Property Tax Discrimination and the Question of Fair Taxation





Andrew W. Kahrl is Assistant Professor of History at Marquette University. His book, "Set in Sand: African American Beaches in the Age of Coastal Capitalism," is expected to be published by Harvard University Press in spring 2012.

In a recent interview with the conservative commentator George Will, the new chairman of the House Ways and Means Committee, Dave Camp (R-MI), offered a revealing glimpse into the underlying assumptions on the problem of taxation our new Republican majority brings with it to Washington.  The problem, says Camp, lies not in the massive slashing of tax rates on the highest income earners from the Reagan administration to the present, but rather from the continued undertaxation of the nation’s poor.  Without some “skin in the game,” as Camp put it, these 46.7 million Americans are prone, to quote Will, to “perverse behavior” as a result of their status as “free rid[ers].”  Ignoring, for the moment, the absurdity of both Camp and Will’s contentions, given the innumerable ways the poor contribute more than their fair share—in the form of inflated rents, payroll taxes, sales taxes, and other hidden costs of being poor in America—their proposed solutions to the yawning deficit offers a revealing insight into the underlying notions that dominate current discussions of “fair” taxation, and the historical background from which contemporary attitudes and public policies toward America’s working poor emerged. 

The pillaging of the poor through subtle and not-so-subtle forms of taxation in times of fiscal crisis is nothing new, nor an unforeseen consequence of the failure of “supply side” economics to generate high tax revenues through economic growth.  Instead, one can say it has been, throughout the twentieth century, a driving force in the production of inequality (in particular, racial inequality), and one of the more revealing indicators of the high costs of being black in America.  The “hidden” racial history of property taxation (and property tax assessments) offers an appropriate way to begin to contextualize Camp’s statement and the underlying notions of just taxation that informs modern conservatism.

The discriminatory over-assessment of property values (and the accompanying spike in property tax rates) on black homebuyers in white neighborhoods served as a crude method of residential segregation after previous strategies failed in Northern and Southern cities during the Great Migration.  In neighborhoods not protected by racial covenants, county tax assessors routinely jacked up tax rates so as to force unwanted residents to sell and move.  In Newark, for instance, an African American couple received a $3,000 spike in the property’s assessed value upon their arrival, a tactic one judge described as a blatant attempt to “force them out” of the home.  In the midst of the black freedom movement of the 1960s, white-dominated Southern counties were known to wield property taxes as a form of intimidation.  After African Americans in the town of Edwards, Mississippi, led a boycott of downtown merchants in the summer of 1966, 237 African American owners of lots in town received a grossly inflated property tax assessment the next spring.  (In comparison, only thirty-four white-owned lots saw any increase in property tax assessment.)  But while such one-time abuses of the power to assess and tax property were common and important in their own right, more significant was the routine over-assessment of property values in African American neighborhoods absent any consciously malicious intent—and the reasons given by public officials over such disparities.  In 1931 alone, one study found, the total sum of taxes paid by African American property owners in the city of Norfolk, Virginia, increased by $241,000, while the sum total of taxes paid by whites decreased $1,634,730.  For white slumlords, these high assessments were, of course, passed onto the renter.  The irony of property taxes rising as neighborhoods transitioned from white to black was not lost of many commentators.  Responding to the perception that blacks depressed property values upon their arrival, a writer for the Baltimore Afro American said, “Of course, we have known all along that this was absolutely untrue.  Many a colored buyer has had the sad experience of having tax assessment upped, not lowered, when he moved in.”

In the age of Jim Crow, white assessors were often quite frank in explaining the logic behind such disparities.  Through high property taxes on black landowners and “colored” neighborhoods, cities and counties could force them to contribute their “fair” share in lieu of their low income tax returns.  Indeed, as other scholars have noted, the idea that African Americans paid little or nothing in taxes constituted one of the core arguments advanced by white segregationists to justify the shockingly unequal distribution of public dollars and amenities in the era of “separate but equal.”  But while they publicly dismissed calls for equalization of services based on this pay-for-service theory of taxation, behind the scenes, public officials did all in their power to ensure that the burden of taxation fell heavily on the poor even as the benefits of taxes were enjoyed primarily by the wealthy and middle class.

In many respects, the use of the property tax as an underhanded means of “socking it to” the poor, as one public official in the city of Baltimore described it, truly came of age and became a core element of modern tax policy during the high tide of liberalism in the 1960s, and a significant (albeit heretofore unexamined) contributor to the era’s “urban crisis.”  As middle-class whites fled to the suburbs and erected structural barriers designed to ensure that all of the tax dollars would come with them, cities compensated for declining tax revenues through, in part, dramatically raising property tax rates in inner-city neighborhoods.  In a 1972 study on this and other so-called Ghetto Taxes, researchers found that in Baltimore, “properties in blighted neighborhoods carry 10 times the tax burdens of properties in upward transitional neighborhoods.”  The high tax rates assessed to properties with comparatively low market value set in motion a vicious cycle that escalated rents and discouraged businesses from locating in these neighborhoods.  (Conversely, artificially low property taxes provided one of the many incentives used by new suburban municipalities to draw in new homebuyers.)  Across the nation, cities responded to “white flight” by, on the one hand, increasing rates of taxation on the poor and minorities (who, after all, officials likely surmised, were by their mere presence responsible for the “crisis”) and, on the other, providing incentives for businesses and middle-class families to come back to the city through generous tax breaks.

