Each year, the Edmondson Community Organization (ECO)—a nonprofit in Baltimore dedicated to revitalizing the city's Midtown-Edmondson area—reviews an obscure list of properties released by the government. The task is to see how many are situated within the organization's neighborhood boundaries. The fewer, the better.

The owners of the properties that do appear have fallen behind on their property taxes and, as a result, are poised to lose their real estate in an annual tax sale conducted by the government. After poring over the list, the ECO knocks on those doors to deliver the queasy news and alert the occupants to what is about to happen.

The issue is one ECO knows intimately. A few years back, the organization accrued a $2,543 property tax debt on its community center. So in 2018, the city sold that lien for $5,115 to a California-based investor, who then foreclosed on and sold the ECO's building for $139,500. In return, the ECO got a check for the difference between its debt and the lien purchase price: $2,572.

In other words, all told, the organization paid six figures to compensate for the $2,543 it owed the government, in what a new federal lawsuit alleges is a pervasive practice in Baltimore that illegally deprives people of their equity in violation of the Fifth Amendment's Taking Clause as the city attempts to satisfy modest tax debts.

Every spring, Baltimore bureaucrats conduct a mass auction online to sell off liens like the ECO's. Sometimes the unlucky debtors have fallen just hundreds of dollars behind on their taxes.

For that, they may lose their property and the vast majority of equity tied up in it. Following an investor's purchase, an owner has a certain period to satisfy the amount of the lien, along with interest and fees, to keep their property. That's a tall order when considering these parties were struggling to pay the original debt, much less the new total, which has since ballooned. In the case that debtors are unsuccessful, the investor has effectively purchased the property for the amount they paid for the lien.

In the ECO's case, that meant an investor bought their building for about 2,600 percent less than what it ultimately sold for. The ECO, in turn, was left with a fraction of what their property was worth.

That Baltimore's process robs property owners of huge chunks of equity is not just a regrettable side effect, the ECO's lawsuit alleges; it's baked into the nature of the city's approach. "The City understands there that there is a finite pot of investor capital available to purchase all the liens," reads the complaint. "This creates a perverse incentive for the City to minimize the winning bids"—a.k.a. to depress prices—"to spread that finite pot across the highest number of liens." 

Some of the moving parts of Baltimore's approach do seem to imply that the government is not merely unconcerned with owners retaining some of their equity but that they are actively seeking to keep bids low. The more glaring examples included in the ECO's suit show that the city charges a high-bid premium that punishes investors making offers above a certain threshold and opts to fulfill the law's advertising requirement in part by listing properties in The Daily Record, a business and legal newspaper that is not targeted at the general community. (The ECO says this violates state law, which stipulates that such a sale must be advertised twice in general-circulation newspapers.)

"There's a limited amount of investor money out there," says Maryland Legal Aid's chief legal and advocacy director Somil Trivedi, who is representing the ECO, "and the city has structured a system to spread that money across as many liens as possible instead of getting as much equity back for their citizens."

The ECO is not alone, according to the suit, but is one of many victims. You don't have to travel far to find others. "In the same tax sale in which a bidder purchased a lien on ECO's building, 68 properties in Midtown-Edmondson were also subject to the tax sale," states its complaint. "The winning bids on those properties totaled only 22% of the assessed value of the properties—a dramatic loss of generational wealth for the owner of each Midtown-Edmondson property that was lost in the sale."

Home equity theft, as it's sometimes called, was once an obscure issue limited to discussion in magazines like this one. But last year it took the national stage when the Supreme Court ruled unanimously in Tyler v. Hennepin County that a local government had violated the Constitution when it seized an elderly woman's condo over a modest tax debt, sold it, and kept the profit. Geraldine Tyler, the plaintiff in that suit, had fallen $2,300 behind on her taxes, which ultimately reached $15,000 after Hennepin County tacked on penalties, interest, and fees. The government then sold the condo for $40,000 and kept the additional $25,000.

While the ECO's situation isn't entirely analogous to Tyler's—the organization was paid something—Baltimore's scheme could still very well be unconstitutional, says Christina M. Martin, a senior attorney at Pacific Legal Foundation who represented Tyler before the Supreme Court. "If the procedure that you're using to sell the property is designed in a totally unreasonable manner, then obviously people are going to still get robbed of more than what they owe," she tells me. "There's a longstanding history of courts overturning sales that have a shocking result like [the ECO's]."

