in the article. Besides what you are saying is ridiculous anyways. A society where people are forbidden from getting loans or investing? You can't even charge interest on risk?
As an English atheist, possibly surprisingly, I think Islam is right regarding interest. Unfortunately wrapping it up in mumbo jumbo doesn't give it any credibility. Also it isn't really related to the article.
If you want to borrow money to buy a car for example from an Islamic Bank they 'buy' the car and the sell it to you in so many installments at a profit. Same as charging interest by wrapped in 'profit' which is allowed in the Koran. Pathetic and hypocritical and the first to lock you in if you can't pay.
Islam doesn't have interest in the sense of an American-style simple interest loan, but it certainly does have charges for borrowing. There's no real meaningful difference other than when the interest is charged; in a lump sum at the beginning for Islamic banking, or spread out throughout the loan for American banking.
Meta note: this is what journalism can look like today. Made for the web first, not for the paper. Visualizations that are actually insightful - and most importantly a well researched story.
Totally agree. This is an incredibly well presented article that makes great use of the web to create a more insightful, moving experience. Internet storytelling well done.
Reading something like that makes me very angry. What would be the highest punishment against people who do something like that? Personally, I would not have any problem to dish out the highest one.
DC is notoriously slimy with taxes. It's not surprising that they would do something like this. For example, DC tries to trick VA and MD based businesses into paying corporate taxes in DC if they work with the federal government based on the unsound lie that because the federal government is based in DC any business that works with the Feds must pay DC taxes. Even if that business never sets foot in DC, or works with a single federal person in DC.
Thankfully VA and MD don't recognize this twisted logic.
Yes many of us would-- in the case of the subject of the article, it would've only required $134 if done early enough (before it snowballed to $4,999).
An important part of the article is that the subject profiled had dementia and was thus may not have been able to understand what was going on and was basically taken advantage of, albeit legally.
the article's title makes it hard for me as a non-us citizen to understand what foreclosure means in this context.
what i got from the article is this: due to the financial situation of the owner, a small unpaid tax turns due to unfair practizes into a larger debt of like $5000, which then allowed a judge to enforce the sale of the house so that unpaid taxes could be paid off.
now if the house was sold for the mentioned 197'000, does that mean that the owner at least got the proceeds minus the debt? the title suggests that this would not be the case...
1) Owner of the house owes a minor amount of taxes. In most of the anecdotes, the homeowners have either no mortgage at all, or otherwise have mostly equity (tiny % of the total value of the home owed).
2) Since the city technically has a lien on the home (or gets one?), they are able to then sell the lien to an "investor", who pays whatever the tax bill is.
3) The investor demands payment, and begins charging huge fees.
4) After 6 months or whatever, the investor forecloses on the house, which is essentially taking ownership (basically a "repossession")
5) The investor sells the house for market value, or whatever price they want.
6) Since the investor is NOT a mortgage company or otherwise holding a mortgage lien, but is holding a lien originated by municipal entity, there is no rule in place that says they need to pay the original homeowner the profit. Therefore, they keep all of the money, minus the tax bill they paid at the start.
In the end, the article implies that this company is buying liens for as low as $50, and then selling the houses out from under the homeowners for hundreds of thousands of dollars.
The logical outcome of this kind of predatory practice should be that the "investor" (the purchaser of the liens) gets $5000 out of the $197,000 sale, and the debtor gets $192,000. And even that seem predatory, never mind getting all the equity and forcing the person out of their place of residence.
taxation without representation. DC barely has a local government. Its Congress who has jurisdiction. so yes, they are as corrupt as it gets. from wikipedia: "Article One, Section Eight of the United States Constitution grants the U.S. Congress "exclusive jurisdiction" over the city. The District did not have an elected local government until the passage of the 1973 Home Rule Act. The Act devolved certain Congressional powers to an elected mayor, currently Vincent C. Gray, and the thirteen-member Council of the District of Columbia. However, Congress retains the right to review and overturn laws created by the council and intervene in local affairs.[160]"
That might be part of the problem... they really don't have much local government. Congress holds sway in DC. When I lived in Glover Park I thought it was one of the strangest systems I had ever seen. Never really quite understood it completely.
Frankly, this is a bigger problem that isn't nationally recognized. The mayor is under federal investigation for his campaign and I've lost count of how many officials have been arrested or investigated at the federal level.
Living near the district, I'm shocked daily by how nobody seems to care that the corruption is so widespread.
This problem is indicative of how screwed up our legal system is. Lawyers harass regular folks at-will as most people have no recourse (i.e. money to hire their own lawyer, or knowledge of the expanding and complicated laws).
Two ways I can think of fixing it - one is offering simple, straightforward hearings in front of a judge with the power to use their own judgement (instead of relying on overly-specific, exploitable laws); the other is to implement some counterbalance punitive fee for wrongly harassing citizens - something that decreases the profit ratio for predators and makes defending people in otherwise unprofitable cases profitable.
> a judge with the power to use their own judgement (instead of relying on overly-specific, exploitable laws);
Yes, because a single corrupt or idiotic or assholic judge should be able to ruin lives left and right without regard for the law.
> the other is to implement some counterbalance punitive fee for wrongly harassing citizens - something that decreases the profit ratio for predators and makes defending people in otherwise unprofitable cases profitable.
And you have another system to game, another way for the scummy lawyers to beat people over the head to prevent their crimes from being punished.
I'd rather take my chances with a judge than nearly guaranteeing failure in the current system. We already do this with small-claims court I believe and to be honest I'm not sure of the differences between that and a court that would handle a tax lien.
And yes, any system you make could be gamed, but you could make one that is harder to game than the current one.
> I'd rather take my chances with a judge than nearly guaranteeing failure in the current system.
Ah yes, the "Let that person solve it" school of fixing major social problems. It works really well right up until it fails really badly: George Washington was, for a while, effectively a dictator in that he could have been President-For-Life long before we came to associate that concept with bad outcomes; sadly, for every Washington who willingly resigns and refuses dictatorial powers, there are multiple leaders who exploit them to the fullest, possibly with good intentions to begin with, but that gets lost on the way to having a syphilitic strongman who eats the flesh of his enemies.
> We already do this with small-claims court I believe and to be honest I'm not sure of the differences between that and a court that would handle a tax lien.
Small-claims courts are, by their very nature, both high-volume and self-limiting: A judge-dominated process is necessary because we can't afford a jury to sit on every case involving piddling small change, and the fact they are limited to piddling small change means the amount of damage a judge can do is extremely limited. It's a trade-off, not a broad social principle.
A small-claims judge also can't just make shit up. The judge generally has to rely on precedent and law and uses his/her own judgement in areas where discretion does make sense.
You're argument that entrusting certain officials with making good publicly known decisions "works really well right up until it fails really badly" based off of a weird GW parable has me scratching my head.
