“Taxes,” the Supreme Court justice Oliver Wendell Holmes once said, “are what we pay for civilized society.” Ensuring that citizens pay their taxes is thus a matter of public priority. But when people fall behind on property taxes, this shouldn’t become an opportunity for private profiteering — as is the case in New York City and thousands of other cities and counties across the United States today.
On May 20, New York City will place the fate of tens of thousands of properties — including over ten thousand one- to three-family homes with outstanding property taxes, water and sewer bills, and building code violations — in the hands of Wall Street investors and private debt collectors. New York is one of twenty-nine states in the US that permit or require local governments to sell delinquent property taxes, and the right to collect on that debt (known as a lien), to private bidders. Tax lien sales like these perversely turn the civic project of collecting funds for the public sector into a bonanza for predators in the private sector.
Beginning in the 1990s, the financial industry devised new mechanisms for commodifying cities’ debt, brokering bulk sales and securitization deals with scores of counties and cities that gave the lion’s share of proceeds to private investors and placed debt servicers in charge of collecting public debts. Local tax lien sales today power a multibillion-dollar industry that wields considerable influence in state legislatures and among the county and municipal governments it does business with.
In New York City, a special trust created by the city annually purchases a pool of liens at a discounted amount, then markets that debt to investors in the form of collateralized securities. The profits…
Auteur: Andrew W. Kahrl
