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PaperclipPerfector  1yr ago (text post)   4327 thread views

Small-Scale Question Sunday for April 23, 2023

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What’s up with Tyler v. Hennepin County?

Next week, SCOTUS is hearing a case from Minnesota. The county foreclosed on a home with $15,000 in tax debt. It made $40,000 from the sale and kept all of it as a windfall in accordance with state law. The 94-year-old owner sued on takings clause (and due process, and 8th amendment) grounds.

The district court dismissed all claims. The circuit court affirmed. What gives?

It feels like there should be protections against the state profiting off the difference from tax debt and market value. Is this just one of those situations where it turns out there are no rights? Am I missing something?

It feels like there should be protections against the state profiting off the difference from tax debt and market value.

To further put a point on what I said below, the amount the state realized for the property was likely far below the actual market value of the property due to the circumstances under which delinquent properties are necessarily sold. First of all, the only liens guaranteed to be cleared are property tax liens, and the title is uninsurable, so unless you have the time and skills necessary to do your own research you run the risk buying the property and then finding out that there's a mortgage attached to it for another $50,000 that the bank hadn't foreclosed on yet for one reason or another and if you don't pay it off in cash right now the bank will foreclose on it and you'll lose it. You can't inspect the property prior to purchase so you run the risk of serious damage. You can't get it financed so the pool of prospective buyers is limited to those who have the requisite cash. And I mean cash because they don't accept personal checks (though it is common to get a bunch of $500 cashier's checks and use those like $500 bills). Due to some redemption rules you can do all the work to prepare to buy the property you're interested in only to find out on the day of the auction that the property has been redeemed and won't be up for bid. Under others you may buy the property at auction but have to wait three years to take possession while you wait to see if it gets redeemed. And once you get title to the property you may have to file a separate ejection action if the prior owner refuses to vacate the premises.

I’ve got family in the foreclosure business and can confirm that there is a significant discount. Plus significant additional labor in ejection or making use of the property, which is the whole reason the state outsourced to the private market.

I was also thinking about an extreme case where the state forecloses based on a small fraction of the property’s value. If the state got it for (hypothetical) $1, there’s no reason they should have to play realtor only to hand a surplus back to the previous owner.

So yes, I’m fairly convinced at this point.

In the linked decision, § I lays out the background, and § II.C.1 explains the important part of the reasoning. tl;dr:

The government gave to the property owner three years of notice prior to the seizure, and even would have permitted her to buy back the 40-k$ condominium for the 15-k$ amount of the debt (with a lump sum or with an installment plan) during the four months between the seizure and the sale. But she failed to avail herself of those options (clearly communicated by personal service), and she has not presented any evidence that she was unable to do so. In that context, there is no unconstitutional taking.

[T]he United States Supreme Court has unambiguously declined to recognize a former property owner’s “fundamental interest in the surplus” by virtue of her prior ownership of the forfeited property. To the contrary, Nelson [v. New York (352 US 103)] held that the former owner has a property interest in the surplus only if a provision of a constitution, statute, or municipal code creates such an interest. Like the Oregon statute at issue in Reinmiller, Minnesota’s statutory scheme gives the property owner no right to the surplus.

My reading of that ample notice section was that it was forestalling process claims. I didn’t realize it covered the takings option too.

There's a timing issue here because the compensation given to the state for the delinquent tax was the property itself not the proceeds from its sale. The landowner has no interest in the surplus because the surplus didn't exist until after the state had taken title to the property and subsequently sold it. Therefore, you'd need some statutory provision to establish that a prior owner was entitled to a surplus.

Think of it this way: Suppose the state had condemned the property under eminent domain for a value of $15,000, and the landowner neither signed off on the sale nor challenged the condemnation in court. In the absence of evidence to the contrary, the court awarded the state the property for the $15,000 they had initially offered, and they mailed the landowner a check. Subsequently, the project the government condemned the property for never materialized, and they sold it to a third party for $40,000. Does the prior landowner have a right to the surplus? It would be hard to argue that she does, unless there's some kind of statute saying she's entitled to it.

Quote from the Supreme Court decision:

[W]e do not have here a statute which absolutely precludes an owner from obtaining the surplus proceeds of a judicial sale.… What the [government] has done is to foreclose real property for charges [several] years delinquent and, in the absence of timely action to redeem or to recover any surplus, retain the property or the entire proceeds of its sale. We hold that nothing in the Federal Constitution prevents this where the record shows adequate steps were taken to notify the owners of the charges due and the foreclosure proceedings.