The discriminatory assessment of African American property taxes did not go unnoticed or unchallenged.  In 1973, Senators Charles H. Percy (R-IL) and Edmund Muskie (D-ME) held a series of hearing on this form of “Ghetto Taxation” after a Congressional study concluded, “All evidence indicates that the poorer neighborhoods of many cities are being forced to subsidize heavily, through tax payments, the residents most affluent.”  (The hearings resulted in their sponsoring of an utterly toothless piece of legislation that provided incentive grants to states to revise assessment procedures.)  In Atlanta, Free for Community Organization, led by Dr. W. J. Stafford, waged a campaign for justice in tax assessment procedures beginning in 1972.  Charging that Fulton County’s method of assessment was systematically “designed to benefit industry and not the poor home owner,” the group called for an injunction to halt assessments.  Later, the NAACP filed suit in the Fulton County Superior Court over the county’s demonstrably unfair system of taxation, citing a study that showed that residents of the all-white, affluent neighborhood Ansley Park were assessed 24.5% of the market value of their homes, while residents of the poor, heavily black Nash-Bans neighborhoods were assessed 44.1% of their home’s market value.

Such legal challenges, though, encountered innumerable obstacles.  The 1937 Tax Anti-Injunction Act states, “federal courts cannot enjoin, suspend, or restrain the assessment, levy, or collection of any tax under state law where a plain, speedy, and efficient remedy may be had in state court.”  The purpose of the law was to prevent out-of-state corporations from withholding taxes while they filed for injunctive relief from federal courts, but in practice, the Act gave local assessors virtual immunity from outside scrutiny or legal challenge to methods of taxation.  In Bland v. McHann, the case involving the use of property taxes as a form of intimidation by the city of Edwards, Mississippi, the Supreme Court refused to hear the case because, they surmised, relief was possible under state and local courts.  In this and other counties, members of the board that heard complaints of unfair taxation were often the same persons charged with assessing taxes—hardly an impartial body.

The dearth of lawsuits challenging discriminatory assessments, much less scholarly attention on this hidden dimension of inequality in America, is revealing in itself of the insidiousness of assaults on the poor.  On a practical level, victims of discriminatory assessments have few incentives for challenging their taxes in court.  Public actions against unfair rates of property taxation can only result in the raising of others’ taxes to a more uniform level, thus providing the aggrieved party no direct benefit from a favorable decision.  Private actions, on the other hand, require plaintiffs to prove assessors’ intent to discriminate and demonstrate a pattern of discrimination that county assessors often deliberately obscured through selective underassessment of individuals.  

Perhaps an even more significant barrier is the challenge of rousing victims into action.  Homeowners of all races and backgrounds want desperately to believe that their home will generate equity and provide its owners a measure of economic security.  For African Americans in post-World War II America, the mere struggle to purchase of home made them all the more determined to see it appreciate in value, which, like the contract buyers Beryl Satter so forcefully describes in her epic Family Properties, made them easy prey for persons and institutions looking to exploit their hopes and dreams for personal gain.  Writing in 1975, the black commentator Charles Price noted, generating a mass movement against high property tax assessments was nearly impossible, since black homeowners so desperately wanted to believe that their homes were worth something.  “Everybody likes to think that his property is worth the world and its gold.  So there is never a complaint when property is over valued.  The higher the value placed on property, the happier the property owner….  This course of action exploits the ego trip of many brothers.”

As the latest war over tax policy heats up, it is worth considering the underlying assumptions that have informed policies of “fair” taxation in the past, and the unchecked powers exercised by agents of taxation on a local level.  Shielded from federal scrutiny and sheltered by state and county courts, property tax assessors have quietly used their position as public officials to serve the interests of capital.  In Jim Crow America and today, as Rep. Camp’s statements suggest, public officials have consistently worked to obscure the astounding benefits America’s skewed tax structure provides wealthy Americans (and its disastrous impact on poor and middle-class Americans) by incredibly, but not surprisingly, pinning the blame on poor persons themselves, a line of argument that has, and continues, to rely on the (white) public’s ingrained prejudice toward the “deserving” poor.  The strange career of property tax assessments suggests how Americans’ internalization of the lie, made popular under Jim Crow but no less resilient today, that the poor (especially the black poor) don’t pay taxes has resulted in a public discourse that frames the poor not only as undeserving of public services but, as importantly, deserving of higher taxes.

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Arnold Shcherban - 1/27/2011

The US is.
Just one outrageous fact (out of many): Only in the US the majority in the supreme law-making body - the Congress - could openly threaten to cancel tax cuts for 95% of population and stop unemployment benefits for the mostly affected by the economic crisis, unless 5% of its citizens (the richest ones and virtually unaffected) would continue to enjoy 5-year old tax cuts.
Simultaneously this situation clearly demonstrates all cowardliness, haplessness, and corruption of those parties who were supposed to protect
the interests of middle and lower class Americans.


Arnold Shcherban - 1/26/2011

Corporate culture, its pundits, and their lap-pet mass-media have accomplished a truly remarkable trick:
to instill to the minds of American public the treacherous fallacy of the supremacy of so-called entrepreneurial
class over working class, i.e. the ones who actually create wealth for the former and the country, in general.
That accomplishment has allowed the 5% of the population of this country not only accumulate the greater part of the national wealth, but to achieve the latter status-quo through essentially robbing the majority, including the poor, of their fair share.
Managerial class having mass-media and
politicians in their pocket is launching now a new wave of attacks on
working people through continuous vilification of working unions and plans to remove already thin veneer of governmental labor protections in favor of so-called "employers.", not mentioning verbal assualt on other truly democratic organizations and activists who even timidly try to raise their voice for the working class and the unemployed.

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