Tyler, in theory, should have put an end to stories like these. But the lawsuit out of Baltimore comes as some other jurisdictions have devised creative ways to comply with the law on its face but not really in practice. After Michigan's Supreme Court ruled the practice unconstitutional, for example, the state passed a convoluted debt collection statute that requires owners to complete a Herculean legal obstacle course to reclaim their equity. It is a difficult course to win.

"It is the government's choice in the first place to collect property taxes, to decide what regime they want to use to enforce the collection of those property taxes, and so it can't then complain that the regime that it chose to engage in for an amount of money that it chooses to collect is then too difficult to do constitutionally," says Trivedi. "There are lots of jurisdictions around the country that do it differently. Some don't even have tax sales. Some have much longer periods of negotiation and payment plans….Municipalities around the country have figured out ways to collect taxes without doing it unconstitutionally."

The post Baltimore's Tax Sales Are Robbing People of Their Equity appeared first on Reason.com.

Republican vice presidential nominee J.D. Vance has been in the news for an old clip of him talking about how the tax code should punish adults without kids. While Vance's proposal probably aims to address demographic concerns, it represents a misguided approach that contradicts fundamental principles of economic freedom and fairness.

And you know what? That's precisely what our tax code already does, in this case and many others.

Using the tax code to "reward" parents and "punish" nonparents is at odds with the idea of a neutral, efficient tax system. In an ideal and fair world, the tax base would be broad but taxed at a low rate. People making the same income should be paying the same level of taxes no matter how they choose to live their lives.

Unfortunately, the tax code is neither fair nor neutral. It punishes and rewards all sorts of behaviors based on what government officials decide is good or bad.

For instance, the tax code does, in fact, treat people with kids more favorably than it treats those who do not have kids.* There's the child tax credit, of course. Then there's the earned income tax credit, which is more generous for families with children than those without. And there is no shortage of other provisions, such as a very significant deduction for heads of households and another for dependent care, which do the same thing.

It's hard to know what Vance's proposal really entails. Does he want another surtax on childless parents? Does he want to expand the child tax credit and make it a universal basic income like many conservatives and progressives want? It's also unclear whether he is simply failing to see that our tax code already delivers on his wishes and punishes childless adults. Either way, I assume he is well intentioned and that he is rightfully concerned about the decline in fertility we are witnessing not just in this country but across the world.

Unfortunately, punishing childless parents with additional taxes wouldn't boost fertility. For one thing, we've had a child tax credit since the 1990s, and the tax break has been regularly extended. That hasn't encouraged people to have more kids.

That's not unique to the child tax credit. Lots of evidence exists showing that government programs of all sorts meant to encourage, reward, or stimulate the supply of babies usually fail. One of the most dramatic examples is South Korea. The country has spent over $200 billion on such policies over the past 16 years, and fertility rates are still falling.

There isn't any doubt that more people, and hence more babies, are a boon for our lives and our economy. But that alone isn't a good reason for government subsidies. And while raising kids is expensive, that's no justification for a government tax break, either.

Besides, careful studies have shown the cost of raising a child in America has been decreasing for six decades. In the end, rather than rewarding families with lesser taxes at the expense of childless adults, I would encourage advocates to focus on removing existing government barriers—like overzealous policies that make child care more expensive without making kids measurably safer—that make life more complicated for families.

Ultimately, these are only secondary aspects of a much bigger debate. Our tax code is incredibly unfair. It's not just childless adults that face a surcharge compared to parents. Tax breaks for homeowners mean that renters pay more money for the same amount of housing. Households which include a college student pay less in taxes. People who can afford an electric vehicle can secure a tax break that others cannot.

These tax breaks for some are not just unfair to the taxpayers who don't get them—they also turn our tax code into a complicated mess that requires many millions of collective hours to comply with. Instead of adding more complexity and bias, we should be moving in the opposite direction—toward a simpler, flatter, and more neutral code that treats all taxpayers equally.

Using the tax code as a tool for social engineering is misguided. It leads to economic inefficiencies and infringes on individual liberty. Rather than doubling down on the problematic aspects of our current system, we should be working toward comprehensive reform. Only then can we hope to see taxes as something that truly serves the interests of all Americans, regardless of their personal choices.

COPYRIGHT 2024 CREATORS.COM

*CORRECTION: The original version of this article misstated in part who benefits more from the current tax code.