Home seizure is one of the canonical examples for illustrating "substantive due process" versus "procedural due process." This is (and probably always will be) a pretty hotly contested bit of American jurisprudence; procedural due process is "was the procedure followed" while substantive due process is more about law-in-equity, i.e. "was justice truly done." If your city or state craft ordinances that, through totally procedurally sound action, works a clear injustice, it's not usually all that difficult to get people to agree that something has gone awry. Based on the Court's posture toward asset forfeiture in Timbs v. Indiana (they decided it violated the Eighth Amendment as excessive), I would not be at all surprised to see Hennepin County definitively lose this case.

However, the main question in my mind is that this is a "tax" case, rather than a "fines" case, and Chief Justice Roberts famously saved Obamacare by giving "tax" status to something that essentially no one thought of as a "tax." Remember that without the Sixteenth Amendment, income tax was clearly an unconstitutional taking. (Personally, I'm very comfortable with the proposition that the Sixteenth Amendment was deeply immoral, and that most taxation is indeed simply theft, but at least it is a kind of theft that was given special exemption in the Constitution.) Strictly speaking, so long as they aren't violating any state laws on the matter, a U.S. county has the power to levy as much property tax against your property as they wish, which could have the practical effect of confiscating anyone and everyone's property for government use (by setting the tax well above the value of the property).

I would hope that, in such a case, the courts would quickly call out the tax as a pretext to seizure and thus declare that it falls afoul of the Fifth Amendment! But courts are remarkably skittish in every case that tends to expose the fact that all taxes are inescapably coercive and confiscatory, with thin justification.

Chief Justice Roberts famously saved Obamacare by giving "tax" status to something that essentially no one thought of as a "tax."

Better yet Obama and his administration stridently argued that it wasn't a tax.

essentially no one thought of as a "tax."

Wait, what? Who thought that? My sense is that everyone knew it was a tax, but that label had been avoided by proponents of the bill.

It sure felt a lot like a tax, given that it was a box to check or uncheck when filing a federal tax return which changed the amount of the check one had to write to the treasury.

I never thought of it as a tax. It was pretty obviously (to me) a punitive fine designed to force you to purchase health insurance.

The government started giving a bunch of money to companies, and telling individuals they must do the same; I didn't give any money to any companies so the IRS made me give them money instead. Questions to determine the amount I had to pay were based on things like AGI, part of my tax calculation, and the resulting amounts were entered back into my tax calculation. If I increased my withholding, I had to write less of a check in April--but I only ever wrote one check, to the same people I'd always written checks to when paying my taxes.

Is there any other thing where one can be "fined" or punished for doing nothing? Aren't negative consequences usually to deter behavior, not compel it?

Is there any other thing where one can be "fined" or punished for doing nothing?

Of course there are. If you don't pay a parking ticket in time, you owe an additional fine. If you don't return a library book on time, you owe a fine to the library. And so on. It's perfectly possible (and common) to use negative consequences to compel behavior.

But in those cases, I've parked somewhere, or broken my contract with the library--there is a punishable action.

No, there is a lack of action you were supposed to take. It's the same thing as the Obamacare fine.

Your examples are actions one is duty-bound to take by the terms of the contract that was entered into, by parking in the spot or by checking out the book. Don't you see the difference?

"Breaking a contract" is an "action", and in either of these cases is directly comparable to petty theft of the equivalent funds--the library has a loss of the use of its book, or the city has loss of its parking space (or remuneration therefor). Someone who never did anything but sit at home, and consequently never used the streets or the library, would never be subject to those fines.

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that label had been avoided by proponents of the bill

Right, when Congress itself functionally says "this law is not a tax," the Court has historically deferred to that. It's similar to the shenanigans (still) pulled by many cities who levy "fees" and "fines" that often seem more like taxes (compare also state universities who are sometimes forbidden from raising tuition, who then raise "fees" instead). When neither the proponents nor the opponents of the bill claim it's a proper tax, that makes the class of people thinking it's a proper tax pretty small (analytically, limited only to those who both don't care either way and for whatever reason have a strong opinion about calling money collected by the IRS "taxes" rather than "fees"). Roberts' decision heaped motivated judicial reasoning atop legislative shenanigans. To his credit, I suppose, that has been the primary function of the Supreme Court for most of the 20th century, but that doesn't mean it's a good way to do things.