And regarding small claims courts - the amount of damage a judge can do is directly related to how much a person is worth, just like fines for civil infractions. It can be nearly nothing or it can be life altering.
Anyway, the solution to this particular problem would be fine-limits (like in other states) and things like license-renewal restrictions (like you get for not paying a speeding ticket).
Edit: I suppose if people don't pay property taxes continually you have to sell the house to stop the tax revenue loss. Enforcing market-price restrictions might be difficult as lack of sale persists the problem. Maybe taking equity in the house at market price or something like that could work. Any way you look at it though $145 shouldn't be such a high-pri. Unpaid speeding tickets amount to more than that.
> You're argument that entrusting certain officials with making good publicly known decisions "works really well right up until it fails really badly" based off of a weird GW parable has me scratching my head.
You're the one who advocated that judges be allowed to ignore the law and judge entirely based on their own good judgement. I pointed out that there are few people who even have good enough judgement to abdicate at the right time.
> And regarding small claims courts - the amount of damage a judge can do is directly related to how much a person is worth, just like fines for civil infractions. It can be nearly nothing or it can be life altering.
That's why we have laws and we make judges follow those laws. It ill-serves society to force extremely good judges to follow poorly-thought-out laws, but the losses on that end are more than made up for by forcing the idiot and asshole judges to adhere to laws written by people who aren't explicitly out to screw you over.
I never said they should be able to ignore the law and judge entirely based on their own good judgement.
A single point of reference argument about people not having good enough judgement to abdicate (which relied on a case of abdication?) isn't a sealed argument that people/judges have bad judgement.
"but the losses on that end are more than made up for by forcing the idiot and asshole judges to adhere to laws written by people who aren't explicitly out to screw you over." Based on what? Why are judges explicitly out to screw you over? And are you joking that judges are more out to screw you over than law makers?
And your argument about idiot and asshole judges out to screw you over is coming from where? If I had to guess I'd say that most judges follow the status quo, a smallish portion can be pricks at times (but within the boundaries of the law), and the ones who truly go out of their way to be exceptional are doing so in the name of civil rights and civil liberties.
It won't help much. Judge elections and appointments will then just be the focus of lobby groups. Watch the movie Hot Coffee to see how state supreme court judge elections are manipulated by business interests to install "friendly" judges.
Why not just make a law to cap the profits. Home must be sold at fair market price and the rest must be given to the owner.
It points out this arose from a change in 2001 that occurred because the agency was trying to do LESS work, not more.
"But the work overwhelmed the agency, and in 2001, city leaders made a critical change: They told investors to head directly to court to file a foreclosure case.
The move empowered investors to start charging legal fees and court costs — a game changer that allowed them to turn minor delinquencies into insurmountable debts."
What do you think was happening in the months and months before the lien sale happened? There were a million opportunities to avoid the whole process through a straightforward administrative process, no lawyers involved.
That assumes you are still capable to follow that process. Apparently the current procedure does not take your present circumstances into account. (like mild dementia, alzeihmer, nursing home example in the article)
In Europe, once you get too incapacitated to take care of your stuff, social security take you in charge. After you die, they repossess your property and sell them to recover their cost. What's left is then given to whoever is supposed to inherit. I am not quite sure what would be acceptable with the more liberal US culture, but profiteering of the weak is certainly not an american value.
> Two ways I can think of fixing it - one is offering simple, straightforward hearings in front of a judge with the power to use their own judgement (instead of relying on overly-specific, exploitable laws)
Administrative hearings are used in a wide range of situations in the U.S. For example, when applying for federal benefits or under compensation programs. They're not a panacea. As organizations, they tend to become biased towards one side or the other. Good luck getting the Department of Labor to rule your way as an employer. One of the values of lawyers is that they force decision makers to justify their decisions to a sophisticated party, which reduces the tendency towards systematic bias or alternatively arbitrary action.
In the context of foreclosures generally, lawyers protect the lenders' interests. Foreclosure is already heavily stacked against the lender. The homeowner has months or sometimes years and numerous second chances to come up with the delinquent payments. Do we need to make the system even more biased by getting rid of the rules and letting a judge decide based on who has the most heartbreaking reason for not paying what they owe?
Incidentally, this situation also clearly demonstrates why the "loser pays legal expenses" rule is a bad one. When the loser pays, the biggest entity in the litigation has no incentive to reign in its legal expenses. Imagine applying "loser pays" to banks in foreclosure proceedings.
Your two-sentence summary is better than the entire article in understanding what's going on.
I read the whole article, and I somehow missed that sentence buried in the middle of the story. So Mr. Coleman wasn't "left with nothing" but presumably received something like $65,000 (i.e., $71,000 minus $6,000 or whatever the final legal bill was). Nowhere does the article say exactly what he received in the end.
The way the tax sale works sounds quite unjust and corrupt -- we don't need the reporter to make it even more evil ("left with nothing") by obscuring key facts.
No, that's not what happened at all. Try reading again.
>The Maryland company that took Coleman’s house sold it for $71,000 two months after evicting him. The company was owned by Steven Berman, who was convicted in 2008 in the Maryland bid-rigging case. He declined to comment. The law firm for Berman’s company said it was willing to reduce Coleman’s bill to $3,500 but could not reach him.
What part are you saying I still don't understand? The point I was trying to make is that Mr. Coleman does get some money from the sale, although unjustly much less than the house is worth. But the reporter is obscuring this simple fact.
> Not only did he lose his $197,000 house, but he also was stripped of the equity because tax lien purchasers are entitled to everything, trumping even mortgage companies.
That's not "obscuring this simple fact", that's stating clearly and unambiguously that your "fact" isn't true. The person you initially responded to was creating an example, based on how liens usually work. The reason the profit margins are so high in this case is that it doesn't work that way.
Ahhh... I use Noscript and the result is when I scroll down about 20 lines there's blank space, so I stopped reading and figured it was the end of a very short article...
So the $197,000 was likely the appraised value, with the $71,000 the actual sale value when the predators unloaded it.
But it sounds from the article like the original owner does lose everything, which I hope is so ridiculous as to be untrue, but I can't tell...
EDIT: I wonder if I got downvoted for using Noscript, or what...
I'm very skeptical of that part of the article and its a little disappointing to me that HN is so ready to take it at face value. It could be true, but it could be a journalist mangling the story like they do for any technically complicated topic.
The first is that laws that allow this to happen are scandalous. Worst case, particularly for the elderly, is that a lien is placed on the home such that it must be paid when the home is transferred in any way. So what if DC has to wait 10 years for $137 mistakenly not paid? Seriously.
Unless the debt exceeds some nontrivial amount, the county should be restricted from taking any action whatsoever. All this to recover $137? Seriously?
