In 2010, alarmed by neighborhood disorder, Tyler, retired and living alone, moved from her Minneapolis condominium to a senior living center. She neglected to pay taxes on her one-bedroom condominium, and by 2015 the $2,300 due in back taxes — combined with penalties, interest and fees — brought her liability to $15,000. The county seized and sold her property for $40,000. Tyler is not challenging the propriety of the seizure or sale, but of the county’s home equity theft. Instead of returning $25,000 to her, the government, in a common act of legalized self-dealing, kept $25,000, to distribute to government entities.
Minnesota governments began doing this under a Depression-era (1936) delinquent-property-tax-forfeiture statute enacted when governments were, even more than usual, ravenous for revenue. As Tyler’s lawyers note, between 2014 and 2021 at least 1,350 Minnesotans lost their homes and equity averaging $155,000 per home. This is many times the average tax liability. Nebraska took a $1 million farm after a widow missed an $8,276 tax bill when she was moved to a retirement home. Such predatory forfeiture is done by a dozen states and the District of Columbia, which took the $200,000 home from a man with dementia and a $133 tax debt. (Michigan has mostly mended its ways since a county pocketed $24,500 from the sale of an octogenarian’s home seized because of his $8.41 tax underpayment, and a court frowned on government’s unbounded power to confiscate.)
Centuries of Anglo-American legal tradition, common law and Minnesota law recognize home equity as private property. The Supreme Court has noted that Magna Carta (1215) stipulated that tax collectors could seize property to acquire only the value of the tax bill. The court has held that the Fifth Amendment’s guarantee that property shall not be taken for public use without “just compensation” makes no “distinction between different types” of property, and that this takings clause protects “every sort of interest the citizen may possess” in a “physical thing.” And prior to Minnesota’s enactment of the 1936 law, the state’s Supreme Court held that after the state’s lien is satisfied, “any surplus realized from the sale must revert to the owner.”
The county tormenting Tyler says Minnesota law “recognizes no property interest in surplus proceeds.” So, her property right is extinguished by nonrecognition? Worse, the Kafkaesque county says she has no compensable property interest because the county took her property. This is legal reasoning worthy of the Ring Lardner character: Shut up, he explained.
The Eighth Amendment (again, the pesky Bill of Rights) forbids “excessive fines.” The county says, in effect: So what? The $25,000 we took from Tyler was not a fine. To which Tyler’s lawyers say: Oh? What then was it? The sum taken from Tyler was so disproportionate to the injury she caused the county (which, anyway, was compensated by the penalties the county imposed), the draconian $25,000 taking can only be explained as having a retributive or deterrent purpose — that is, punishment. So, if it is not a fine, what is it? And, if it is a fine, it obviously is excessive.
The county pointlessly (Tyler is not contesting the county’s right to tax) quotes some 1899 nonsense from the Supreme Court: The “power to tax is the one great power upon which the whole national fabric is based.” Good grief. The national fabric is based not on a government power but on the doctrine of natural rights that limits government power. This is the credo of the Pacific Legal Foundation, which is representing Tyler.
Fifty years ago, the PLF became the nation’s first freedom-defending public interest law firm, whose litigation focuses on property rights, equality and opportunity, and separation of powers. It has won 15 of the 17 cases it has hitherto taken to the highest court. With Wednesday’s home equity theft case, and with two other cases heard last fall, the PLF has 5 percent of the court’s docket this term. Little platoons like PLF exist to make government’s big battalions be nice to people like Geraldine Tyler.
