Uri Rafaeli takes a stand for traditional property rights

Can the government constitutionally take your house if you are tardy paying an $8 property tax debt? PLF client Uri Rafaeli is asking the Michigan Supreme Court that very question.

In 2014, Rafaeli was shocked to learn that Oakland County in Michigan had taken title to his $60,000 rental house to collect an $8.41 debt. Rafaeli had paid all his property taxes for 2012 and 2013, and the first part of 2014 taxes. But he had mistakenly underpaid his 2011 taxes by a measly $8. In response, the county foreclosed on Rafaeli’s house, sold it for almost $25,000—and kept every penny.

Most people accept the fact that, at least most of the time, government can seize property to collect on a tax debt. But common sense tells us that it can only keep as much as it is owed.

And in fact, for hundreds of years, that is exactly what the law required. Hundreds of years ago, William Blackstone wrote in his famed Commentaries on the Laws of England that when government officials seize and sell property to pay a tax debt, “they are bound, by an implied contract in law” to refund to the former owner the profits that exceed the debt. This was the rule in England and it was consequently followed in the colonies and at the founding of this nation.

But somewhere along the way, Michigan (along with a handful of other states) lost its bearings and took a power that would have made an English monarch blush, and would have revolted this nation’s founders.

The Founders adopted the Fifth Amendment to the U.S. Constitution to make sure government could not take what is rightfully yours, without paying you for it. The Fifth Amendment’s Takings Clause provides that when government takes private property, it must pay just compensation. In the wake of the Civil War, that same protection was applied to restrain the power of the states from violating property rights.

So given the weight of historical example, the Constitution, and common sense, how can American officials in 2019 claim the power to confiscate valuable property as payment for a much smaller debt?

The answer: They have no such power, as we explained in our brief to the Michigan Supreme Court filed on Wednesday. Government can impose taxes, and even impose reasonable interest and costs—like the $275 in penalties, interest, and costs tacked onto Rafaeli’s debt. But government cannot transform private property—Rafaeli’s home equity that exceeded the $285 total debt—into public property without paying for it.

It doesn’t matter that Michigan’s property tax statutes fail to recognize a property owner’s right to their home equity. The right is as unalienable as it is self-evident. It existed before the state of Michigan and remains even when government officials violate the right. Michigan’s Supreme Court should recognize this truth and vindicate Rafaeli’s right, and the rights of all Michiganders.