On Takings, Taxes, and Entitlements

American Thinker | Steven M. Warshawsky | Aug. 2, 2008

America recently marked the third anniversary of one of the most controversial Supreme Court decisions of recent memory: Kelo v. City of New London. Kelo is the now-infamous “takings” case, in which the Supreme Court declined to rule unconstitutional a Connecticut town’s decision to use the power of eminent domain to take property away from a group of working-class homeowners and give it to a private development corporation for use as part of a government-approved “economic revitalization” project.

As a result, attractive, well-maintained homes that the petitioners had lived in for decades were bulldozed to make way for upscale condominiums, a waterfront conference hotel, an office park, a renovated marina, and various other commercial and retail facilities that cater to the interests of the business, professional, and leisure classes.

The legal issue in Kelo was whether the proposed taking was for a valid “public use” within the meaning of the Takings Clause of the Fifth Amendment, which prohibits the government from taking private property except “for public use” and upon payment of “just compensation.” In its decision, the Supreme Court acknowledged that the condemned property in Kelo would not be open for use by the general public, in the manner of roads or parks or schools or public utilities. Nevertheless, the Court held that the proposed redevelopment plan served a valid “public purpose” because it would bring “new jobs and increased tax revenues” to the local community. The fact that the plan primarily would benefit private individuals and corporations, at the expense of the displaced homeowners, did not render it unconstitutional. As the Court explained, “[p]romoting economic development is a traditional and long accepted function of government.”

The Kelo decision produced an avalanche of outrage from across the political spectrum, and sparked a grassroots movement to limit the eminent domain authority of state and local governments. The reaction to Kelo was driven by the simple, yet powerful, insight expressed by Justice O’Connor in her dissenting opinion (which was joined by Chief Justice Rehnquist, Justice Scalia, and Justice Thomas): “Under the banner of economic development, all private property is now vulnerable to being taken and transferred to another private owner, so long as it might be upgraded — i.e., given to an owner who will use it in a way that the legislature deems more beneficial to the public — in the process.” While the majority opinion in Kelo faithfully, if mechanically, applied existing Supreme Court precedents (which had upheld egregious uses of eminent domain in the past), Justice O’Connor’s dissent expressed a deeper concern about the abuse of governmental power.

Read Justice O’Connor’s statement again. It encapsulates much more than the logic of the Kelo decision — it describes the very essence of contemporary government. As any disinterested observer must conclude, the most important function of government today, even in the “capitalist” United States, is to use the power of the state to take the property of some persons and give it to other persons. In short, expropriation and redistribution. Only instead of using the power of eminent domain, the government mainly uses the tax-and-spend power to achieve the same ends. The purported justifications may be financial security or economic growth or cultural enrichment or, simply, “fairness.” It does not matter. The result is the same: The legislature takes the private property of some persons and transfers it to other persons “who will use it in a way that the legislature deems more beneficial to the public.”

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