The COVID-19 Pandemic Permanently Damaged Property Rights

March 26, 2023 By Steven Greenhut 3 Comments

Officials used the crisis to impose policies they already supported but couldn’t get through the normal legislative process, like bans on evictions.

I don’t pay particular attention to health scares, so when talk of a spreading pandemic started dominating the news cycle I largely shrugged and went about my business. I was staying at a cheap motel in Calexico, taking photos of the New River and the Salton Sea for my book about California water policy, when my wife called from Sacramento and said, “You better get home. And I mean now.”

That was the weekend when the shutdowns began. I recall stopping at a grocery store near Modesto, when I noticed meandering lines and a run on toilet paper. The rest, as they say, is history. Like most people, I never could have predicted the coming shutdown of the economy, government orders to stay at home, an end to restaurant dining and public gatherings, and profligate “relief” payments.

As that (probably fake) George Washington quotation put it, “Government is not reason, it is not eloquence—it is force.” Government officials aren’t wiser than the rest of us, so when they tried to deal with a serious public health problem, they did so in a forceful, ineloquent, and unreasonable manner. Unfortunately, many of its worst approaches leave permanent scars.

In my column last year summarizing lessons from COVID-19, I concluded that it left us as a “nation of rulers, not laws.” American governors—and California Gov. Gavin Newsom in particular—quickly and eagerly used their broad emergency powers to begin issuing edicts. Given the extent of the public-health threat, some of the more modest and temporary ones were understandable, but they bypassed the normal legislative process in cynical and expansive ways.

One Republican lawmaker published a 138-page document detailing the 400 laws that Newsom unilaterally imposed or changed—many of them that only tangentially had anything to do with protecting public health. In particular, officials used the crisis to impose policies they already supported but couldn’t get through the normal legislative process.

The worst example involved anti-eviction orders that have literally destroyed our property rights. Virtually all mom-and-pop landlords depend on the rental income. With one fell swoop, governors (and the federal Centers for Disease Control) declared that tenants no longer had to pay their full rent if they faced a pandemic-related hardship. Sure, landlords could potentially collect rent in the future in civil court, but good luck with that.

In making it virtually impossible to evict non-paying tenants, policymakers imposed the full cost of their public-health plans on individual property owners, who could no longer count on getting a return on their investment. Often, property owners have mortgages—and they always have tax and insurance bills. When a heating system or roof leaks, they’re still required (ethically and legally) to make repairs. But they no longer could count on receiving rent.

Someone posted my column detailing the plight of landlords on a liberal housing-related news group, and you can probably guess the ensuing negative responses. No landlord I know expects any sympathy given that it’s the type of investment they freely chose.

However, I thought that most people—even renters who have had less-than-stellar rental experiences—might understand that if the government deprives owners of their supposed state constitutional right to a fair return on their investment, fewer people will go into the business and even fewer will upgrade their properties. That helps no one.

The result is obvious: fewer available rentals and fewer rentals in tip-top condition. Investing in rental property has always been a prime means for middle-class people to build wealth. My grandfather was an immigrant paperhanger (remember wallpaper?) who invested in Philadelphia row houses decades ago. Now, I talk to many people who won’t dare buy a rental house out of the legitimate fear that the government can suspend rent payments at will.

Tenants often outnumber owners, especially in larger cities such as Los Angeles. We see groups of activists lobbying for rent controls in Costa Mesa (and previously in Santa Ana). By eliminating property rights and shifting decisions to city councils (and tenant-dominated rental boards), the government has made owners’ livelihoods dependent on the political system. As the saying goes, democracy is two wolves and a sheep voting on what’s for dinner.

Certainly, many cities (San Francisco, Santa Monica, New York) embraced strict rent control long before the pandemic was a thing. They largely destroyed their housing markets of course, as renters stayed put in under-market units while investors high-tailed it elsewhere. But COVID added a new level of uncertainty. Look at how Los Angeles continually extended its anti-eviction provisions.

Click here to read the full article at Reason

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Proposition 13 Is Safe — For Another Few Weeks

September 27, 2016 By Jon Coupal 1 Comment

prop 13The Legislature is in adjournment, and with lawmakers at home campaigning for re-election, they are unable to engage in their favorite pastime of undermining Proposition 13 and its protections for California taxpayers.

