Chief Justice John Marshall once said, “The power to tax is the power to destroy.” I’ll let that sink in for a minute. 
I was at the gym a week or two ago and saw the most appalling “infomercial” I have ever seen in my life. (No, it wasn’t for maternity clothes or acne treatments!) It was John Beck’s “Free & Clear Real Estate System.” I’m not going to complain about what bunk the “system” is and how it’s a rip-off– I’m going to bellow at the top of my lungs the absolute tyrannical immorality of the governmental system that John Beck is using. I am still so angry about something like this!
Here’s what happens: a homeowner gets into financial trouble, for whatever reason. 
The homeowner cannot pay his property taxes. The homeowner may be keeping up with his mortgage payments, but not the property tax payments. In such a case, the government (usually the city or county) can confiscate the ENTIRE property and auction it off for tax default. Any capital the homeowner has gained from paying years and years of mortgage and tax payments disappears. The homeowner is evicted from the home and the government sells it. Usually, the property sells for a very low price, because all the government wants is the back taxes that are due.
This is absolutely unconscionable. I am outraged– apoplectic- that this can happen! What happened to property rights in this country? In all essence, there are NO property rights. If you do not pay your taxes, the government can take your hard-earned property and turn around and sell it to a speculator. (That’s where John Beck’s “system” comes in– he snaps up those properties and resells them at market value.)
The infomercial feeds on the greedy “small-business” American speculator. But no one stops to ask– Is this justice in America? And what old lady or impoverished family is being evicted, so that I can buy my new house real cheap? And a lot of times, it’s the government or banks that snap up the foreclosed property. It happens right here in Utica, NY. The government forecloses, owns the property, and sells it for a hefty profit. Criminal!
This tyrannical confiscation of property is not American. It is socialist/fascist. Let’s not pretend here– it’s the government that really owns all the property. If you don’t pay the “rent” in the form of their high property taxes, then you are thrown out into the streets (or jailed or fined, or both) and you lose EVERYTHING you have built on up to then. What kind of system is this? This is more akin to serfdom- slavery– where the lord is the government and we are the tenant farmer serfs. And the government works hand in hand with the banks and credit card companies to do this. And what’s worse is that the property tax is after the income tax and the sales tax, and all the billions of little taxes on top of that! There are so many taxes in this country that we lost the concept of what it means to be free. We are slaves to the taxation departments, the government, and the banks. What a hateful system.
“If the American people ever allow private banks to control the issue of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered.” Thomas Jefferson
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Tags: government, Jefferson, property, taxes, tyranny
June 28th, 2008 at 8:19 pm
First of all I want to say that I love your passion and anger. It is so refreshing, and I know it feels so good to post your depth of thought!
This is one reason I believe and support what is called a consumption tax. It is something many think is a wacko idea but if you really think about it consumption is the fairest tax of all. The elderly rarely buy anything including groceries, why tax them on a profit they will never see?
I would prefer for the big cats that buy the big yachts pay the tax upfront. It would be a higher rate, but just think you leave a store being free each April!
I think Jefferson was a genius, he truly understood the “overpower of government”.
June 28th, 2008 at 8:35 pm
Oh yeah, I’ve got passion, lol. I am meek and mild for the blogosphere, though…
As far as a consumption tax, that is not wacko at all. I believe Alexander Hamilton proposed something like it. He also proposed the luxury tax, of which you refer with the yachts.
Wanna know something that will make you beserk? The Founding Fathers were in *only* favor of taxes for the defense of the nation and other smaller issues (like war debt, etc). There was NO tax on income, none for schools, none for welfare (which they were adamantly against).
But the income taxes we pay do not go for the defense of the nation. They go directly to pay the national debt– and the interest accrued– that the government owes to the Federal Reserve Bank (which isn’t even federal!). The Federal Reserve Bank is an independent group of private bankers, who coin our money. Their coining of money is unconstitutional, as Congress is supposed to do it. Anyway, the “Federal” Reserve Bank coins our money and then charges us interest on what the nation owes. None of that income tax is going to defense, to welfare, or anything. It’s all a scam!
