Mises Wire

Civil Asset Forfeiture: Another Stealth Tax

When you’re a government agency, asking for a tax increase is always a hassle. 

For the most part, taxpayers don’t like taxes, and if asked if they want to pay more, they’re likely to often say “no.” 

Moreover, when public officials pass tax increases, they may face the wrath of taxpayers at the ballot box.

For this reason, governments are always looking for ways to get revenue without having to use tax revenue. After all, if taxes are the government’s only source of revenue, this presents a problem. As noted by Ludwig von Mises in Omnipotent Government: 

The government has but one source of revenue — taxes. No taxation is legal without parliamentary consent. But if the government has other sources of income it can free itself from this control.

One of these “other sources of income” is the so-called “inflation tax” through which governments can create more money for themselves by simply creating it. The “tax” then falls on the public which is left holding devalued currency. 

This is, as Ludwig von Mises, noted, “essentially undemocratic” since it’s an attempt to make an end run around the voters and obtain more revenue without having to go through the trouble of raising taxes honestly and out in the open. 

Another method of seizing wealth from the taxpayers is through what is now called “civil asset forfeiture.” 

This occurs when a law enforcement agency seizes the assets — including real estate, cars, cash, and other valuables — from private citizens based merely on the suspicion that the person has committed a crime with the assets in question. No due process is necessary. No conviction in a court of law need occur. 

While it is technically possible to sue a government agency to reclaim one’s possessions, this requires immense amounts of time and legal fees to pursue. 

Needless to say, civil asset forfeiture has become a lucrative source of income for law enforcement agencies. And, over the past 30 years, the practice has become widespread. 

Tate Fegley writes

Similar to how the income tax has become the primary source of funding for the federal government, many police departments have become dependent on CAF [civil asset forfeiture] to pad their budgets. In a survey of 1,400 county sheriffs and municipal police departments, 40 percent of responding agencies agreed that forfeiture provides a necessary budget supplement.

Fortunately, many taxpayers and reformers have begun to demand changes to their policies, and require that property can only be seized if the accused is actually convicted of a crime. 

In recent years, New Mexico and Nebraska have enacted sweeping reforms to the system. Other milder — but significant — reforms have also been adopted in Maryland, Florida, Minnesota, and Montana. 

Not surprisingly, law-enforcement agencies have often opposed the reforms tooth and nail. Moreover, in New Mexico, many municipal governments simply continued to seize assets, claiming the state law did not apply to them. 

Even when the reforms are extremely mild, as is the case with recently-passed legislation in Colorado, local governments and law enforcement agencies are demanding the governor veto the reform legislation already passed by the legislature. 

In response to the proposed legislation, a lobbyist for the County Sheriffs of Colorado claimed

A lot of the counties don’t have the money to put the supplemental budgets in there to make these drug task forces go, and so that leads to decreased ability to do drug investigations and human trafficking investigations.

The message: “veto this bill, or you’re complicit in human trafficking.”

In a joint op-ed penned by the DA, the sheriff, and a commissioner from one Colorado county, the authors demanded a veto pointing out that “the forfeited funds go to all of our law enforcement agencies ... to assist in enhanced training programs, purchase equipment to keep our officers safe, and help prevent crime in our area.”

Looking at government protests to the reform one will notice a common denominator: civil asset forfeiture is about enhancing the revenue of local governments and law enforcement agencies. 

Virtually ignored is the fact that these revenues are obtained by seizing the property of innocent people. We know they’re innocent, because — nationwide, at least — an overwhelming majority of seizure victims were never actually brought up on any criminal charges

Indeed, the opponents of the Colorado legislation claimed the burden of proof was on the legislation’s supporters to prove “abuse” on the part of law enforcement agencies. But only in the mind of a government agent is seizing property without due process — even if it’s a single case — not prima facie evidence of abuse. 

Moreover, “proof” is hard to come by precisely because reporting requirements are so lackluster in cases of asset forfeiture, that it’s hard to know the money’s provenance, or where it ends up. 

These government agencies claim that without this revenue, they’ll be unable to fight crime effectively. But, if government agencies need to collect revenue to fight violent criminals, there’s a perfectly legal and out-in-the-open way to raise that revenue: they can ask the taxpayers to submit to a tax increase. 

It’s that simple.

If this money is really as essential as the government agencies say it is, a tax increase should be a slam dunk. After all, who doesn’t want more money for the prevention of human trafficking? 

But we all know what will really happen. The taxpayers, already burdened with multiple federal, state, and local taxes, may be reluctant to approve yet another tax increase. The local governments would have to convince the taxpayers that the money would actually be used for fighting serious crimes, and not to pad the pensions of government employees.

Thus, it shouldn’t surprise us at all that local governments and law enforcement agencies would rather make their money by stealing from people who’ve never been convicted of any crime. It’s so much easier that way. 

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