When neither the proponents nor the opponents of the bill claim it's a proper tax

I'm not sure if you're making a distinction with "proper" tax, but opponents, heck even Democrats, definitely claimed it was a tax, and it was a live enough question to get addressed in a one-on-one (sorry, it's an amp link):

STEPHANOPOULOS: That may be, but it's still a tax increase.

OBAMA: No. that's not true, George. the -- for us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase....

STEPHANOPOULOS: But it may be fair, it may be good public policy...

OBAMA: No, but -- but, George, you -- you can't just make up that language and decide that that's called a tax increase.

STEPHANOPOULOS: I -- I don't think I'm making it up. Merriam Webster's Dictionary: Tax -- "a charge, usually of money, imposed by authority on persons or property for public purposes."

OBAMA: George, the fact that you looked up Merriam's Dictionary, the definition of tax increase, indicates to me that you're stretching a little bit right now. Otherwise, you wouldn't have gone to the dictionary to check on the definition. I mean what...

https://www.google.com/amp/s/abcnews.go.com/amp/ThisWeek/Politics/transcript-president-barack-obama/story%3fid=8618937

Stephanopoulos in that exchange appears to be saying that requiring you to pay for insurance is essentially a tax. Look at Obama's claim:

...for us to say that you've got to take a responsibility to get health insurance is absolutely not a tax increase...

What SCOTUS decided was not that paying for insurance is a tax, but that the resultant penalty if you don't is a tax--even though fines are not generally regarded as taxes. So this sound bite is not on point; they're literally talking about something else.

They're not talking about something else, though. Did you read the full conversation? I just quoted that bit (and elided some) because I found Stepho's pulling out a dictionary and President Obama's swift about-face on "words have a meaning" amusing. But prior to that bit, it's quite clear they're discussing a penalty (Shared Responsibility Payment, "responsibility" being the buzzword) for not buying insurance:

STEPHANOPOULOS: ...during the campaign. Under this mandate, the government is forcing people to spend money, fining you if you don't. How is that not a tax?

OBAMA: (evasion evasion)... we've driven down the costs, we've done everything we can and you actually can afford health insurance, but you've just decided, you know what, I want to take my chances. And then you get hit by a bus and you and I have to pay for the emergency room care, that's...

STEPHANOPOULOS: That may be, but it's still a tax increase.

OBAMA: No. That's not true, George.

You're correct that in 2012 SCOTUS ruled the penalty (which is what makes the purchase a "mandate" rather than a friendly request) a tax--it's the only way Congress has power to impose such a thing. It's simply amusing because of how hard the administration has pushed "it's not a tax!", then subsequently had to go to court and argue it was a tax.

then subsequently had to go to court and argue it was a tax

But even then they didn't really argue that it was a tax. The Obama administration argued that the penalty--and they definitely continued at that point to call it a penalty--was constitutional. There is an attenuated sense in which they claimed it was a "tax" at this point, in that they made an argument in the alternative that even if the penalty was otherwise inappropriate, it was permissible under Congress' taxation powers. That's the (stupid) argument Roberts seized on in seeking to preserve Obamacare, but until his decision came out, the "it's a tax" argument was widely regarded as pretextual at best. When I said that "essentially no one" thought of it as a tax, I don't mean "literally nobody floated this argument ever," I mean I was up to my eyeballs in debates (mostly with other lawyers) about this issue at the time and I just never encountered a serious and well-developed claim that the question turned on "it's a tax." This was surely in part because opponents wanted Obamacare to fail entirely, and proponents (like Obama himself) had very vocally insisted that it's not a tax.

But this is all a weirdly autistic tangent anyway, given that even if I just had a wildly idiosyncratic experience at the time, and you are totally correct that there was some substantial contingent of people who believed the penalty was a tax all along--then my warning about the weird directions SCOTUS might take the Minnesota case is all the more true.

the "it's a tax" argument was widely regarded as pretextual at best.

Again I'm gonna have to differ here, and I think the Stephanopoulos interview bears me out. George brought out a dictionary and Obama handwaved away the meaning of "tax", for gosh sake.

was up to my eyeballs in debates (mostly with other lawyers) about this issue at the time and I just never encountered a serious and well-developed claim that the question turned on "it's a tax."