June 28th, 2008 at 8:58 pm
When I tried to sell my house, the buyers could not come up with financing. The house was not on the market while I had to wait for them, and I couldn’t pay the mortgage and also the rent where I was living,(the house was empty all that time) so the bank foreclosed. Then the original buyers bought the house from the bank for much less, and I have bad credit. How can they get away with that?
My neighbor lost his house after being in it almost 30 years, the mortgage was almost paid off but he got an infection and had his leg amputated so was out of work and had massive medical bills. After all those years of hard work and paying mortgage, he now has NOTHING. It’s heartbreaking.
June 28th, 2008 at 9:09 pm
Apparently, there is no such thing as private property ownership. The government and banks own it all, and you rent it from them. What a disgrace.
June 28th, 2008 at 11:45 pm
Mecomber You are a Libertarian at heart. A friend and I have this discussion all the time, if our forefathers saw the IRS they would overthrow the government!
Rebecca I am so sorry about your house.
The consumption tax would tax everything you eat, drive, or wish to buy. That way those that spend the most, pay the most. Nobody would have to ever fill out a form, not even a business. Alexander is another of my heroes.
The men that started this great country were brilliant beyond their time. The constitution is a work of art!
June 29th, 2008 at 1:14 am
Here, here!!! Very well said!! If the founding fathers could see what the career politicians (something they were also against) have done to this country they would be disgusted.
June 29th, 2008 at 6:15 am
It is rather sad to think that the day we bought our home, we started ‘working’ for the bank.
June 29th, 2008 at 10:03 am
It is so sad how things are going. Our forefathers had no idea and did not want things to be like this. Your post is great and I will stumble it.
June 30th, 2008 at 2:02 pm
Unfortunately, history is against you here.
Property tax has always been part of the US system (it was income tax that was seen as unthinkable).
Even the phase “real estate” shows how property is treated. In this case, the word “real” does not mean “it exists” it means “crown.” The term comes from when all land was owned by the monarchy/government. In 1776, we got rid of the monarchy but kept the government.
Very few people can make their mortgage payments but not make their property taxes. This is because property taxes are usually much lower than mortgage payments and the states give a lot of time to come up with the money (from six months to five years, depending on the state).
Also, since a tax repossession wipes out the mortgage, the mortgage holder will generally pay the property taxes so they don’t lose their money (and foreclose on the property). If you are going to a tax auction (and that is probably what that seminar was talking about), the properties there generally have no mortgage or the mortgage company screwed up big time. Given the length of time the state gives to pay the taxes, most properties are there because either someone decided that they could get away with not paying property taxes (seldom), the person had multiple properties and lost track of that one (happens more often than you think) or it is a property in probate (elderly former owner, paid off mortgage, slow probate).
June 30th, 2008 at 3:20 pm
Hello Jeff.
I did wonder when someone would say I am against property taxes. I am not, not exactly. I’m aware of history and I do remember that, in Colonial days, people were taxed on how many closets they had (which is why few old houses have closets) or how many windows they had. If you read very carefully, I am against CONFISCATORY property taxes, especially when they are loaded ON TOP of income, sales, luxury, utility, etc etc etc taxes.
Two short notes: in 1776, we DID get rid of the government after we got rid of the monarch. The Articles of Confederation were drawn up immediately after declaring our independence. When the Articles proved inadequate after the war– when better government was necessary between the states and for foreign affairs, the Constitution was drafted.
And, you said “Very few people can make their mortgage payments but not make their property taxes.” I question the accuracy of this statement. Here in New York State, property taxes exceed mortgage payments much of the time. Of course, such depends on when you bought the home, when taxes went up and up, etc. Here in Central NY, we have seen property taxes rise 50% in three years– and the taxes were quite high to begin with! This, on top of all the other double-, triple, and quadruple-taxes, is intolerable.
