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Tuesday, June 12, 2012

Property Taxes: Property at Risk

Thirty years after Californians shrank their property taxes by passing Proposition 13, the same question faced the people of North Dakota as they voted on whether to eliminate their property taxes entirely. In an interesting twist, the debate on the tax incorporated a human-rights dimension that is rarely brought into debates in the American republics.

In addition to pointing to the budget surplus enjoyed by the Government of North Dakota at the time as well as to the unpredictableness of the tax and its inconsistencies, the proponents of a constitutional amendment to prohibit a property tax argued that it is contrary to the concept of property ownership. Beyond property rights, however, the advocates pointed to a human right to shelter irrespective of wealth or income. “I would like to be able to know that my home, no matter what happens to my income or my life, is not going to be taken away from me because I can’t pay a tax,” said Susan Beehler, a member of the group that was pushing for the amendment. The American republics are as it were joined at the hip, so it is no surprise that, Jim Cox, a representative in the Pennsylvania legislature’s lower chamber chimed in by declaring, “No tax should have the power to leave you homeless.” The implication is that having a home is a human right that even a government ought not be able to take away.

There is reason for concern as long as one’s house is subject to one’s wealth. For one thing, a large part of one’s net worth is in the equity-value of one’s house—such value being subject to the wax and wane of the market. According to the Federal Reserve, the medium amount of home equity dropped to $75,000 from $110,000 in 2007 (adjusted for inflation). More generally, the economic crisis of 2008 left the medium American family in 2010 with no more wealth than in the early 1990s. Medium family income fell to $45,800 in 2010 from $49,600 in 2007 (adjusted for inflation). With less of a cushion, should a homeowner lose his or her job, less home equity would translate into more difficulty in getting a loan (or being cut off from even being able to borrow to survive a brief period of unemployment). 

Therefore, housing viewed as not just a property-right, but moreover as a human right (i.e., not to be homeless), is incompatible with the precariousness that goes with treating one’s house as not only a commodity subject to market forces, but also a significant part of one’s wealth. A vicious circle can be engaged that leaves one as though drowning in a whirlpool without a life-preserver.  If nothing should have the power to leave one homeless, our concept of housing must go even beyond our concept of private property to be based in a doctrine of human rights—a concept rather foreign in North America. Paradoxically, a constitutional amendment that would remove one’s house from the government’s (as well as any private company’s or bank’s) grasp would proffer citizens more security (and thus happiness) than even a full-fledged notion of private property (rights), for the right of property—unlike a constitutional amendment—depends on government and is thus subject to eminent domain. To be sure, a competitive market is well-suited to distributing non-necessity commodities, but human rights trumps even economic efficiency (or its ideology). I find it odd that this notion is so foreign in the American states, while it is almost taken for granted in the European states.


Monica Davey, “North Dakota Considers Eliminating Property Tax,” The New York Times, June 11, 2012. 

Binyamin Appelbaum, “Family Net Worth Drops to Level of Early ‘90s, Fed Says,” The New York Times, June 11, 2012.