If it does come to foreclosure, it is utterly ridiculous that the "investor" (I prefer "predator") gets to keep the entire sale amount. Fees (that should be capped) may be retained with the rest being returned to the owner. Otherwise this is (or should be) the unlawful seizure of assets.
Secondly, if you are such an "investor" how exactly do you live with yourself as a human being doing this? Seriously. I couldn't sleep at night.
As for the county or state officials that make this possible, how do they live themselves doing this to their constituents?
I wouldn't be against this basically being a fraud committed by someone in the local government there. Who else would have the knowledge to have found the loophole? Who else could have abused it so well?
The six companies that dominate the auctions for those liens.
"When it was over, six companies had swept the bidding, snaring two-thirds of the liens, which totaled $5 million, on properties worth more than $666 million"
Ironically, a lot of houses owned by banks as a result of foreclosures ("REOs") are in turn getting foreclosed for failure to pay taxes and HOA fees. Banks were/are not equipped to manage the number of properties they own as a result of foreclosures and they lack the basic infrastructure to maintain these properties not limited to paying taxes and HOA fees, but violations of certain civil statutes like failing to maintain lawns that result can result in fines upwards of hundreds of dollars per day for continued violation.
Agreed, but there is a lot of debate on this for the following reasons. The banks own so many homes, that there is an argument that they could flood the housing market with under priced homes which would slow the housing recovering by driving down the prices of all homes. Additionally, there is a lot of speculation that part of the $1.2 trillion stimulus packages went directly to the banks to account for the above argument and actually requires the banks to slowly release their inventory of homes in order to prevent flooding the housing market with under priced homes (again because that would continue to drive down value across the board).
All that said, as mentioned above I do agree with you, because assuming banks are keeping homes off the market this only artificially keeps home prices stable, and many of those REOs are failing into disrepair. In my opinion it is better to have ownership and people in homes, even at a short term cost of flooding the market with under valued homes. After all it is the banks who originally to the risk on these loans they foreclosed on and they lost.
Large servicers (Bank Of America, Chase, Wells Fargo) already have a known history of mistakenly foreclosing on the wrong houses, fucking up tax payments from escrow accounts causing legal problems for the homeowner's, etc.
My father and step-mother both are mortgage underwriters. One is currently still underwriting, the other is currently working for the GSEs (Fannie and Freddie) forcing several large banks to eat the shitty mortgages they pushed on them.
I can not even begin to tell you how poorly managed these large servicers are. But heh, keep on thinking they know what they're doing. If they service your mortgage, I encourage you to keep a very careful on your note.
What a clever disruption of the property tax industry!
But seriously, things like this are why we must not get too carried away focusing only on market opportunity. Some ideas are profitable, but socially disruptive. In this case, public policy is enabling predatory with very obviously antisocial results, but I think there are plenty of cases where the government isn't so directly involved and the results aren't so obviously destructive, yet antisocial, nonetheless. This is really addressed to the small but vocal minority that seems infatuated with profit-seeking, without concern for anything else.
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[ 2.4 ms ] story [ 287 ms ] threadWritten by Michael Sallah, Debbie Cenziper, Steven Rich / Graphics by Ted Mellnik, Emily Chow, Laura Stanton / Photos by Michael S. Williamson / Editing by Jeff Leen, Steven Kress / Research by Jennifer Jenkins / Production by Chris George, Connor Jennings, Bronwen Latimer, Michelle Williams, Tim Wong
Edit: clarity
But researched articles like this are expensive to produce. That's why PR firms are so successful. Reporters need others to find and research stories for them.
In print, production is the act of taking the raw inputs (copy, graphics, layout) and getting it out the door. E.g., the print production managers I know manage the physical details of the print medium. There is a similar meaning in advertising. [1]
Looking at the resumes of the first couple producers, one's a designer, the other lists himself as "Nerd". So I think they are using the meaning from publishing: people who produce the final product.
[1] http://en.wikipedia.org/wiki/Advertising_agency#Production
I hope papers start providing full 'Credits' to what goes into a piece so as to better inform the reader how many people in the chain it takes to arrive at the final copy.
Example: Small town with "speed trap" (not a for profit business) gives out excess tickets to raise money.
Look, I understand you believe in the idea, but the harsh reality is that you are being tricked into obedience by your rulers/owners. My country is no different. The standards of living may be lower, but the fact remains: no government ever truly cares about its citizens. It's nice to think they do, though. But look at the incentives. There are none.
Special interest groups are citizens teaming up to push their agenda, those are people who elected you. Special interest groups are not inherently bad nor are they automatically against the will of the electorate. Many are actually representing the electorate.
> Instead, think about this: why do you need some people sitting in a pathetic building ruling over you? Why do you think society cannot do without them and what is it that only governments can do, but people and companies can't?
There you go again treating government and people as if they're different things. You're presenting a false choice, it's not government rule vs freedom from it, it's government rule vs local warlord rule. Power abhors a vacuum and government is our solution to that problem, it's how we live civilly together. It's not nor will it ever be perfect as no human system is, but it's vastly preferable to the alternative.
The idea that people can live peacefully without a form of government is just silly, someone has to enforce rule of law and it can't be someone's private security force or the guy with the most goons wins every time. Either the people choose a government or someone will choose one for them, or decide to rule himself.
Regarding your particular questions, in May 2003, 79% of Americans thought the Iraq war was justified, so the majority clearly didn't oppose it. Most now believe it was a mistake. Only 41% of citizens agree with the president's plan to close Guantanamo. A majority of Americans think the TSA is doing a good job. I think the majority of Americans are wrong on all of these things, but they are undeniably popular opinions.
I, personally, am not being robbed. I am also not being tricked into obedience. Your insistence to the contrary, entirely ignorant of my actual situation, is arrogant foolishness. I've lived on four continents, and I'm quite happy with what I have here.
Could it be better? Sure. Is it at risk from powerful interests? Definitely, especially at the federal level. But I also see many causes for hope.
But if people want to enjoy the benefits of living in a city, state, and country, to participate in an economy, those benefits come with obligations. Sure, they may not want to pay for things. But if they can't get others to agree that the government should not do those things, or at least should run them on a cost-recovery basis, then it's too bad.
They certainly have the freedom to move to someplace without effective government. E.g., Waziristan or Somalia. They will be much freer there. Of course, warlords will be free to rob or kill them, so it may not be entirely to their tastes, but then, we aren't guaranteed perfect choices, just the opportunity to make better ones.
What is the scope of the problem here?
Ok:
"Others weren’t as lucky. Tax lien purchasers have foreclosed on nearly 200 houses since 2005 and are now pressing to take 1,200 more, many owned free and clear by families for generations."
Out of home many?
"The retired Marine sergeant lost his house "
Obligatory "and he was a good guy who fought for his country" added in for extra emotion (in addition the picture of course of a respectable citizen).
