The Fifth Amendment to the United States Constitution, enforced against the states under the Fourteenth Amendment, provides that property shall not be taken for public use without just compensation.1 Similar protections exist in virtually all state constitutions.
The purpose of these protections is to prevent the government “from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”2 Tax-and-take laws violate this maxim by forcing delinquent taxpayers—often among society’s most vulnerable—to bear more than their fair share of the public tax burden.
As the Supreme Court has explained, property rights are not created by the Constitution. Rather, property rights arise from independent sources, including state law3 and common law.4 And these rights encompass more than just physical lands and things; even rights in intangible property are included.5 When someone owns a home, for example, they also have a right to the home’s equity—the underlying value of the home after accounting for all debts.
In the context of private debt collection, the law has long recognized equity in property as a discrete and valuable interest, requiring its return to the former owner after a property’s foreclosure.6 Consistent with that principle, tax collectors have traditionally been—and in most states still are—required to hold a public sale of a property and refund any surplus proceeds from the sale of a tax-delinquent property to the former owner.7 The famous jurist Sir William Blackstone wrote that, when officials seize property for delinquent taxes, “they are bound, by an implied contract in law” to sell it and “render back the overplus.”8 This principle may trace its roots all the way back to Magna Carta, which limited the king’s right to seize property and prevented him from taking more than necessary to satisfy tax debts.9
In the early days of the republic and for at least a hundred years, government officials who took more property than necessary or who failed to refund the surplus proceeds after selling seized property were liable in trespass or conversion or for a taking.10 It was widely understood that tax collectors could take no more than they were owed.11 So secure was this principle that when Congress passed a statute that appeared to confiscate equity in tax-delinquent property in the newly formed Confederate states, the U.S. Supreme Court repeatedly chose a strained interpretation to avoid such an outcome.12
In short, the principle that tax debtors have a right to the equity interest in their property was in force when the Takings Clause was adopted, and it is still in effect throughout most of the U.S. Most states refund the surplus equity to the former owner after selling tax-delinquent property.13 Those that fail to abide by this principle violate the Constitution.