The post J.D. Vance Wants To Control You With Taxes appeared first on Reason.com.

A federal court yesterday heard arguments in an appeal concerning an area of law that, while niche, has seen a streak of similarly situated plaintiffs pile up in recent years. At stake: When a SWAT team destroys an innocent person's property, should the owner be strapped with the bill?

There is what I would consider a commonsense answer to that question. But in a reminder that common sense does not always guide law and policy, that is not the answer reached by several courts across the U.S., where such victims are sometimes told that "police powers" provide an exception to the Constitution's promise to give just compensation when the government usurps property for public use.

It remains to be seen where the U.S. Court of Appeals for the 6th Circuit will fall as it evaluates the complaint from Mollie and Michael Slaybaugh, who are reportedly on the hook for over $70,000 after a SWAT team destroyed much of their home in Smyrna, Tennessee.

In January 2022, Mollie Slaybaugh stepped outside her house and was greeted by a police officer with his gun drawn. She was informed that her adult son, James Jackson Conn—who did not live with her but had recently arrived to visit—was wanted for questioning concerning the murder of a police officer, which she says was news to her. Although she offered to speak to Conn and bring him out of her house, law enforcement declined to permit that, or to let her re-enter at all, so she went to stay at her daughter's house nearby.

The next day, police broke down the door and launched dozens of tear gas grenades into the Slaybaughs' home, laying waste to nearly everything in the house. Their insurance declined to assist them, as their policy—like many policies—does not cover damage caused by the government. Yet both Smyrna and Rutherford County said they were immune from helping as well.

But despite Mollie Slaybaugh's offer to coax Conn out sans tear gas, her complaint does not dispute that it was in the best interest of the community for law enforcement to do as they did that day. It merely contests the government's claim that innocent property owners should have to bear the financial burden by themselves when police destroy their homes in pursuit of a suspect.

"Law enforcement is a public good. Through our taxes, we pay for the training, equipment, and salaries of police officers. We pay to incarcerate criminals. We pay for a court system and public defenders," reads her complaint. "When the police destroy private property in the course of enforcing the criminal laws, that is simply another cost of law enforcement. Forcing random, innocent individuals to shoulder that cost alone would be as fair as conducting a lottery to determine who has to pay the police chief's salary each year."

That hypothetical is absurd. And yet the spirit of it is at the heart of several court decisions on the matter. That includes the U.S. District Court for the Middle District of Tennessee, which ruled last year that the Slaybaughs were not entitled to a payout because, in the court's view, the Takings Clause of the Fifth Amendment does not apply when the state seizes and destroys someone's property in the exercise of "police powers."

The Slaybaughs are unfortunately not alone. The notion that "police powers" immunize the government from liability is what doomed Leo Lech's lawsuit, which he filed after a SWAT team did so much damage to his home—in pursuit of a suspect that broke in and had no relation to the family—that it had to be demolished. In 2020, the Supreme Court declined to hear the case.

Similar claims are continuing to accumulate. The city of Los Angeles refused to compensate Carlos Pena after a SWAT team destroyed his North Hollywood print shop in pursuit of a suspect who barricaded himself inside, and the government in McKinney, Texas, turned away Vicki Baker after police ruined her home and much of its contents while, again, trying to catch a fugitive. After a legal odyssey of sorts, Baker was able to secure a judgment from a federal jury—though that was ultimately overturned by the U.S. Court of Appeals for the 5th Circuit, which ruled there was a "necessity" exception to the Takings Clause. Most recently, the local government in South Bend, Indiana, rejected Amy Hadley's pleas for help after police mutilated her home in search of a suspect she'd never met and who'd never been to her home. An officer's botched investigation led law enforcement to her house, and she has been forced to pay the price of that blunder. Accountability should not just be for the little people.

"The plain text of the Just Compensation Clause contains no exemptions for the police power, for public necessity, or for damage done by law enforcement. And the government bears the burden of establishing that any such exception is grounded in our nation's history and tradition," Jeffrey Redfern, an attorney with the Institute for Justice representing the Slaybaughs, told the 6th Circuit yesterday. "But the government hasn't even tried to meet that burden. Instead it asks this court to blindly follow decisions from other jurisdictions—decisions whose reasoning the government isn't really defending."

In some sense, the government is throwing what it can at the wall to see what sticks. And a fair amount of nonadhesive material is successfully latching on—an exception to the laws of nature that few entities other than the government could reasonably hope to enjoy.