All this is sad and most certainly an interesting read. But it seems more suite for Taibbi in Rolling Stone.
Would be nice if in addition to writing emotional appeals they enlisted the help of someone (say a think tank) that could do further analysis and come up with some suggestions as far as reform that are backed up by research and in writing.
[1] Noting that this dates back to 2006 and yes if you ignore simple notices bad things happen. Don't pay your insurance bill? You won't have insurance if there is a fire. Etc.
Let's take the best possible return, say 20% annual return, and let's say he owed this for 10 years, then at best, he'd owe $848. I don't see how a firm purchasing a $134 debt from the state can justify such a huge penalty/return.
As an aside as someone who has gone through significant pain trying to collect money from people that owe varying amounts (over the years) it's a process that given a bigger stick (not "ordinary" penalties) would go a long way.
Noting also that this played out over many years. He didn't just miss a payment of $134 and boom someone profits $5000 or $197,000.
Not so. The article states the liens can be sold after a year and foreclosure initiated after an additional 6 months. In several of the cases listed, the original home owner was in hospice care or otherwise unavailable.
I don't disagree that the city needs a way to recoup unpaid taxes. But, there has to be a better way than this.
The number of people this is happening to and (one third of them over a bill less than $1,000) suggest that something about the process is screwed up.
What is the time period that that happens though? Isn't that an important factor in all of this? Plays out over years? How many chances (and over what time period) could the homeowner have been able to rectify for a more reasonable amount of money?
Not disagreeing with your main point or that the punishment not fitting the crime (or opportunists) etc.
I guess I have a wider problem with this "problem".
The fact is there aren't really people out there (other than some community activists) who have a brain and can help people like this to navigate the system without charging the rates that attorney's charge. Which seems to be the answer to anyone's problem. Get an attorney to tell you your rights and write a letter so people take you seriously. This is in a sense one of the reasons that poor and/or uneducated people get shafted so often. They have no way to communicate and people don't take their problems as seriously to boot.
Of course even if you created an office of "ombudsmen to the normally shafted" that office might simply drown with those that weren't deserving and simply wanted to take advantage of any thing they could to dodge legal process.
That's why the examples are all of people who were absent or had medical problems - because there are multiple opportunities to correct the problem.
It sounds like it's basically an oversight, but nobody in government has bothered to fix it because the people affected are predominantly poor and black.
This is mindboggling to me.
The reasons are best described in the article below, but in summary, we all pay to defend and enhance your property (by supporting the police, roads, local services, etc). It's fairer for property owners to take a larger share of this burden since they alone get the benefits from it, like the ability to sit in the garden and enjoy the view or the increased value of the property when the government builds a road to it. Land taxes also raise revenue without deterring productive work (unlike, say, income tax).
http://stumblingandmumbling.typepad.com/stumbling_and_mumbli...
To answer your direct question, since property owners are overrepresented (they vote more often and are far more likely to be politicians), yes of course they've tried to get rid of progressive property taxes. eg. This in Nevada:
http://www.interstice.com/~drewes/allodial.html
eg you buy a laptop, you have to pay the government a tax each year to keep it.
Why just apply it to houses? May as well just prohibit people from owning property.
Personally, I think such taxes are a massive disincentive for people to do well. As soon as you have enough money to buy a house, you are penalised for it.
Luckily in the UK, we don't have property tax, although we do have other taxes just as disgusting and unfair - stamp duty, inheritance tax, council tax.
Council tax is the UK property tax. It's a very low-rated and regressive tax, but it's a property tax.
"All personal property situated in the commonwealth is subject to tax, unless specifically exempt by law"
http://www.mass.gov/dor/local-officials/municipal-finance-la...
You were required to declare your chairs and desks and tables, calculators, paper and pens, books, bicycles, cameras and computers, and everything and look up its market value and then pay the usual tax just as if it were real estate. You were required to do it every single year. And it's still the law for property above an exempt amount, but no longer applies to every paperclip like it used to.
That law is crazy, of course. Real estate is a big expensive immovable item that creates limits on the level of corruption and record keeping headaches so it's the best target for property taxation. Maybe really big vehicles like cars and airplanes and boats could be targets, too, if they have a home base, but even then you can see problems.
And finally, Henry George [0] points out that the ideal property tax to promote investment, limit corruption and cheating, allow fair administration, limit any kind of dead-weight loss [1], and generate reasonable revenue would be a tax on land value only. Buildings, improvements, vehicles, and personal property should be exempt and only the land's location, area, and fixed geology/hydrology/soil conditions should matter.
[0] http://en.wikipedia.org/wiki/Georgism [1] http://en.wikipedia.org/wiki/Excess_burden_of_taxation
(To ancitipate an obvious rebuttal: yes, I will admit that inheritance tax has probably put people off the idea of dying.)
Inheritance tax is very unfair. If you are rich enough, you'll plan around it and avoid it. But if you're not rich enough, your kids will not only lose their parents, they'll be sent a bill from the government. Which at best is a tad insensitive.
Add to that the fact that the thresholds for inheritance tax haven't been raised properly, so that someone with a 1 bedroom apartment in London will be subject to inheritance tax, it all seems pretty unfair, and perverse for the government to effectively profit from peoples death.
You know that your entire income isn't taxed at the highest bracket's rate, right? So, for example, the highest bracket is 39.6% for income above $400k. If you make $410k, $10k is taxed at 39.6%, and the rest of your income is taxed at a lower rate.
Why bother trying harder if the government will take half of anything extra you make?
Given a hypothetical luxury good with a price of $500,000 under a current taxation regime, which do you think is more likely in a regime with, say, 50% higher taxes: That the luxury good ceases to be produced, or that its price is lowered to the point where a similar number of people as before could afford it?
To answer your second question is impossible - we don't know the shape of supply and demand curves nor do we know the initial rate of taxes. E.g. if the original taxes had been 1% then it's just going to bump the price a little bit. If the original taxes had been 50% then it ceased to be produced.
But if you want to know the general relation of taxes and supply and demand consider how things are going to progress as you keep raising taxes. Do you seriously believe prices are going to fall as the taxes raise?
What matters is the people who are actually paying the bulk taxes and making investments.
However, I feel that I'm already paying the government FAR more money than I should be, so I'm simply not bothered about trying to make them more money.
For simplicity sake, consider that first 100K are taxed at 10% and next 100K at 20%. If you made 100K your effective tax had been 10% i.e. you owed 10K to the government, however if you made 200K, even though the first 100K is still taxed at the same rate, your effective rate is 15% because you now owe 30K out of 200K.
Numbers vary, but it's definitely fewer than 5% and possibly fewer than 1% of households that need to do anything at all to avoid the estate tax. And these are people who have benefited immensely from services provided by the government (if only the services that keeps people from stealing their wealth!) and are really doing quite alright; adjusting the tax code to make them do even better seems unfair.