June 30th, 2008 at 3:30 pm
P.S. I have never heard that “real” meant “crown” before. I’ll look it up. According to the basic dictionary, “real” means “existing as a physical entity and having properties that deviate from an ideal, law, or standard” and that’s how I’ve always interpreted it.
June 30th, 2008 at 3:35 pm
I found this from the Columbia Encyclopedia, for anyone who is wondering what “real” in “real estate” means and from where it comes:
Formerly its chief characteristics in a legal sense were that it went by descent to the heir of the owner (who had no control over its disposition) and that ownership might be recovered from any other party by a lawsuit (a so-called REAL action). Also possessing such characteristics, and hence classified as REAL property, were titles of honor, heirlooms, and advowsons, i.e., rights to sell ecclesiastical benefices. The manner in which REALTY is owned is called an estate; specifically, ownership is a fee of some sort, for example, an estate in fee simple.
June 30th, 2008 at 4:29 pm
I think it is great how much I am learning!
June 30th, 2008 at 4:39 pm
So true, and the post’s title is especially poetic. What a way to kill the American dream.
June 30th, 2008 at 4:48 pm
I’ve done more reading on the history of property tax in the US. The Puritans started it in the Northeast (the South never really had property tax– they had poll tax). But when a widow was poor or a man was out of work for a time, the town board got together and excused the poor from paying taxes, either temporarily, or permanently, based on need and community support. Interesting.
June 30th, 2008 at 4:57 pm
#10: Yes, I’ve also hears stories about property tax being evaluated based on personal property as well (sewing machines, toasters, etc.) though that may have only been in certain states.
What I was getting at was that we got rid of the current government 1n 1776 but kept most of it’s legal structure. Most of the laws worked just fine for the colonists and they didn’t create our legal structure from whole cloth (it might make more sense if they had) but edited what they had.
I am only aware of a few places where property taxes have been that high. I now add NY to that list. CA would be there if it weren’t for our Prop 13.
#11: that meaning of “real” comes from its Latin roots.
#12: I hadn’t seen that definition before. I’ll try to find a cite for the version I know to make sure it isn’t apocryphal.
June 30th, 2008 at 5:45 pm
Hey Jeff, thanks for coming back to comment further! My kids and I are early American history and government scholars, so I loooove this kind of discussion. I’m rather particular about definitions and terms.
As to your reply about #10– I cannot think of any time in American history where people were taxed by their possessions, not until the Federal Reserve Act in 1913. Please correct me if I am wrong. Like I said, people in the North were taxed on their real property (and most tax was according to real improvements made to the real property, like how many closets you could afford to build) and there was the poll tax in the South; although it is apparent that taxation was administered also according to one’s financial status and/or need. The terrific thing is that everyone was accountable to each other– you KNEW your assessor and your town board. Today, everything is so cloaked and impersonal. And confiscatory.
I cannot say with certainty that our “legal structure” remained the same after our independence. Technically, our legal structure as a nation was completely converted, from monarchy to constitutional republic. But as far as on a local level, the states and towns did continue to operate under the traditional “Common Law” as practiced in England (although not in a pure sense by any means). Colonial government had shades of English law, but we were ruled differently (which accounts for the Revolution).
New England developed the “town meeting” which was unique to English government. And our states were ruled by royally appointed governors, not nobles or dukes (who inherited their lands). New York State was under Dutch patroons, which was different than the other colonies, and that atmosphere probably accounts for the air of superiority that exists in NY government today.
Well, I could go on and on! Thanks for your replies!
June 30th, 2008 at 6:05 pm
My history interests are of a different era (-4000BC - 0 BC) and I’m not as steeped in early US history. I know a lot about the Mexican revolution and the Spanish American War though (I grew up in CA).
