Monday, February 13, 2023

Is Taxation Ever Theft?

That provocative question is answered by some as - YES, and pending court cases will have more to say to that question. The current state of affairs in Massachusetts is alarming in that local governments are authorized to seize properties when the owners are unable to pay debts such as property taxes, water bills, or other municipal assessments. The result of this process is that the property owners often lose all of the equity they have built up in their property. 

In response to this situation, the Boston Globe recently published an editorial calling for legislative changes and advocating for the rights of property owners. I am the sponsor of legislation aimed at addressing this issue and providing a solution that is fair to both the property owners and the local government.

There is a growing concern among advocates for low-income and elderly residents who are being threatened with foreclosure. In a tax lien foreclosure, towns and private companies are able to take not only the debt owed but also all of the equity that the property owner has invested in the property.

A recent study conducted by the Pacific Legal Foundation found that on average, property owners who have their property seized due to tax debt lose 87% of their equity. This means that in just one year, towns and private companies statewide have taken more than $56 million in property equity from residents.

In an effort to generate revenue, some cities have sold hundreds of delinquent debts to private companies, who then collect the debt at high-interest rates and have the authority to foreclose on the property owners.

This situation is highly controversial however, some city leaders argue that the auctions are a necessary means of obtaining the tax revenue required to fund public services. The impact on low-income homeowners can be devastating, as hundreds of property owners are faced with defending their homes against foreclosure in the State Land Court each year.

My bill aims to address this issue by ensuring that towns are able to collect what is owed to them in a fair manner, while also providing a reasonable fee to debt collectors and restoring the home and dignity of the property owners who have fallen behind on their debts. Here is the Globe Editorial:

Map by Pacific Legal Foundation