Secondly I have never heard of anyone who didn't want to make more money because of their tax bracket. I do not believe this phenomenon exists, and even if it did, it wouldn't strike me as all that much of a problem in a population with unemployment as high as our own.
http://www.hmrc.gov.uk/inheritancetax/intro/basics.htm
You can get around it by 'gifting' things to your kids, as long as you then don't die for 7 years after etc etc.
On your last point, it certainly does exist. What I think happens is people like me don't bother trying so hard, because I'll be damned if I'm going to give the government more money. However, people who are already making much more than me, just hire a good accountant to 'make the problem go away' - eg register offshore companies etc etc
Are you seriously saying, that when the UK government had a higher tax rate of 97% in the 60s/70s, you would have been more than happy to do that extra overtime work, and would have gladly received your 3%??? Crazy
Anything over 49% is slavery, and will end up crippling the country rather than raising more tax revenue. Which is why it was absolutely right and proper that the current government reduced the top rate from 50% to 45%.
* blind investments into endless real estate development projects that have no tenants or structural quality (China, Dubai)
* extremely high prices for anyone entering the real estate market (old European monarchies, where a family might have owned the same real estate for centuries)
* lack of funds for upkeeping and maintaining what's considered a shared property (facades, sidewalks) while maintaining fancy interiors (Eastern Europe)
No. Property tax is primarily a means for localities to raise revenue. If what you were saying were true, then developed land, including primary residences, would have no associated property taxes. It'd be exempt.
Here, generally, personal income taxes are replaced with property, sales, and business (franchise) taxes. You pay taxes, as a person, on your vehicle, real property, and per taxable transaction. But, you do not pay it on your income.
(Note that property owners would NOT take a larger share of the burden; as with council tax, responsibility for payment would fall to tenants, to the greatest extent that market forces will permit. For council tax, that is currently "tenant pays all of it". No reason to assume a land value tax would be different.)
disclosure: I am an ordinary, average, white, property owner, not Amish (Atheist, actually).
The notion that we can be isolated within a nation and refuse to take collective responsibility is a dream that has never had much foundation in reality.
http://en.wikipedia.org/wiki/Land_value_tax
The naivete, here, is of course, that the wealthy don't have more resources to protect themselves against property taxes or reduce their burden, or deal with enforcement, or mitigate corruption by the state.
In reality though, there is no "rules scheme" you can construct that will be as progressive as you want. You'll tack on more rules to tweak it to satisfy your conscience that you're not hurting the poor. The wealthy will hack this and find a loophole, and even if they don't, the burden isn't so terrible for them. Slight infraction by the poor will be come down upon disproportionately by the government (because the cost of enforcement against the poor is lower because of lowered risk of having it fought in the courts) and 'an example must be set'.
Although your property tax was designed to be 'progessive', it instead, wound up being a barrier that is difficult to surmount. It is naive to think that the state will be this hyper-logical ultra-fair machination. It's not, and it never will be.
Instead of socially engineering through the state, everyone would have been far better off if you helped the poor by reaching into your own pocket. But, of course if one is selfish, that's not going to happen - and it's far easier instead to project one's own selfishness onto other people, extrapolate onto all of society and use the state to run your charity for you.
So land tax is fair and progressive (the more land you own, the more tax you pay).
Did you even read the WaPo article? Do you not see how the existence of a property tax has come around to hurt exactly the most vulnerable population (and in this case, through no directed malice) I promise you, people living in Palisades (the richest part of DC) are not worried about property tax liens because they can pay people to deal with paying the taxes (either legally, say hiring an admin, or extralegally). It's not progressive because the bureaucracy and the hammer of the state causes a greater fundamental inconvenience to those of less means than to those of greater means.
As to the hammer, do you think the DC government would have sent "armed US marshals" to recover the house if it were in the Palisades? Why or why not?
Many countries have land taxes which work reasonably well. There can be some proscribed formula (based on a regression on nearby property). Or they can do valuations. There'll always be problems, but it's not more evil than many other taxes (unless they enforce it by stealing property).
Maybe the government will send in SWAT teams to collect unpaid land tax bills from poor people, and a friendly note to rich people; but that's not because it's a land tax. How do you think they treat unpaid parking tickets?
The advantage of taxing the use or consumption of a scare resource (land) instead of income should be obvious. If Bill Gates wants a mansion, he's making it harder for normal people to buy a home. If Bill Gates makes a billion dollars selling some operation system, he's presumably creating jobs, and making a lot of people happy (since they can get on the internet without buying an expensive Mac, or having to figure out how to configure their modem using Linux). (Note - some rich people make their money by being parasites, but capitalism works because this usually isn't the case).
Finally, there's the stabilising effect that a land tax has. Property is a huge investment, driven by unsophisticated retail investors (who may be putting most of their life's savings into a single home), prone to stupid fluctuations, which can destroy the lives of normal people when it does something funny. Taxing it helps keep it a little rational (as the taxes will encourage people to avoid it when it starts heating up).
What happens if they refuse to pay the tax, then? As an agent of the state, how do you make them pay? You might send them some letters with warnings. Of course then they might continue to shirk the law. You can ratchet up the tax, by charging interest. Ok, but that's a number. They still refuse to pay. How do you make them pay?
2. your logic is questionable:
>Property is a huge investment, driven by unsophisticated retail investors (who may be putting most of their life's savings into a single home), prone to stupid fluctuations, which can destroy the lives of normal people when it does something funny. Taxing it helps keep it a little rational (as the taxes will encourage people to avoid it when it starts heating up).
Having children is a huge investment, driven by unsophisticated people, prone to stupid fluctuations, which can destroy the lives of normal people when it does something funny. Taxing childbirth helps keep it a little rational (as the taxes will encourage people to avoid sex when it starts heating up)
Does that sound like reasonable public policy?
And aside from the policy ethics I strongly doubt your model that property taxation is a significant 'tempering agent'. If you're going to call the buyer an 'unsophisticated retail investor', it's unlikely to presume that they will have a 'sophisticated' concept of property taxation, either, especially when the government can change its parameters at will.
Finally, if you're going to argue that property taxation is supposed to be a detterent for people who you are codedly calling 'unsophisticated' (whether or accurate or not, that reads to me as 'poor people') to 'rash' purchases, well, thank you for demonstrating my point that it's tax with regressive outcomes.
If you can show me a citation indicating that property tax keeps housing prices 'rational', I'd give it a second thought.
OK, in extreme circumstances then seizing the land, selling it, then giving any residual (after taxes are paid) back might be necessary. The problem in this thread is, the residual didn't get given back, and it doesn't seem they followed due process.
