If would be difficult to lose in a more thoroughgoing rout at the Supreme Court than Hennepin County, Minn., did Thursday morning. The county, which is home to the city of Minneapolis, took the position that it was not just entitled to seize a 94-year-old woman’s home (a condominium) to pay a tax bill, but was entitled to sell the home at a profit and keep more than twice as much money from the sale as the old lady owed in taxes. This, even though more than three-quarters of her tax bill was already penalties. The unpaid taxes amounted to $2,300, which came to $15,000 with penalties, but the county ended up taking the entire $40,000 price for which the home was sold. The Court, in an opinion by Chief Justice John Roberts, was unanimous: This was a taking of her property in violation of the Fifth Amendment. As Roberts pithily summarized: “A taxpayer who loses her $40,000 house to the State to fulfill a $15,000 tax debt has made a far greater contribution to the public fisc than she owed. The taxpayer must render unto Caesar what is Caesar’s, but no more.”
The biblical allusion is not accidental. Tax collectors were so reviled at the time of the Gospels not just because taxes are always unpopular, or because they were Jews who collaborated with the occupying Romans, but because they were notorious for shaking down taxpayers for more than they owed. Roberts further noted that the principle Hennepin County violated had essentially been settled in law since the Magna Carta:
The principle that a government may not take more from a taxpayer than she owes can trace its origins at least as far back as Runnymeade in 1215, where King John swore in the Magna Carta that when his sheriff or bailiff came to collect any debts owed him from a dead man, they could remove property “until the debt which is evident shall be fully paid to us; and the residue shall be left to the executors to fulfil the will of the deceased.” . . .
That doctrine became rooted in English law. . . . This principle made its way across the Atlantic. In collecting taxes, the new Government of the United States could seize and sell only “so much of [a] tract of land . . . as may be necessary to satisfy the taxes due thereon.” [citing a 1798 federal statute] Ten States adopted similar statutes shortly after the founding. . . . The consensus that a government could not take more property than it was owed held true through the passage of the Fourteenth Amendment. . . . Our precedents have also recognized the principle that a taxpayer is entitled to the surplus in excess of the debt owed. [citing Supreme Court decisions from 1881 and 1884].
It is unsurprising that this sort of thuggish and corrupt governance (abetted by the state of Minnesota, which conducted the sale) would be found in a deep-blue city that has to squeeze old ladies because it keeps chasing out its business tax base. Roberts was unrelenting in describing this as essentially a conspiracy of Minnesota and Hennepin County to apply a different set of rules to property taxpayers:
In collecting all other taxes, Minnesota protects the taxpayer’s right to surplus. If a taxpayer falls behind on her income tax and the State seizes and sells her property, “any surplus proceeds . . . shall . . . be credited or refunded” to the owner. . . . So too if a taxpayer does not pay taxes on her personal property, like a car. . . . Until 1935, Minnesota followed the same rule for the sale of real property. The State could sell only the “least quantity” of land sufficient to satisfy the debt . . . and “any surplus realized from the sale must revert to the owner.” . . . The State now makes an exception only for itself, and only for taxes on real property. But property rights cannot be so easily manipulated. . . . Minnesota may not extinguish a property interest that it recognizes everywhere else to avoid paying just compensation when it is the one doing the taking.
Minnesota’s scheme provides no opportunity for the taxpayer to recover the excess value; once absolute title has transferred to the State, any excess value always remains with the State. The County argues that the delinquent taxpayer could sell her house to pay her tax debt before the County itself seizes and sells the house. But requiring a taxpayer to sell her house to avoid a taking is not the same as providing her an opportunity to recover the excess value of her house once the State has sold it.
He also didn’t buy the state’s argument that a property has somehow been abandoned simply by falling behind on the property taxes:
Minnesota’s forfeiture scheme is not about abandonment at all. It gives no weight to the taxpayer’s use of the property. Indeed, the delinquent taxpayer can continue to live in her house for years after falling behind in taxes, up until the government sells it. . . . Minnesota cares only about the taxpayer’s failure to contribute her share to the public fisc. The County cannot frame that failure as abandonment to avoid the demands of the Takings Clause.
Given how easily the Court disposed of the defenses to the takings claim, it didn’t reach the issue of whether this scheme also violated the Eighth Amendment’s excessive-fines clause. But Justices Neil Gorsuch and Ketanji Brown Jackson — a pair one rarely sees together — wrote separately to suggest that the Eighth Amendment claim was also more serious than the treatment it had been given in the lower courts.