MauledAgain

Sometimes when a problem appears to have been solved, it turns out that the problem hasn’t been solved because a way is found to circumvent the solution. Why would this happen? It happens when the solution gets in the way of those who benefit from the problem. In other words, sometimes what is a problem for some is a windfall for others and thus the solution to the problem becomes an obstacle to obtaining the windfall. In turn, attempts are made to bypass the solution in order to continue obtaining the windfall.

One situation in which this problem-solution conundrum often pops up is when a property owner fails to pay real property taxes, the taxing jurisdiction causes the property to be sold, and the property owner loses whatever equity the property owner had in the property.

Five years ago, in Who Gets Surplus Proceeds From a Tax Sale?, I explained that the Michigan Supreme Court issued a decision in a case involving the sale of a property on which the real property taxes had been unpaid. A Michigan statute permitted the taxing jurisdiction to retain any excess of the selling price of the property over the amount of unpaid taxes, interest, fees, and costs. The Michigan Supreme Court held that permitting the taxing jurisdiction to retain more than the unpaid taxes, interest, fees, and costs violated the Michigan Constitution. Michigan was one of about twelve states with that sort of statute and I noted that it remained to be seen whether other states would eliminate this practice.

Three years later, in Supreme Court Puts An End to a Bad Tax Practice, I explained that a dispute involving a similar practice in Minnesota has reached the United States Supreme Court, which held that this practice violated the Takings Clause of the United States Constitution. The Court explained that a government cannot take more from a taxpayer than what is owed. Presumably, if a taxing jurisdiction in any other state with a statute similar to those in Michigan or Minnesota retains or tries to retain the excess proceeds, it will face a challenge and it will lose that challenge. Presumably the problem was solved.

But then a year later, in It Turns Out the Supreme Court Didn’t Put An End to a Bad Tax Practice, I had to backtrack on my previous headline, “Supreme Court Puts An End to a Bad Tax Practice,” with a commentary whose headline, “It Turns Out the Supreme Court Didn’t Put An End to a Bad Tax Practice,” because states had found a way to get around the Supreme Court’s holding. In this commentary, I explained that officials in Oakland County, Michigan, seized the home of a delinquent property owner, gave that home to a private company, which sold the house, remitted the unpaid taxes to the county, and kept the excess. The property owner received nothing. When the property owner sued, the judge dismissed the case because “the government itself didn’t make a profit.” What made this situation outrageous was the explanation from the property owner’s lawyer that the private company in question was operated by the mayor and the city administrator. Apparently the company collected $10 million in selling houses in this manner. In July of this year, the Michigan Supreme Court held that what had happened violated the Michigan Constitution, in Jackson v. Southfield Neighborhood Revitalization Initiative.

Today Reader Morris alerted me to a Pennsylvania Commonwealth Court decision, , Gaynor v. Delaware County Tax Claim Bureau and CJD Group, LLC, filed earlier this year. A property owner neglected to pay real estate taxes in 2020 because the pandemic paused visits to the courthouse and paused enforcement of overdue real estate taxes. When she later tried to pay those taxes her payment, unbeknownst to her, was applied to her 2021 tax bill. Later, when notices with respect to the 2020 taxes were sent she apparently did not respond because, according to this story, her mental faculties were declining. The county then sold the property to a private company for the amount of the unpaid taxes, interest, fees, and costs. The home, worth about $247,000, was sold to the private company for $14,000, and the company acquired the $233,000 equity. The homeowner received nothing. The homeowner sued, alleging that the notice of the tax sale was insufficient or defective, that she was not offered an installment payment plan, and that the property was worth more than 15 times what was paid by the private company at the tax sale. The Common Pleas Court rejected the homeowner’s petition, and the homeowner appealed to the Commonwealth Court. On appeal, the homeowner argued “that the trial court erred by failing to find that the price for which the Property was sold was grossly inadequate in comparison to the actual sale price.” The Commonwealth Court explained that the homeowner “did not allege any sale irregularities in her Petition, nor did she present any evidence thereof at the trial court hearing,” and held that, “ Thus, assuming, arguendo, that the Property was sold for a grossly inadequate price, because there is no evidence to even suggest that there were irregularities in the tax sale that contributed to the grossly inadequate sales price, the trial court properly denied the Petition.”

The Commonwealth Court noted, in a footnote, that the Statement of Questions Involved portion of her brief, the homeowner had presented two additional issues for the court to review, specifically “(1) whether the trial court erred by failing to exercise its equitable powers to set the tax sale aside where [homeowner’s] son testified that he would be able to pay all tax arrearages; and (2) whether the trial court erred by failing to set the tax sale aside where the County Tax Claim Bureau (Bureau) had failed to give proper notice or service of the sale in accordance with the requirements of Section 602 of the Real Estate Tax Sale Law.” The Court pointed out that the only issue addressed in the Summary of Argument and Argument portions of her brief was the question of “whether the trial court erred by failing to find that the price for which the Property was sold was grossly inadequate in comparison to the actual sale price.” The court treated the failure to address in the Argument portion of the brief the two issues described in the Statement of Questions Involved portion as having been waived.