> Having children is a huge investment, driven by unsophisticated people, prone to stupid fluctuations, which can destroy the lives of normal people when it does something funny
There's no "child bubble", in which people all want to have children when the price of children goes up. I don't follow the analogy. Wait ... you mean it's a financial risk? Good point, maybe children should be taxed, but since having children isn't always voluntary, and there's no way you can stop a person who can't afford the tax from having a kid (at least, no ethical way), then it's' probably not such a great idea.
> And aside from the policy ethics I strongly doubt your model that property taxation is a significant 'tempering agent'.
It just makes sense. As you've asked, I can find some economists who think it's a good idea. Here's some review - http://www.enhr2011.com/sites/default/files/Paper-Haffner%20...
One of the things it cites:
http://search.oecd.org/officialdocuments/displaydocumentpdf/...
Basically, yes a tax on value reduces volatility. Maybe. It's a credible idea, though it would be nice to have some more research. Transaction taxes are not such a great idea. Tax breaks on houses increase volatility.
And it's not a tax with regressive outcomes. Really poor people rent. I'm just saying "unsophisticated" to mean "people who don't trade for a living". Most people who invest in housing aren't professional real estate investors.
For instance, if I had 5 acres in the middle of nowhere, I might be expected to chip in to a fund to keep a fire on my land from spreading to adjacent BLM property. However, my acreage is likely to be taxed more or less based on the quality of the view, or another similarly cosmetic factor in land value. Why not just calculate my share of the public fire suppression expenses based on area? Assuming, of course, that sufficiently many of my neighbors feel compelled to intervene in cases of wildfire.
remember:
> there is no "rules scheme" you can construct that will be as progressive as you want.
What you propose may be 'fair'[0], in the context of providing services*. But that is not the goal of progressivism, which is redistribution of wealth and creation of an more outcomes-equal society (a concept I'm personally not opposed to, if the state doesn't do it).
[0]but even fair in your example isn't quite correct. Because area is not proportional to fire risk. Let's say I live in the valley, where a stream runs through, the vegetation is green, and the area never gets hit by lightning. And my rich neighbors a mile away are on the mesa, which has a great view, but is brown and always dry, and up high, so lightning hits there regularly? Should area be a fair assessor of fire risk? Is it fair to have me subsidize the fire protection of the rich people who live closer to where fires happen? (this is a simplified description of the very real LA county fire system where rich people live out on the hills where there are far more brushfires)
I can think of a few solutions* to your counterexample though, and that's the point. There's no reason to expect a solution to be fair in all cases, or perfectly fair in any. I'd only argue that there is often, or perhaps always, a more equitable and direct way to provide for common services than property taxes.
*I choose the BLM as a neighbor purposefully. The rich people in your example would almost certainly prefer to fund their own municipal utility than settle for the type of response I would expect the state or county to provide.
And the unfairness will always over time become skewed towards the wealthy and powerful (municipal authority:'well obviously we are authorized to make exceptions like X as precedented by our rules system in code ZZZ, subparagraph Q; if we give an advantage to corporation Y by implementing change T, it may not necessarily be in the spirit of total fairness - but we will create jobs! and thus it will be in the public interest'). If fairness is your dominant value, the only perfectly fair and sustainable solution is zero. If progressive redistribution is your dominant value, you will wind up with a lot of difficulty over the 'how much is enough' question, and the implementation will almost always find a way to be anti-progressive.
Would you at least agree that things don't have to be quite so complicated once you get out of the city?
What else could the government do, put the homeowner in debtor's prison?
I'm still curious what myname would propose as an alternative collection scheme. The article mentions that Michigan stopped doing tax lien sales, so I checked up on what they do now: https://www.tax-sale.info/html/index/page/general
SPOILER: > The properties are then sold by deed at auction.
Not much of an improvement over the lien process; just a faster foreclosure.
But of course, with this "new method" it makes sense to be higher.
http://www.nuwireinvestor.com/articles/how-texas-tax-sales-w...
http://www.dallascounty.org/department/pubworks/documents/St...
http://en.wikipedia.org/wiki/Bella_Vista,_Arkansas
First-hand experience.
edit: IRS liens in effect before the sale go with the property, and can delay the new owner in getting a title policy.
It's not a coincidence that this is happening to mostly elderly people who otherwise own their properties in the clear, people who are often burdened with serious health problems.
There is a simple fix. Require the liens to be paid off when there is a change of ownership. The city knows what it is owed, and that it will get the money eventually. If the city needs the money today, it ought to be able to borrow the funds (not all that different that accounts receivable factoring). Throwing people out of their homes over small amounts is inhumane.
BTW, this is a privatized operation wherein predatory debt collectors buy the liens, foreclose the property, and then flip it at a huge profit. Just another example of government acting as stenographer for the financial industry.
Did you actually just say a sentence with the phrase "government acting" in it as an example of something Ayn Rand would be in favor of? HAHAHAHA....
(I'm not in the Ayn Rand camp, but I think you're missing the basic concept of what she was about.)
"Randian/Thatcherite dream"...as if they want people to lose their houses. You are very misinformed on Objectivist principles.
Yea, that's what process usually entails. I don't see outcome in that list.
Well, property is sacred in Objectivism and "stealing" is a deadly sin. I'll leave it up to you to decide whether taking someone's home over a tiny unpaid tax bill would be considered stealing. (Hint: it is.)
Also, Godwin's law alert!
Do you really expect anyone to engage with you when you call a well-known author a sociopath without justification? Might as well call her a child rapist while you're at it.
For an example, consider an HOA taking a home from someone over unpaid fees.
(Incidentally, if one were looking for a crystal ball into what private/libertarian governance would actually start out looking like in the first world, I'd guess that the problems of HOAs would probably give a pretty good idea.)
Absolute nonsense....I can't think of a single Rand writing that would support this notion in the slightest. One of her primary principles was that the desire for the unearned was a "sin" (or whatever equivalent word she used).
Taking someone's home over a small tax bill is definitely unearned.
If someone who's halfway through paying their mortgage stops making payment, has the bank earned the equity the borrower has put in? You might argue they haven't, but this isn't absurd.
If nothing else, advocates for the lender -- and, in general, libertarian voluntarists -- would argue that if both parties have agreed on the conditions, execution of them is justly earned.
And if you want Rand cite for that, read the Roark/Rand courtroom soliloquy where it's explained why it's OK for him to blow up a building (sure, other people may have put in sweat and equity, but that's nothing compared to his contract).
Well, why not the same thing for an HOA? Nobody held a gun to your head to move into a property that's part of a private collective. If Roark can uphold his aesthetic conditions, surely an HOA can uphold whichever please them, and ask for their fees, and blow you out of your building if you don't comply.
