“[G]overnment shall not collect more in taxes than are owed, nor shall it take more property than is necessary to serve the public[.]”
With these words, the Michigan Supreme Court on Friday confirmed what Uri Rafaeli and his attorneys knew all along: The government violates constitutional property rights when it takes more than it is owed from individuals to collect unpaid taxes.
Before Uri Rafaeli’s victory in the Michigan Supreme Court on Friday, Michigan’s counties routinely violated property rights with impunity, engaging in what the Pacific Legal Foundation has dubbed “home equity theft” — taking the entire value of a home to pay small tax debts.
That’s what Oakland County did to Uri Rafaeli, an 85-year old retired engineer who lost his rental home over an incredibly small property tax debt of $8.41. When County Treasurer Andrew Meisner auctioned the property for $24,500, the county pocketed every penny — $24,215 more than it was owed in taxes, penalties, interest, and costs. In all justice and fairness, that surplus money belongs to Rafaeli.
Fortunately, the Michigan Supreme Court unanimously corrected the injustice and ended the perverse incentive for counties to take homes to collect nominal tax debts.
The court’s ruling affirms that Michigan’s Constitution does not allow the government to keep surplus proceeds from a tax sale; keeping it is unconstitutional. The decision explains the fundamental nature of the property right violated by counties across the state. The court noted that even the Magna Carta, the 13th century document that proclaimed rights of Englishman long before American’s founding, “recognized that tax collectors could only seize property to satisfy the value of the debt payable to the Crown, leaving the property owner with the excess.” This principle was also “firmly established in the early years of Michigan’s statehood.”
Source : , “Opinion: State’s highest court upholds fundamental property rights“, Detroit News, July 13, 2020.