Guess which tax gets singled out?
City profits on tax lien misery
You hate to see somebody lose their home. But do you want to pay their taxes for them? Thats the choice we have in the current system, until we live in a geonomy. These 2010 op-eds are from (1) the Baltimore Sun, May 18 and (2) Hanno Beck, this websites founder and webmaster.
by Sun editors and by Hanno Beck
In Baltimore MD, investors buy up municipal liens and use them to extract thousands of dollars in fees over minor debts for unpaid water bills and other obligations. In 400 cases over three years, people lost their homes for non-property tax debts, half of those for initial debts of $500 or less. Furthermore, three Baltimore investors have pleaded guilty to bid rigging in tax lien sales. But the state has done little to stop this practice. Why? Because the Baltimore City government, which profits from the tax lien sales, has lobbied against it.
Baltimore just had what is probably its best year ever for property lien auctions, selling 12,689 of them, twice as many as three years ago. City officials defend the practice, saying the threat of losing one’s home is necessary to get people to pay their bills. But there are other means — such as shutting off water service when people get far behind — to achieve that goal.
Collecting disproportionate compensation for back debts is no less wrong just because the government gets a cut.
Hanno Beck: I’ll side with the city on this one:
(a) Property taxes, unlike adjustable-rate mortgages, did not suddenly shock people by doubling or tripling. In Maryland there are strict caps restraining the rate at which property tax bills can rise. (No such caps for income tax or sales tax.) The property tax was much more predictable, and much smaller, than what people pay on their mortgages. So why single it out?
(b) People have YEARS to pay their property taxes before serious action is taken.
(c) If someone doesn’t pay the property tax and the government does finally act, does it throw the non-payer into jail? No, that’s what non-payers of income tax face, which is one of the many reasons why the income tax is so much more violent and anti-freedom than the property tax. The worst that can happen is that the thing the person bought but cannot afford to pay for, is taken away from them and put into the hands of someone new who needs housing (and who pays all the other person’s back taxes for them). Horrors!
(d) The Sun editorial fussed against abuses by third-parties who manipulated people’s debts (ground rent, water bills) other than property tax. Simple solution for that and for property tax debts too — pass a law, if that’s what they want, that makes all such debts non-transferable. The City (and counties) would not be allowed to privatize, transfer or otherwise assign their accounts receivable, they would have to collect them all by themselves. Personally, I doubt that such a law would be seen as a big improvement; it would probably just encourage the City to sell off tax-delinquent properties all the sooner. But if it’s something that people want, then hey let them try to pass the legislation, we live in a democracy. (And by the way — the tax sales that took place last week don’t transfer ownership of any properties. They just assign a third party to get the property if the current purchasers don’t bring their taxes up to date. The owners are granted still another period of time, about six months, to pay off their long-delinquent taxes.)
(e) We have all heard of a repo man, hired by a bank or vendor to repossess property that was bought but not paid for. I doubt that The Sun has ever editorialized against that idea, but as soon as the government starts to get active and do something like it, then the shouting starts. Gee, I thought people generally agreed that they want the government to get moving and start acting more like a real business!
(f) The Sun did not offer any good alternatives. What tax increases does it favor, in lieu of the City collecting some of the money that is already owed to it? Each of us who ends up paying the increased taxes would be doing so, in order to enable people who have owed money to the city for years, to keep on owing it. Does that really justify a tax increase? Is that really the best way to spend a tax increase?
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