What question, precisely? "Can Congress make people pay this" or "Is a penalty for inaction constitutional"? Because, if it's the latter, your lawyer friends missed the forest for the trees, I'd say.

this is all a weirdly autistic tangent

You know, I seem to be called/implied to be autistic fairly frequently online. Maybe I should get checked or something. Is there a test? To me, if it was important enough for you to use as a point in your post, it's important enough to warrant accuracy, or further exploration if needed. If we retcon the shit out of history, we can't learn much from it.

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The ACA tax/fine was presented from the start as a fine (a punishment) against those who chose not to purchase a product from an ostensibly private or nonprofit health insurance company. That’s blatantly illegal and unfair, and is one of the main reasons conservatives fought it so hard.

That the fine would be collected through the tax system was seen not as a clue to its true nature as a tax, but rather as a sign of a corrupt system which really wanted the money.

How are taxes different in their coercive nature from any other government action? Even in a direct democracy, if you are on the losing side of a vote you are coerced by the government to abide by the terms if the winning vote.

How are taxes different in their coercive nature from any other government action?

I mean, they're mostly not. I am very broadly in favor of government taking substantially less action than it does today.

Even in a direct democracy, if you are on the losing side of a vote you are coerced by the government to abide by the terms if the winning vote.

"Even in" is an interesting framing. Direct democracies are historically terrible for pretty much this exact reason. The strongest limiter on coercive action in the American tradition is individual rights. If the majority votes to kill you, your fundamental right to life is supposed to cause the government to stand against the majority. Collective action is often likened to a deaf, dumb, blind leviathan, overwhelming in its capacity to destroy individual lives and insensitive to the nuances of individual human existence. We erect such leviathans out of a sense that our individual lives may be better protected thereby (if nothing else, from the leviathans constructed by others), but the idea that they have great potential to get out of control has led to the Western tradition of hobbling those leviathans in various ways.

Taxation is just one way in which the leviathan extracts sustenance from its constituent members. Some taxation is presumably inevitable; at minimum, the provisioning of a stable financial system seems like something people participating in that system should be willing to support through taxation of one kind or another. Likewise the maintenance of military and police protection. Anything that plausibly benefits everyone in a country more-or-less equally is at least simpler to justify as an expense worth occasional coercion of the recalcitrant; robbing the collective Peter to benefit selective Pauls, on the other hand, is quite difficult to justify on any moral grounds that respect individual rights. (Importantly, utilitarianism does not respect individual rights, Bentham himself regarded rights as nonsense, and this is the central critique of utilitarianism as a moral system.)

Your celebration of individual rights seems to me, however, to be just a different shade of pink. When individuals' understanding of their rights differ, either the more powerful of the differers or some other more powerful authority (like a government) will assign an outcome, and coerce the other (or both) to abide by the decision. I'm not sure which of these two is the greater moral failing.

I'm not sure which of these two is the greater moral failing.

It's not at all clear to me that they are even commensurable. "The Government" is just other people, ultimately. Diffusion of responsibility can create the illusion that the individuals acting on the government's behalf are somehow insulated from blame for morally impermissible activities, but anyone who has seen A Few Good Men knows how thin that illusion can be.

When individuals' understanding of their rights differ, at least one of those people is probably wrong. The realpolitik (or what are sometimes called the "facts of power") are a different consideration; you are right that powerful individuals or groups will often simply impose a view, but that doesn't make it the morally correct view. And often, powerful individuals or groups will regard themselves as bound by morality in ways that are not explainable on the reductive account you've offered here. Your concern has been expressed since ancient times (e.g. Thrasymachus in Republic), and very few moral theorists find it compelling, because it does not appear to capture the way that most people experience morality.

What then does make a morally correct view? And, assuming such a circumstance can or does exist, who is to recognize it? I also don’t see why it follows that one person is likely morally wrong (in some objective or universal sense) when two disagree on their rights. It’s as likely, it seems to me, that they could both be wrong, or both be right based on incomplete information.

