Most of the time, claims that taxation is “theft” are esoteric. Minnesota, however, has been working to perfect a form of taxation that is hard to describe any other way.
Geraldine Tyler, a 94-year-old grandmother, owned a condo in Minneapolis. Concerned about her safety in the city, Tyler moved in 2010 to an apartment in a senior living center. However, she was unable to afford the rent on this apartment as well as her property taxes on her Minneapolis condo. By 2015, the back taxes on her condo had reached $2,300, though penalties, interest and fees drove her total liability up to $15,000.
Hennepin County, Minnesota, where Tyler’s Minneapolis condo was located, responded by seizing the condo to cover Tyler’s unpaid debt. A year later, the county sold the condo for $40,000.
Now, in this situation, most governments would pocket the $15,000 to pay off Tyler’s tax debt and refund her the remaining $25,000. Not Hennepin County. Hennepin County took not only the $15,000 it was owed, but the entire value of the sale. Just $2,300 in property tax assessments had ballooned into a $40,000 windfall for Hennepin County. Turns out taking candy from a baby is small-time stuff — the real profit comes from taking home equity from grandmothers.
Hennepin County isn’t the only Minnesota county where residents are in danger of becoming victims of home equity theft, as Minnesota state law allows counties to engage in this practice. Between 2014 and 2020, more than 1,200 family homes were seized by Minnesota counties, with the victims having an average of more than 92 percent of their home equity stolen — over an average tax debt of $17,000, these 1,200 Minnesota families lost an average of $207,000 in home equity.
Fortunately, Tyler isn’t taking this lying down. Represented by the Pacific Legal Foundation, Tyler has taken her fight over this $25,000 theft all the way to the Supreme Court, which has agreed to take up the case. A ruling in Tyler’s favor would set an important precedent that unpaid tax liabilities do not entitle governments to take whatever they please.
And the constitutional arguments are very much on Tyler’s side. While governments like Hennepin County have the ability to resort to remedial action to recover unpaid tax liabilities, there are two protections enshrined in the Constitution against schemes to translate this into a blank check.
The first is the Fifth Amendment’s “takings clause,” which reads: “nor shall private property be taken for public use, without just compensation.” The theft of Tyler’s remaining $25,000 in home equity beyond her unpaid tax liability is a rather blatant violation of this protection, as she received no compensation at all, let alone “just compensation.”
The other protection afforded taxpayers is the Eighth Amendment. Better known for protecting Americans against “cruel and unusual punishment,” the Eighth Amendment also protects taxpayers from “excessive fines.” Effectively charging Tyler $40,000 for a $15,000 tax liability violates this provision as well, especially considering that that $15,000 figure already factors in penalties and interest — the original unpaid tax liability was just $2,300.
The Court has an opportunity to send a strong signal that taxpayers do not lose their rights merely by falling behind on tax payments. Such a reminder would go a long way towards forcing certain recalcitrant tax authorities to view taxpayers as people, not revenue sources.