However, this time out is only a brief respite from the Sacramento politicians’ inexorable pursuit of taxpayers’ wallets, the ferocity of which matches the dedication and intensity of a bear going after honey.

This December, after the election, lawmakers will reconvene to kick off the next two-year legislative session. During the just completed session, with great effort, taxpayer advocates were able to blunt a number of major efforts to modify or undermine Proposition 13, and, as surely as Angelina and Brad will be appearing on the covers of the supermarket tabloids, these attacks on taxpayers will begin anew when the Legislature is back in session.

Bills will be introduced to make it easier to raise taxes on property owners as well as to cut the Proposition 13 protections for commercial property, including small businesses. There may even be an effort to place a surcharge on all categories of property, an idea that was put forward by authors of an initiative that nearly collected enough signatures for placement on this year’s November ballot.

Accompanying the legislative fusillade will come the usual arguments that local government, or schools, or infrastructure, or the homeless, or the elderly, or (fill in the blank with the program or cause of your choice), or all of the preceding, need more money.

Government at all levels has become a militant special interest and its Prime Directive is to increase revenue – to take in more taxpayer dollars that is – and more is never enough.

The dirty little secret behind why government has changed from a service entity, dedicated to meeting the needs of its constituents, to a rapacious overlord, is that since being granted virtually unfettered collective bargaining rights in 1977, California’s state and local government workers have become the highest compensated public employees in all 50 states. With the high pay comes high union dues, collected by the employing entity and turned over to the government employee union leadership. These millions of dollars can then be used as a massive war chest to elect a pro-union majority in the Legislature and on the governing bodies of most local governments. And since these elected officials’ political futures are dependent on the goodwill of their union sponsors, there are almost no limits on what they will be willing to do to extract more money from taxpayers to be shoveled into ever increasing pay, benefits and pensions for government workers. (Government employee pension debt is several hundred billion dollars).

Literally, the only protections that average folks have from a total mugging by state and local governments are Proposition 13 and Proposition 218, the Right to Vote on Taxes Act. These popular propositions put limits on how much can be extracted from taxpayers by capping annual increases in property taxes, requiring a two-thirds vote of the Legislature to raise state taxes and guaranteeing the right of voters to have the final say on local tax increases.

It is easy to see why these taxpayer protections are despised by the grasping political class and their government employee union allies. This is also why taxpayers will have to work hard to preserve them.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

This piece was originally published by HJTA.org

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Property Rights and The American Democrat

September 11, 2015 By Gary Galles Leave a Comment

James Fenimore Cooper widely influenced American literature. However, one of his books–The American Democrat, a civics primer–gets scant attention. Given that Cooper was born (September 15) so close to Constitution Day, it merits revisiting now.

Cooper defended the limited government the Constitution authorized, because political power not tightly controlled would be abused. In particular, he emphasized private property rights as necessary to liberty, our “right of self-government.

Unfortunately, the erosion of property rights Cooper warned against has only accelerated. Consequently, his understanding, echoing our founders, may be even more important today, because “vigilance in the protection of principles is even more necessary in a democracy.”

Cooper began from an insight few recognize today: “The rights of property [are] an indispensable condition of civilization.” Consequently, “we must take those consequences of the rights of property inseparable from the rights themselves.”

Since “property is the base of all civilization,” it follows that “its existence and security are indispensable to social improvement.” So “the first great principle connected with the rights of property is its inviolability,” leading to “the safe and just governing rule … permitting everyone to be the undisturbed judge of his own habits and associations, so long as they are innocent, and do not impair the rights of others to be equally judges for themselves.”

Given the foundational role of private property rights to effective social cooperation, Cooper concluded that for public policy, that meant property rights. “shall have no factious political aids.” That denial of unequal treatment implies “it is a great mistake … to take sides with the public, in doubtful cases affecting the rights of individuals, as this is the precise form in which oppression is the most likely to exhibit itself in a popular government.”