Sticking just to the constitution of the us (including the bill of rights), I’m not persuaded that even all signatories agreed what it meant. And that’s an arbitrary, defined set of rights and relationships. I happen to agree with a particular interpretation of much of it, partly due to conditioning and partly to sharing certain values with some of the drafters (could also be due to conditioning, tough to tell). But my interpretations differ widely from many others. Have so far been unable to persuade a sufficiently powerful group to my point of view, and so I remain coerced into abiding by understandings with which I disagree. Is this a moral outcome? How am I alone to determine that? How are you and I? How are we as a polity?

You appear to mostly be asking the basic questions of moral realism versus moral relativism. A majority of philosophers either accept or lean toward moral realism. A big reason for this, I think, is that retreating to moral relativism is like the original motte-and-bailey. It's the kind of thing people say when they feel like they are losing an argument about morality. But if someone starts torturing you, or tries to enslave you, or steals your precious belongings, or otherwise wrongs you, it would be very surprising if your reaction were simply, "eh, who even knows how to do morality, really? Maybe they're doing the right thing, by torturing me for their own amusement." In fact there is a very high chance that, if you thought it might change their activity, and maybe even if you had your doubts about that, you would try to reason with them, in part by appealing to morals. So it is no accident that, for thousands of years now, there has been very broad agreement among people thinking about these matters carefully that ethics is first and foremost grounded in human reasoning.

I'm not saying that this makes the answers easy, or that it makes the answers uncontested, and most of the time those answers are rooted quite deeply in the human condition, so it would be a mistake to assume they are definitely universal in nature, even if they are broadly applicable to humankind. But there is absolutely nothing arbitrary about this process. Powerful people do act to subvert it, but there has never in history been a shortage of criticism of people in power!

I also don’t see why it follows that one person is likely morally wrong (in some objective or universal sense) when two disagree on their rights. It’s as likely, it seems to me, that they could both be wrong

Yes, "at least one of those people is wrong" also means both could be wrong.

both be right based on incomplete information.

No, this is not how "being right" works. If you would be right if you had all the information, but you don't have all the information and you are wrong, then you are still wrong. (You might lack all the information and accidentally be right, but then you're just lucky.) This is just how truth works.

But now that you've removed the discussion from the actual issues and retreated into simple relativism, you've stopped expressing any points (and essentially claimed that there is no way for us to reason to a shared understanding) because moral relativism is in fact a thought-terminating cliche. If you really do accept it, then I have no way of persuading you, and you have no way of persuading me, so it's not clear why you're even talking to me about it. I have reason to talk to you, of course--I believe you actually don't believe what you've suggested here that you believe. But if I'm wrong (as I may well be!) and you're right, then your own judgment on the matter is irrelevant, and the only point of substance you can really contribute here is to discourage substantive conversation. I'm not interested in continuing that conversation, as it seems to me that it can only either be false, or true but both useless and boring.

No, this is not how "being right" works. If you would be right if you had all the information, but you don't have all the information and you are wrong, then you are still wrong. (You might lack all the information and accidentally be right, but then you're just lucky.) This is just how truth works.

This mischaracterizes my statement. I meant, right based on the available information. There is no speculative conditional embedded there. And, as a practical matter, there is always incomplete information, and always, two minds will interpret the same information differently. In the case where their capacity and approach to logic is identical and without error, they may still reach opposing conclusions. They are nevertheless both "right."

You seem to have sidestepped my question, which was not “are morals relative,” or even, “why do you believe in moral absolutes.”

It was rather, how do individuals and groups determine morals? This is also not a question about politics, but rather procedural. I don’t think your answer would be “long tradition,” but I guess it could be. That runs counter to your confession if individual rights, however, as many groups across the world, often in the minority, have lengthy traditions different from Europe’s.

For example, certain Buddhist traditions would, in fact, hold that allowing torture of oneself is a moral imperative.

FWIW, I certainly don’t feel like I am losing a debate, or even having one. I’m simply asking clarifying questions about assertions of yours that seem presumptive. I do appreciate your engagement.

I will push back on one thing though. If the basis of your belief in “moral realism” is simply long tradition, I don’t see how thousands of years is sufficient. Humanity has been around for much longer. And I can’t think of any moral that is universal and also divorced from economics. Perhaps you can provide an example? Maybe involuntary euthanasia of old people? Not sure that goes back much before the Hebrews in the western tradition, nor has it ever been universal.

Another way to ask my question might be, what is the standard against which you measure moral truth, and where does it come from?

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