A new study from the Goldwater Institute in Arizona tackles the state government's abuse of eminent domain and offers 12 market-based alternatives to taking over property. In Arizona and other states, eminent domain has become less about developing public infrastructure and more about developing tax revenue.
Taking a property owner's brake shop or barber shop because it is too small, too old, too ugly, or another party has a "better" use for the land violates fundamental constitutional principles, creates uncertainty about property rights, and can deter individuals from opening or expanding their businesses.
Hmmm, by the "too small, too old, too ugly" standard, my cat should have been government property long ago. A Google News search for "eminent domain" reveals that the problem isn't just in Arizona. Some of the headlines: Eminent domain reform rests with governor in N.Y., Growth leads to more eminent domain cases in Florida, and Homeowners fight eminent domain decision in Connecticut -- and that's just a handful of news stories from this week.
A few organizations work solely on this problem. Castle Coalition offers an Eminent Domain Survival Kit. Defenders of Property Rights and Institute for Justice also have information. The National Center for Public Policy Research published Shattered Dreams: 100 Stories of Government Abuse, which you can download. Check out the eminent domain section. From small businessmen to little old ladies, the government will rip off anyone! Sad stories.
There is a bill in the House Ways and Means Committee that would give people who lose property through eminent domain a little break from the IRS. The new bill would allow those who are forced to sell to the government to pay no capital gains tax. According to present law (I.R.S. Code 1033) they pay no capital gains tax only if they reinvest in certain types of real estate within three years. The new law would allow citizens to do whatever they want with the money, including start new businesses, venture capital investment, or build real estate.