Property taxes haven’t concerned me as much as the early option/minimum pay loans out there. We got hit with the loans that had a 3 year recast in 2007. There is another batch of loans from the same era that have a 5 year recast. So we should be seeing more of those hit mid 2009. Expect more foreclosures when that happens unless the banks get busy on work outs.
June 30th, 2008 at 8:15 pm
Closets counted as rooms, so to get around this like our house has huge windows. Newer homes have many smaller windows. Each bedroom has two big windows.
FYI Texas has never had a state tax, and I predict never will. It is the last of the our Texas heritage. We will do anything to prevent a state tax.
June 30th, 2008 at 9:09 pm
This article is wonderful! I have learned so much about our history as it relates to property taxes and income taxes. It’s a tragedy that we, as a country, have strayed so much from what the founding fathers had in mind. Thanks for posting this. If you don’t mind, my husband and I would like to post your article on our blog, which we’ve just recently started. The blog covers all sorts of topics and this would be a great addition.
July 1st, 2008 at 1:15 am
Wow, Jeff, I’m interested in ancient civilizations, as well.
That’s not very good news about the impending crisis in mortgages. :S
Kathy, yes *sigh* I know TX has no state income tax. Enjoy.
Kim, thanks for visiting. I don’t mind people taking excerpts from my posts and linking back to me. Feel free.
July 1st, 2008 at 1:46 am
It might not be great news but it’s not the wort news. It means that things won’t be getting better any time fast but they probably won’t get much worse.
When this foreclosure crises first hit, banks did not have staffed foreclosure departments. They had one guy who would pass the property on to their favorite realtor and they would recover their money in the house sale. When they started to get swamped, their departments did not try to work out the loans because their policy was to foreclose the house and hand it off to the guy who sends it to a realtor. They also didn’t have staffed workout departments (all of their staffing was in people generating questionable loans).
Now, banks have staffed foreclosure departments and work out departments (loss mitigation). So, I don’t think that the ‘09 foreclosures will hit as hard. They will just delay the recovery.
July 1st, 2008 at 9:13 pm
someone already beat me to the punch. I was gonna say, “spoken like a true Libertarian!”
two items on the Libertarian docket - property rights and repeal of the 16th amendment. But there’s only so much that a clean up on the federal level can accomplish. You (and I) still live in New York, the Tax Me State. But if real change on a federal level were to occur, New York would have to straighten up in order to prevent the mass exodus which will ensue as people flee the state for greener pastures… oh wait! It’s already begun! Buffalo has lost about 500,000 residents already. I live in an abandoned shell of a city where most of the people remaining are on the welfare rolls. Yet the politicians just don’t get it. It’s pretty bad when the largest employer in the State IS the government itself!
BTW, you can pick up a dump or two in my hood for a few hundred (back taxes), but you’ll have to replace the copper that the scrappers stole.
July 2nd, 2008 at 1:39 pm
#23: Urban mining is a big problem in a lot of places. In many areas, it means that it costs less to tear down the house than to fix it.
There are two markets for that kind of house: buy it, fix it, & sell it and buy it, fix it & rent it out.
If no one is buying (except those looking for pretty houses at fixer prices), the first is out.
Many of the states that have a bad out flux of home owners also have very landlord unfriendly laws. So that puts a damper on the second market.
August 4th, 2008 at 6:09 pm
[...] the other posts I’ve written about this subject– you can read more about it on my post, How To Create a Serfdom, which is exactly what the government and their fascist corporations are doing to us. These tyrants [...]
August 5th, 2008 at 2:23 am
I could be wrong but as I remember correctly from college that the original “property” tax was meant only for someone who made a profit from their property, such as if you had a farm or some other enterprise on that property that made money. Per the founding fathers, this would only have made the most sense.
August 10th, 2008 at 10:48 am
[...] were occurring– lots of homes foreclose, and lots of investors snap them up (see my post How to Create a Serfdom about that). But this is a HUGE, across-the-board failure in the United States (and in a few other [...]