Now, if you think that there's a flaw here -- perhaps that "as agreed" is not necessarily the same thing as "earned" -- I might agree with you. Perhaps Rand even says something to that effect elsewhere. But at the same time, the entire climax of her second most famous book turns on a different principle.
(Also -- I have my doubts that anybody has any true claim to have earned most of what they have. We all have a heck of a free ride as far as life and resources go.)
Exactly, and that's the difference. Nobody held a gun to you head to move into the HOA collective. You knew the terms and consented to them when you moved in. Conversely, you are held to the laws of the state by the force of, ultimately, guns.
It's pretty logically and mathematically definitive, only in present society with bankers gone wild could it be terribly questionable who owns what. Common sense is usually sufficient.
> And if you want Rand cite for that, read the Roark/Rand courtroom soliloquy where it's explained why it's OK for him to blow up a building (sure, other people may have put in sweat and equity, but that's nothing compared to his contract).
Honestly, it's been ages since I've read that book so I can't comment intelligently. That sounds pretty crazy, but I have a feeling you're taking a negative interpretation, although I may be wrong. I tend to find Rand's larger principles correct, if not practical, while I differ on some of the smaller ones (Food Safety / restaurant inspections come to mind).
I could see it if MAYBE the HOA had that as part of a written agreement consented to the homeowner at the time of home puchrase. Of course, that's exactly not how government works.
If you work at a major investment bank, why would you speak out against government regulation of your industry when you might need a bailout some year in the future?
If you work at a government regulator (e.g. the SEC), why would you regulate the industry too hard when they are going to be your biggest source of consulting fees after you leave your government employment?
For example, Bernie Madoff's brother was a director of SIFMA (Securities Industry and Financial Markets Association) for two years.
I'm only familiar with the tax sale rules in one Connecticut town, but the include a provision for the (delinquent) taxpayer to pay their bill in full within 30 days of the auction to cancel the sale / lien.
and
Chapter 3 - Verse 130: http://www.usc.edu/org/cmje/religious-texts/quran/verses/003...
"O you who believe! Devour not usury (interest), doubled and multiplied; but fear Allah (God); that you may (really) prosper."
Some more quotes: http://www.answering-christianity.com/yahya_ahmed/riba.htm
Allah (God) has declared war on those who take interest: http://www.hilalplaza.com/islam/Interest.html
a) growth isn't required in all economic models so inflation isn't necessarily valid.
b) goods and services are perfectly good interest. Not that you'd have to borrow it if interest wasn't profitable (it would drive asset value down).
c) risk is irrelevant if lending isn't required.
you're too in the bank and growth model mindset. It doesn't work like that everywhere.
e.g.: http://en.wikipedia.org/wiki/Murabahah
Thankfully VA and MD don't recognize this twisted logic.
I understand how it would be hard for the government to implement a policy to do the same, but this situation is ridiculous.
An important part of the article is that the subject profiled had dementia and was thus may not have been able to understand what was going on and was basically taken advantage of, albeit legally.
http://rollingjubilee.org/
http://strikedebt.org/
http://www.occupyourhomes.org/
http://occupyforeclosure.org/
what i got from the article is this: due to the financial situation of the owner, a small unpaid tax turns due to unfair practizes into a larger debt of like $5000, which then allowed a judge to enforce the sale of the house so that unpaid taxes could be paid off.
now if the house was sold for the mentioned 197'000, does that mean that the owner at least got the proceeds minus the debt? the title suggests that this would not be the case...
1) Owner of the house owes a minor amount of taxes. In most of the anecdotes, the homeowners have either no mortgage at all, or otherwise have mostly equity (tiny % of the total value of the home owed). 2) Since the city technically has a lien on the home (or gets one?), they are able to then sell the lien to an "investor", who pays whatever the tax bill is. 3) The investor demands payment, and begins charging huge fees. 4) After 6 months or whatever, the investor forecloses on the house, which is essentially taking ownership (basically a "repossession") 5) The investor sells the house for market value, or whatever price they want. 6) Since the investor is NOT a mortgage company or otherwise holding a mortgage lien, but is holding a lien originated by municipal entity, there is no rule in place that says they need to pay the original homeowner the profit. Therefore, they keep all of the money, minus the tax bill they paid at the start.
In the end, the article implies that this company is buying liens for as low as $50, and then selling the houses out from under the homeowners for hundreds of thousands of dollars.
At least, that's what I understood.
That might be part of the problem... they really don't have much local government. Congress holds sway in DC. When I lived in Glover Park I thought it was one of the strangest systems I had ever seen. Never really quite understood it completely.
Living near the district, I'm shocked daily by how nobody seems to care that the corruption is so widespread.
The owner loses $130,000. Don't be surprised if the person buying the house for $71,000 is in on the game too.
Two ways I can think of fixing it - one is offering simple, straightforward hearings in front of a judge with the power to use their own judgement (instead of relying on overly-specific, exploitable laws); the other is to implement some counterbalance punitive fee for wrongly harassing citizens - something that decreases the profit ratio for predators and makes defending people in otherwise unprofitable cases profitable.
Yes, because a single corrupt or idiotic or assholic judge should be able to ruin lives left and right without regard for the law.
> the other is to implement some counterbalance punitive fee for wrongly harassing citizens - something that decreases the profit ratio for predators and makes defending people in otherwise unprofitable cases profitable.
And you have another system to game, another way for the scummy lawyers to beat people over the head to prevent their crimes from being punished.
And yes, any system you make could be gamed, but you could make one that is harder to game than the current one.
Ah yes, the "Let that person solve it" school of fixing major social problems. It works really well right up until it fails really badly: George Washington was, for a while, effectively a dictator in that he could have been President-For-Life long before we came to associate that concept with bad outcomes; sadly, for every Washington who willingly resigns and refuses dictatorial powers, there are multiple leaders who exploit them to the fullest, possibly with good intentions to begin with, but that gets lost on the way to having a syphilitic strongman who eats the flesh of his enemies.
> We already do this with small-claims court I believe and to be honest I'm not sure of the differences between that and a court that would handle a tax lien.
Small-claims courts are, by their very nature, both high-volume and self-limiting: A judge-dominated process is necessary because we can't afford a jury to sit on every case involving piddling small change, and the fact they are limited to piddling small change means the amount of damage a judge can do is extremely limited. It's a trade-off, not a broad social principle.
And regarding small claims courts - the amount of damage a judge can do is directly related to how much a person is worth, just like fines for civil infractions. It can be nearly nothing or it can be life altering.
Anyway, the solution to this particular problem would be fine-limits (like in other states) and things like license-renewal restrictions (like you get for not paying a speeding ticket).
Edit: I suppose if people don't pay property taxes continually you have to sell the house to stop the tax revenue loss. Enforcing market-price restrictions might be difficult as lack of sale persists the problem. Maybe taking equity in the house at market price or something like that could work. Any way you look at it though $145 shouldn't be such a high-pri. Unpaid speeding tickets amount to more than that.
