NCPA - National Center for Policy Analysis

PRIVATE PROPERTY AT RISK

February 14, 2005

City officials are stretching eminent domain laws to take property away from law abiding citizens in order to generate higher tax revenues, according to the National Taxpayers Union (NTU).

Paul Gessing, director of government affairs for the National Taxpayers Union, concludes that a recent judicial finding which allowed the city of Detroit to uproot families and businesses to build a GM factory has been used by governments around the country to clear the way for redevelopment of areas that aren't seen as generating enough tax revenue:

  • The city of Brooklyn is threatening to forcibly move 150 tax-paying homeowners and ring up nearly $1 billion in subsidies for a new sports stadium and a four-office-tower development.
  • The city of Toledo recently offered DaimlerChrysler nearly 160 acres of residential property (including 83 homes) to prevent the relocation of its manufacturing facility.
  • The city of Pittsburgh used subsidies and city-financed loans adding up to over $50 million to persuade upscale department chains Lazarus and Lord & Taylor to relocate downtown.

In addition to abusing individual rights, municipalities often don't get the benefits they expect, says Gessing. In Toledo, less than half of the 4,900 jobs were saved by keeping the DaimlerChrysler plant, while in Pittsburgh, both department stores closed before they reached the sales target that would require them to start payments on their taxpayer backed loans.

Gessing suggests that the growing number of citizen-based tax revolts may be one reason why politicians are turning to eminent domain as a way to raise revenues without actually raising tax rates.

Source: Editorial, "Study: Property Grabs Grow Government, Not Economy," Capital Ideas Vol. 12 No. 6, National Taxpayers Union Foundation, December 2004; based upon:Paul Gessing, "Eminent Domain Abuse: If They Can't Tax It, They'll Just Take It," NTU Issue Brief 148, National Taxpayers Union and National Taxpayers Union Foundation, August 25, 2004.

 

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