Real Estate & Property Law

Further Thoughts On Property Taxes And Voting

By Robert Thomas (inversecondemnation.com)

I've received a few interesting comments and e-mails on an earlier post ("Why Hawaii Can't Vote On Property Taxes") about the Ohana Kauai property tax charter amendment and how it was declared unconstitutional by a 3-2 Hawaii Supreme Court.

Here's one that I thought was worth moving from the below-the-fold comment section:

I know you're addressing strict legal interpretations here at inversecondemnation.com, but I feel compelled to mention that giving the direct power to tax to the electorate does not necessarily mean that it will be exercised fairly and wisely. To deprive the electorate of ability to directly set tax policy through charter amendments does not deprive them of the ample power they have to effect tax policy through their choice of elected representatives and their ability to remove unresponsive representatives. It also permits elected representatives to make wise and balanced decisions fair to all taxpayers many of which have no right to vote. These decisions may then also be enacted with an eye to economic consequences which are often overlooked by the electorate. My primary concern over the Ohana Kauai charter amendment was that it would tend to shift the property tax burden to non-owner occupants such as owners of rental units who in turn must pass this along in rent increases to their non-home owning, less affluent tenants. 

I recall talking to a less than affluent renter I know who voted for the amendment because he wanted to prevent tutus from being forced to sell their homes due to rising property taxes. This was one of the several heart-wrenching and effective pleas that were voiced during the public debate regardless of their factual validity. He had no clue that by voting for the amendment, he might just as likely be voting to indirectly increase his own rent. As we all know, government is reluctant to reduce spending in the face of lower revenues when it can increase them simply by raising taxes, especially when the heavier financial burden is shifted to non-voters, the uninformed and minority classes of taxpayers.

It's true that the voters are not presently without remedies, and that reasonable people can differ regarding whether establishing or amending property tax policy by direct democracy is a good idea from a philosophical or political standpoint. At issue in the Baptiste case, however, was not whether a property tax cap or whether allowing voting on taxes was a good idea or not, but but whether judges are the ultimate arbiters of that question. In the end, the 3-2 majority of the Hawaii Supreme Court held they are.

Full post as published by inversecondemnation on June 15, 2009 (boomark / email).