You're the one who advocated that judges be allowed to ignore the law and judge entirely based on their own good judgement. I pointed out that there are few people who even have good enough judgement to abdicate at the right time.
> And regarding small claims courts - the amount of damage a judge can do is directly related to how much a person is worth, just like fines for civil infractions. It can be nearly nothing or it can be life altering.
That's why we have laws and we make judges follow those laws. It ill-serves society to force extremely good judges to follow poorly-thought-out laws, but the losses on that end are more than made up for by forcing the idiot and asshole judges to adhere to laws written by people who aren't explicitly out to screw you over.
A single point of reference argument about people not having good enough judgement to abdicate (which relied on a case of abdication?) isn't a sealed argument that people/judges have bad judgement.
"but the losses on that end are more than made up for by forcing the idiot and asshole judges to adhere to laws written by people who aren't explicitly out to screw you over." Based on what? Why are judges explicitly out to screw you over? And are you joking that judges are more out to screw you over than law makers?
And your argument about idiot and asshole judges out to screw you over is coming from where? If I had to guess I'd say that most judges follow the status quo, a smallish portion can be pricks at times (but within the boundaries of the law), and the ones who truly go out of their way to be exceptional are doing so in the name of civil rights and civil liberties.
Why not just make a law to cap the profits. Home must be sold at fair market price and the rest must be given to the owner.
1. It gives more power to the government and less power to the people.
2. The majority of lawmakers are lawyers - complexity means them more job/business opportunities and significance in society.
It points out this arose from a change in 2001 that occurred because the agency was trying to do LESS work, not more.
"But the work overwhelmed the agency, and in 2001, city leaders made a critical change: They told investors to head directly to court to file a foreclosure case. The move empowered investors to start charging legal fees and court costs — a game changer that allowed them to turn minor delinquencies into insurmountable debts."
In Europe, once you get too incapacitated to take care of your stuff, social security take you in charge. After you die, they repossess your property and sell them to recover their cost. What's left is then given to whoever is supposed to inherit. I am not quite sure what would be acceptable with the more liberal US culture, but profiteering of the weak is certainly not an american value.
Clearly, yes, it has become that. Each day, I become more ashamed of where I live.
Administrative hearings are used in a wide range of situations in the U.S. For example, when applying for federal benefits or under compensation programs. They're not a panacea. As organizations, they tend to become biased towards one side or the other. Good luck getting the Department of Labor to rule your way as an employer. One of the values of lawyers is that they force decision makers to justify their decisions to a sophisticated party, which reduces the tendency towards systematic bias or alternatively arbitrary action.
In the context of foreclosures generally, lawyers protect the lenders' interests. Foreclosure is already heavily stacked against the lender. The homeowner has months or sometimes years and numerous second chances to come up with the delinquent payments. Do we need to make the system even more biased by getting rid of the rules and letting a judge decide based on who has the most heartbreaking reason for not paying what they owe?
Incidentally, this situation also clearly demonstrates why the "loser pays legal expenses" rule is a bad one. When the loser pays, the biggest entity in the litigation has no incentive to reign in its legal expenses. Imagine applying "loser pays" to banks in foreclosure proceedings.
I read the whole article, and I somehow missed that sentence buried in the middle of the story. So Mr. Coleman wasn't "left with nothing" but presumably received something like $65,000 (i.e., $71,000 minus $6,000 or whatever the final legal bill was). Nowhere does the article say exactly what he received in the end.
The way the tax sale works sounds quite unjust and corrupt -- we don't need the reporter to make it even more evil ("left with nothing") by obscuring key facts.
>The Maryland company that took Coleman’s house sold it for $71,000 two months after evicting him. The company was owned by Steven Berman, who was convicted in 2008 in the Maryland bid-rigging case. He declined to comment. The law firm for Berman’s company said it was willing to reduce Coleman’s bill to $3,500 but could not reach him.
What part are you saying I still don't understand? The point I was trying to make is that Mr. Coleman does get some money from the sale, although unjustly much less than the house is worth. But the reporter is obscuring this simple fact.
That's not "obscuring this simple fact", that's stating clearly and unambiguously that your "fact" isn't true. The person you initially responded to was creating an example, based on how liens usually work. The reason the profit margins are so high in this case is that it doesn't work that way.
So the $197,000 was likely the appraised value, with the $71,000 the actual sale value when the predators unloaded it.
But it sounds from the article like the original owner does lose everything, which I hope is so ridiculous as to be untrue, but I can't tell...
EDIT: I wonder if I got downvoted for using Noscript, or what...
The first is that laws that allow this to happen are scandalous. Worst case, particularly for the elderly, is that a lien is placed on the home such that it must be paid when the home is transferred in any way. So what if DC has to wait 10 years for $137 mistakenly not paid? Seriously.
Unless the debt exceeds some nontrivial amount, the county should be restricted from taking any action whatsoever. All this to recover $137? Seriously?
If it does come to foreclosure, it is utterly ridiculous that the "investor" (I prefer "predator") gets to keep the entire sale amount. Fees (that should be capped) may be retained with the rest being returned to the owner. Otherwise this is (or should be) the unlawful seizure of assets.
Secondly, if you are such an "investor" how exactly do you live with yourself as a human being doing this? Seriously. I couldn't sleep at night.
As for the county or state officials that make this possible, how do they live themselves doing this to their constituents?
>you have to pay $5000
>you lose $197,000
How is this acceptable?
"When it was over, six companies had swept the bidding, snaring two-thirds of the liens, which totaled $5 million, on properties worth more than $666 million"
All that said, as mentioned above I do agree with you, because assuming banks are keeping homes off the market this only artificially keeps home prices stable, and many of those REOs are failing into disrepair. In my opinion it is better to have ownership and people in homes, even at a short term cost of flooding the market with under valued homes. After all it is the banks who originally to the risk on these loans they foreclosed on and they lost.
My father and step-mother both are mortgage underwriters. One is currently still underwriting, the other is currently working for the GSEs (Fannie and Freddie) forcing several large banks to eat the shitty mortgages they pushed on them.
I can not even begin to tell you how poorly managed these large servicers are. But heh, keep on thinking they know what they're doing. If they service your mortgage, I encourage you to keep a very careful on your note.
Basically everything you read about on the news is what almost never happens.
But seriously, things like this are why we must not get too carried away focusing only on market opportunity. Some ideas are profitable, but socially disruptive. In this case, public policy is enabling predatory with very obviously antisocial results, but I think there are plenty of cases where the government isn't so directly involved and the results aren't so obviously destructive, yet antisocial, nonetheless. This is really addressed to the small but vocal minority that seems infatuated with profit-seeking, without concern for anything else.