The post A SWAT Team Blew Up This Innocent Couple's Home and Left Them With the Bill. Was That Constitutional? appeared first on Reason.com.

The Los Angeles Press Club on Thursday announced the finalists for the 66th Annual Southern California Journalism Awards, recognizing the best work in print, online, and broadcast media published in 2023.

Reason, which is headquartered in L.A., is a finalist for 14 awards.

A sincere thanks to the judges who read and watched our submissions, as well as to the Reason readers, subscribers, and supporters, without whom we would not be able to produce impactful journalism.

Senior Editor Elizabeth Nolan Brown is a finalist for best technology reporting across all media platforms—print, radio, podcast, TV, and online—for her November 2023 print piece, "Do Social Media Algorithms Polarize Us? Maybe Not," in which she challenged what has become the traditional wisdom around the root of online toxicity:

For years, politicians have been proposing new regulations based on simple technological "solutions" to issues that stem from much more complex phenomena. But making Meta change its algorithms or shifting what people see in their Twitter feeds can't overcome deeper issues in American politics—including parties animated more by hate and fear of the other side than ideas of their own. This new set of studies should serve as a reminder that expecting tech companies to somehow fix our dysfunctional political culture won't work.

Science Reporter Ronald Bailey is a finalist for best medical/health reporting in print or online for "Take Nutrition Studies With a Grain of Salt," also from the November 2023 issue, where he meticulously dissected why the epidemiology of food and drink is, well, "a mess":

This doesn't mean you can eat an entire pizza, a quart of ice cream, and six beers tonight without some negative health effects. (Sorry.) It means nutritional epidemiology is a very uncertain guide for how to live your life and it certainly isn't fit for setting public policy.

In short, take nutrition research with a grain of salt. And don't worry: Even though the World Health Organization (WHO) says "too much salt can kill you," the Daily Mail noted in 2021 that "it's not as bad for health as you think."

Managing Editor Jason Russell is a finalist in print/online sports commentary for his August/September 2023 cover story, "Get Your Politics Out of My Pickleball," which explored the emerging fault lines as the government gets involved in America's weirdest, fastest-growing sport:

Pickleball will always have haters—and if its growth continues, local governments will still face public pressure to build more courts. Some critics think the sport is a fad, but strong growth continues for the time being, even as the COVID-19 pandemic ends and other activities compete for time and attention. There's no need to force nonplayers to support it with their tax dollars, especially when entrepreneurs seem eager to provide courts. If pickleball does end up as an odd footnote in sporting history, ideally it won't be taxpayers who are on the hook for converting courts to new uses.

Reporter C.J. Ciaramella is a finalist in magazine investigative reporting for his October 2023 cover story, "'I Knew They Were Scumbags,'" a nauseating piece on federal prison guards who confessed to rape—and got away with it:

Berman's daughter, Carleane, was one of at least a dozen women who were abused by corrupt correctional officers at FCC Coleman, a federal prison complex in Florida. In December, a Senate investigation revealed that those correctional officers had admitted in sworn interviews with internal affairs investigators that they had repeatedly raped women under their control.

Yet thanks to a little known Supreme Court precedent and a culture of corrupt self-protection inside the prison system, none of those guards were ever prosecuted—precisely because of the manner in which they confessed.

Senior Editor Jacob Sullum is a finalist in magazine commentary for "Biden's 'Marijuana Reform' Leaves Prohibition Untouched," from the January 2023 issue, in which he disputed the notion that President Joe Biden has fundamentally changed America's response to cannabis:

By himself, Biden does not have the authority to resolve the untenable conflict between state and federal marijuana laws. But despite his avowed transformation from an anti-drug zealot into a criminal justice reformer, he has stubbornly opposed efforts to repeal federal pot prohibition.

That position is contrary to the preferences expressed by more than two-thirds of Americans, including four-fifths of Democrats and half of Republicans. The most Biden is willing to offer them is his rhetorical support for decriminalizing cannabis consumption—a policy that was on the cutting edge of marijuana reform in the 1970s.