That led Cooper to dissent from democratic orthodoxy that has only intensified since: “As between the public and individuals, therefore, the true bias of a democrat … is to take sides with the latter. This is opposed to the popular notion, which is to fancy the man who maintains his rights against the popular will an aristocrat.”

Cooper connected this to individuality, which property rights protect. “Individuality … lies at the root of all voluntary human exertion … because we know that the fruits of our labors will belong to ourselves, or to those who are most dear to us.” Consequently, “all which society enjoys beyond the mere supply of its first necessities is dependent on the rights of property.” In other words, “property is an instrument of working most of the good that society enjoys,” because “it encourages and sustains laudable and useful efforts in individuals.” In sum, “Property is desirable as the groundwork of moral independence, as a means of improving the faculties, and of doing good to others, and as the agent in all that distinguishes the civilized man from the savage.”

The upshot of Cooper’s logic of liberty was that “the man of property … is privileged to use his own means … in the pursuit of his own happiness, and they who would interfere with him, so far from appreciating liberty, are ignorant of its vital principles.” Unfortunately, that is radically at odds with “the habit of seeing the public rule,” which “is gradually accustoming the American mind to an interference with private rights that is slowly undermining the individuality of the national character.”

The American Democrat was a civics book. But with the declining respect for property rights since Cooper wrote, it doesn’t read like current civics books.  Americans today would greatly benefit by remembering that “All who love equal justice, and, indeed, the safety of free institutions, should understand that property has its rights, and the necessity of rigidly respecting them.” It would serve us far better than the prevailing view, which applauds using government power to give majority coalitions what they want by blatantly violating others’ property rights.

Gary M. Galles is a professor of economics at Pepperdine University.

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Greater Transparency on Threat to Property Owners

October 7, 2014 By Jon Coupal 1 Comment

Legislation just signed by Gov. Brown may help alert homeowners to the threat posed by per parcel property taxes. Parcel taxes have become one of the most insidious threats to home ownership because they can be imposed over and above the property tax limits set by Proposition 13.

Supported by a broad coalition lead by the California Taxpayers Association and the Howard Jarvis Taxpayers Association, Assembly Bill 2109 requires the Controller to maintain a publicly accessible data base relating to the imposition of locally assessed parcel taxes, including the type and rate of a parcel tax and the number of parcels subject to or exempt from the parcel tax. Finally, taxpayers will be able to see the extent of parcel taxes throughout the state and the costs to property owners.

Parcel taxes came about as a result of politicians never ending effort to circumvent the property tax limitations contained in Proposition 13. Howard Jarvis and Paul Gann, Proposition 13’s authors, intended that taxes on property be limited to one percent of the taxable value and that the taxable value on the assessor’s books could not be increased by more than two percent annually.

To squeeze more from homeowners, local officials came up with the parcel tax, usually a uniform tax placed on each parcel of property within a community –although it can also be based on size. By imposing a uniform charge for the privilege of owning property within a community, they were able to persuade the courts that it did not violate Proposition 13’ prohibition against additional ad valorem (value based) taxes.

Parcel taxes are extremely regressive, bearing no relationship to ability to pay. The young couple in a starter home, the elderly couple in a bungalow and a multimillionaire in a mansion, all pay the same amount. There is no restriction on the dollar amount of these taxes that exceed Proposition 13’s limits, or on the number of such proposals that can be placed on the ballot. And while bonds — also paid for by property owners — must be used for “brick and mortar” construction, parcel taxes can be used for any purpose including increased pay and pensions for government employees.

Adding insult to injury, there has been a major push in the Legislature to reduce the two-thirds vote needed to approve parcel taxes. Although this would clearly undermine Proposition 13 by making it easier to increase property taxes, backers of a lower approval threshold respond innocently, “We are not trying to raise taxes, we are just making the process more democratic.” The threat of course is that by making it much easier to impose new taxes on property owners, home ownership could again be threatened as it was prior to Proposition 13 when taxes were going up so fast that many owners were forced to give up their homes.

Thanks to Assembly Bill 2109, more attention can be brought to the burden that parcel taxes impose on California homeowners and it will help make the case that not only should they be defeated individually as they appear on the ballot, but they should be banned outright.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

This article originally appeared on HJTA.org

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