<![CDATA[Tax auctions, where unpaid property tax bills are sold to investors, occur annually across the United States. Local governments transfer these bills to private groups who obtain the right to charge interest on those debts or acquire the title to tax delinquent property. In Chicago, Illinois, the tax sales law was changed in 1951. This change in the law gave rise to a class of investors who made millions of dollars through fees, interest payments and acquisition of real estate. Tax buying thrived as rates of property tax delinquency rates increased sharply in the 1970s, particularly in the city's African American neighbourhoods; these areas tended to suffer from discriminatory over-assessment. As the city's fiscal situation worsened, tax buyers increasingly wielded greater influence over tax policy and administration. A recent study has traced the history of tax buying in Chicago amidst the fiscal crisis of the 1970s. Andrew Kahrl, from the University of Virginia, claims that tax sales shed new light on the making of contemporary municipal fiscal policies and administrative practices. In his article, published in the Journal of Urban History, Kahrl argues that by looking at this period we can explore the broader features of capitalism and the state in modern America. "The age of urban crisis provided a fertile ground for investment practices and market-oriented approaches to bureaucratic administration and local law enforcement to grow," Kahrl writes. Increasing migration - of both people and industries - away from city centres led to a decrease in urban finances. As a result, public officials sought new sources of revenue. At the same time, property tax delinquency rose sharply amongst many of the city's poorer and heavily minority districts. Tax buyers, Kahrl explained, seized on the investment opportunities in buying up public debts. "Desperate for revenue, public officials tacitly encouraged predatory tax buying and, in spite of public outcry over the industry’s practices, its devastating effects on individual homeowners, and the havoc it wreaked on poorer neighborhoods [sic.], resisted calls for reform," Kahrl notes. In doing so, tax buyers turned one of the basic functions of local government - property tax collection and enforcement - into a means of personal enrichment and private investment. As their level of investment grew, tax buyers became increasingly powerful in a political sense. Seizing the opportunity for new sources of income, local governments became agents of an industry which, Kahrl argues, preyed on citizens. Kahrl also suggests that 1970s Chicago can help us understand the predatory activities that emerged in the wake of the 2008 housing market crash and the relationship between capitalism and the state in the modern USA. Kahrl concludes: "Then, as now, we find in the tax buying industry an example of private investors and large financial institutions who are not merely benefiting from public policies they helped to write, but who are actually turning the administrative apparatus of the state into a vehicle for accumulating personal and corporate wealth, one that inflicts much collateral damage on both its principal victims and its client, the state." For more information: www.juh.sagepub.com Image courtesy of Wikimedia Commons user: Poco a poco ]]>
Chicago's Predatory Tax Buyers: A Warning For Today?