Editor in Chief Katherine Mangu-Ward is a finalist for best magazine columnist for "Is Chaos the Natural State of Congress?" from the December 2023 issue, "Don't Just Hire 'Better Cops.' Punish the Bad Ones," from the April 2023 issue, and (a personal favorite) "Bodies Against the State," from the February 2023 issue:

Governments do unconscionable things every day; it is in their nature. But not all transgressions are equal. In the wake of the Iran team's silent anthem protest, an Iranian journalist asked U.S. men's soccer captain Tyler Adams how he could play for a country that discriminates against black people like him. What makes the U.S. different, he replied, is that "we're continuing to make progress every day."

The most perfect and enduring image of a person weaponizing his body against the state was taken after the brutal suppression of protests in Tiananmen Square in 1989. The unknown Chinese man standing in front of a tank didn't have to hold a sign for the entire world to know exactly what the problem was.

Reporter Christian Britschgi is a finalist for best long-form magazine feature on business/government for "The Town Without Zoning," from the August/September 2023 issue, in which he reported on the fight over whether Caroline, New York, should impose its first-ever zoning code:

Whatever the outcome, the zoning debate raging in Caroline is revealing. It shows how even in a small community without major enterprises or serious growth pressures, planners can't adequately capture and account for everything people might want to do with their land.

There's a gap between what zoners can do and what they imagine they can design. That knowledge problem hasn't stopped cities far larger and more complex than Caroline from trying to scientifically sort themselves with zoning. They've developed quite large and complex problems as a result.

Associate Editor Billy Binion (hi, it's me) is a finalist for best activism journalism online for the web feature "They Fell Behind on Their Property Taxes. So the Government Sold Their Homes—and Kept the Profits," which explored an underreported form of legalized larceny: governments across the U.S. seizing people's homes over modest tax debts, selling the properties, and keeping the surplus equity.

Geraldine Tyler is a 94-year-old woman spending the twilight of her life in retirement, as 94-year-olds typically do. But there isn't much that's typical about it.

Tyler has spent the last several years fighting the government from an assisted living facility after falling $2,300 behind on her property taxes. No one disputes that she owed a debt. What is in dispute is if the government acted constitutionally when, to collect that debt, it seized her home, sold it, and kept the profit.

If that sounds like robbery, it's because, in some sense, it is. But it's currently legal in at least 12 states across the country, so long as the government is doing the robbing.

Senior Producer Austin Bragg, Director of Special Projects Meredith Bragg, Producer John Carter, and freelancer extraordinaire Andrew Heaton are finalists for best humor/satire writing across all broadcast mediums—TV, film, radio, or podcast—for the hilarious "Everything is political: board games," which "exposes" how Republicans and Democrats interpret everyone's favorite games from their partisan perspectives. (Spoiler: Everyone's going to lose.)

The Bragg brothers are nominated again in that same category—best humor/satire writing—along with Remy for "Look What You Made Me Do (Taylor Swift Parody)," in which lawmakers find culprits for the recent uptick in thefts—the victims.

Deputy Managing Editor of Video and Podcasts Natalie Dowzicky and Video Editor Regan Taylor are finalists in best commentary/analysis of TV across all media platforms for "What really happened at Waco," which explored a Netflix documentary on how the seeds of political polarization that roil our culture today were planted at Waco.

Editor at Large Matt Welch, Producer Justin Zuckerman, Motion Graphic Designer Adani Samat, and freelancer Paul Detrick are finalists in best activism journalism across any broadcast media for "The monumental free speech case the media ignored," which made the case that the legal odyssey and criminal prosecutions associated with Backpage were a direct assault on the First Amendment—despite receiving scant national attention from journalists and free speech advocates.

Associate Editor Liz Wolfe, Senior Producer Zach Weissmueller, Video Editor Danielle Thompson, Video Art Director Isaac Reese, and Producer Justin Zuckerman are finalists in best solutions journalism in any broadcast media for "Why homelessness is worse in California than Texas," which investigated why homelessness is almost five times as bad in the Golden State—and what can be done about it.

Finally, Senior Producer Zach Weissmueller, Video Editor Danielle Thompson, Video Art Director Isaac Reese, and Audio Engineer Ian Keyser are finalists in best documentary short for "The Supreme Court case that could upend the Clean Water Act," which did a deep dive into a Supreme Court case concerning a small-town Idaho couple that challenged how the Environmental Protection Agency defines a "wetland"—and what that means for property rights.

Winners will be announced on Sunday, June 23 at the Millennium Biltmore Hotel in downtown Los Angeles. Subscribe to Reason here, watch our video journalism here, and find our podcasts here.

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