A decision by Pfizer not to develop some land it owns in New London, Connecticut, would not normally make news. But because of the controversial way in which the firm came to own that land, which required a Supreme Court case to resolve, that plot of land is back in the news.
We’re reminded that people are good at the things they enjoy. Justice Souter hated tax cases, and he decided them poorly.
In one of his most controversial cases, Souter cast his vote with the majority in a 5-4 decision to allow a local government to seize unblighted land from private owners and give it to private developers.
The Court accepted the argument of the City of New London, Connecticut, that transferring the property from the current homeowners to private developers would increase the number of jobs in New London and increase the taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. revenues available to the city. This, in the Court’s mind, was enough to satisfy the “Public Use” requirement of the Takings Clause.
Local governments have traditionally used their power of eminent domain to seize private property if it were blighted or if the city needed it for a public use such as a road. Giving land to another private party, in this case a corporation, seemed unjust and a misuse of the term “public use,” so Susan Kelo sued the city for seizing her home, but in vain.
Well, how much tax revenue is it generating now? Zero. The developers have changed their minds and have no plan to develop the land, as Business Insider explains, alongside a picture of the vacant lot where only feral cats now live.
The Wall Street Journal has an I-told-you-so piece with some excellent comments by readers, particularly one from a local named Martin Heilweil who says the property may end up with a nonprofit hospital on it, ironic because that, too, would produce no property taxA property tax is primarily levied on immovable property like land and buildings, as well as on tangible personal property that is movable, like vehicles and equipment. Property taxes are the single largest source of state and local revenue in the U.S. and help fund schools, roads, police, and other services. revenue.
Souter was replaced by Sotomayor who would have decided it the same way, as Reason explains.
Publicity of such fiascoes is beneficial. In the Kelo case, local New London officials were so revenue-hungry and confident that Pfizer would prosper that they threw people out of their homes and gave the land to Pfizer. In the Dell case, North Carolina officials were so confident that Dell would thrive there, they gave outlandish tax incentives worth millions, possibly up to $318 million, to the firm to build a facility. Five years later Dell has abondoned it. These so-called economic development officials are trying to outguess the market, but they can’t and shouldn’t be permitted to risk taxpayers’ money that way. This LocalTechWire article includes some surprisingly candid reactions from North Carolina officials who acknowledge that they were gambling with taxpayer money.
P.S. Alicia reminds me that a group tried to teach Souter a lesson by persuading his New Hampshire town to seize his home to build the Lost Liberty Hotel and Just Desserts Cafe, generating more property tax for the town than Souter’s residence generates. The FoxNews story googles up first.Share