There are two ways to analyze this case, which perhaps is being appealed to the Pennsylvania Supreme Court. One is that a procedural glitch prevented the court from getting to the root of the problem and that had the issues been presented in accordance with the procedural rules it would have reached a different conclusion. The other is that even if the court considered those other two issues it would still have concluded, based on its reasoning, that so long as there were no irregularities in the sale, the sale was valid and the property owner’s equity shifted to the buyer.

The story about the homeowner’s loss of her home and her equity in it revealed that according the Channel 6 in Philadelphia, the company that purchased the homeowner’s property has purchased 62 properties since 2011. It is not the only company engaged in this practice.

Several Pennsylvania legislators have introduced a bill designed to stop these situations from happening through a change in the notice procedure. It would permit homeowners to designate an agent who would also receive the notices. This would protect homeowners who for some reason don’t receive the notices, or receive them but fail to act perhaps because their faculties are declining, are in the hospital, or dealing with some other setback. However, this does not solve the problem. The problem is that the taxing authority is permitted to sell the property for less than its fair market value. In a time when housing is scare and prices high, it is puzzling that no one showed up to acquire a $247,000 property for more than $14,000. Surely someone wanting to purchase a home similar in size, features, and location to the one in question but who could, and was willing to, pay, say, $150,000 or some similar amount would have jumped at the opportunity to make such a purchase. Why that did not happen is a question that can and should be asked of real estate agents who are representing buyers. Why not take the potential buyer, who is struggling to find a sufficiently sized yet affordable home, to these tax sale auctions?

Reader Morris sent me an email with the subject line, “Will eliminating taxes increase reading skills in Denmark?” Curious, I clicked on the link he gave me, a link to a EuroNews article explaining why Denmark is repealing its 25 percent value added tax on books. According to the article, Denmark is facing a literacy crisis, with 25 percent of 15-year-old “struggl[ing] to understand a simple text.”

Denmark’s Culture Minister commented that “he hopes the change will see more books flying off the shelves.” Though the repeal of the tax on books will cut government revenue, proponents of the repeal see it as “an investment in the country’s cultural future.”

Of course, the ability to read is not simply a matter of a nation’s cultural future. It’s a matter of life and death, because the inability to read road signs, medicine bottle labels, appliance and tool safety instructions, and a long list of other things increases the risks of traffic accidents, workshop injuries, unintentional overdoses and poisonings, and a long list of other tragedies.

Yet lowering the cost of books by repealing the tax on books will increase reading activity and book sales only if the reason youngsters are not reading from books is the impact of the tax. It is possible that someone might refrain from buying a $20 book because the tax raises the cost to $25 but I propose that the reason for the decline in reading skills lies in a different direction. And it’s an issue that extends far beyond the borders of Denmark.

The time once invested in reading is now invested in looking at and listening to screen. The decline has its origins not in the internet but in television and digital technology has merely accelerated that decline. The decline in reading isn’t a phenomenon limited to today’s youngsters. Many adults, today and even in the latter decades of the twentieth century and the first two decades of this one, read very little, especially reading for fun. The reasons include a lack of time, a problem faced by adults trying to raise children and hold down a job, but also the ease of watching or listening, especially when it is possible to watch or listen while doing various tasks.

Youngsters, who are somewhat more comfortable and certainly more adept with digital technology, are even more likely to turn to the screen unless they are required to read a book. And given that books can be read online or on a tablet or similar device, purchasing a book in “hard format” is an idea that continues to attract fewer and fewer people as the years pass.

Getting people, particularly youngsters and students, to use print books perhaps is near impossible or very difficult. Most prefer audiobooks and videos. One popular remedy, banning screens from classrooms, has a negative effect. I speak from experience. Student achievement increased as I incorporated more and more digital technology into my teaching. This included front-of-the-room screens and the administration of mini-exams requiring responses inputted through computer or phone internet connections to my laptop. The front-of-the-room screen in the classroom, in many ways, is nothing more than a modernized blackboard. It still required students to have the ability to read. As pointed out in the preceding paragraph, a person can read from something on a screen.

The reading problem isn’t the screen per se. It’s the failed use of the screen, when there is accompanying audio that simply repeats the words on the screen, or when the screen is text-free, as is the case with many video games. Worse, too often what is on the screen is too short, or uses oversimplified vocabulary, and becomes nothing more than a visual version of a misleading audio sound bite. The worst versions are the videos that contain only text and that take 10 times as much time to hear as would be required simply to read the text.

The issue ultimately isn’t the purchase and use of books, though some of us, myself included, simply enjoy holding a book to read. Yet more and more of my reading has shifted from paper books to the digital environment. The issue is finding ways to teach and encourage people, especially youngsters, to read text whether on a printed page or a screen.

So is the tax law the avenue for encouraging people to read? No. Slightly reducing the price of books impacts only the very few who choose to buy a book for $20 but not $25. Tax credits or deductions for buying books would do nothing more than open the door to wholesale fraud, to say nothing of the challenges presented when trying to administer such provisions.