The New Landed Gentry

The United States was formed to establish the individual’s right to own property and to have a vote in the establishment of laws through the election of representatives. These rights were to be protected through the Bill of Rights in the Constitution. Yet within the past sixty years the Democratic Party has worked to slowly undo these rights and establish themselves as what can only be called a contemporary version of the old British landed gentry: those who earn a living from owning property and renting it to taxpayers.

This article is not intended to examine a theory of how a landed gentry can be established in contemporary American politics. Unfortunately, the seizure and rental of property by government is an established fact.This paper will primarily focus on Illinois and the methods its government has used to establish its landed gentry.  Illinois is the best example since it is the most thoroughly dominated by the Democratic Party, and has experienced the most thorough control of its finances and property through Democrats. 

Local governments obtain their authority to levy property taxes through the exercise of what is known as police powers: the duty of the government to maintain services for the health and safety of the community. But in Chicago the pensions paid to public sector union retirees have become so great that in effect all of the property tax revenues are used for public pensions and bond debt only. The services provided by the city such as police and fire protection are now funded solely through fees collected by the city for such things as cable TV, motor fuel and liquor taxes, and so on. Recently the city has started floating the idea that it will begin to bill residents for street lights and other services they claim are paid for through property taxes. 

While retired teachers take up most of the pension dollars raised by the city and state, the number of pensioners in Illinois is so great that now there are 80,385 people who get a pension of more than $60,000 a year and of these there are 13,240 who earn $100,000 or more. An additional 20,004 make a pension between $60K and $80K a year. The total for the past year was $12.7 billion dollars.

These are the landed gentry. And while pensioners assert that the Illinois state constitution forbids reducing public pensions, the state constitution also mandates the state budget be balanced, and Democrats ignore that.  Currently there is a six billion dollar deficit in the Democrats’ state budget. 

No wonder Chicago’s municipal bonds now have a junk bond rating, and Illinois has the highest unfunded pension debt -- $205 billion according to Moody’s -- of any state in the U.S.  

How this debt came about and how Democrats gamed the Constitution to make it happen are closely related. The voting public is supposed to have some input into property tax increases. Illinois has a state law that requires that any property tax hike of five percent or more be put before a public hearing. However, to get around this, municipalities have raised taxes 4.99% a year so the public doesn’t have to know what’s going on. And contracts made with public unions are negotiated behind closed doors. The only thing the public is allowed to know is how much their new property tax bill will go up. In Chicago, now each household “owes” the city and state $88,000 for their pensions. In effect the charming Democrats used the homes of innocent taxpayers as collateral to create the bond debt they want to fund their pensions.

These tactics have been carefully hidden for decades. Only with the retirement of Mayor Daley II has the city been “allowed” to reveal its pensions debts. After Daley retired, the Treasurer started to list the unfunded debts of all the major pension funds on property tax bills. This verifies that the property taxes only go to fund the luxurious retirements of public union members. And only through careful investigations by the Chicago Tribune newspaper, the IL Better Government Association, and the Illinois Policy Institute have other details been revealed. 

The Tribune reported that when it asked to see the records of how the $9.8 billion of bond debt money was spent, records showed that millions were spent on such things as flower boxes for street decoration, plastic doggie bags, and real estate deals for the politically connected. 

So the Democratic Party is stonewalling investigations into how they spend money; refuse to allow citizens to attend meetings where their taxes are raised, and secretly creating more debt through muni bond issuances and layers of derivatives.

Anyone who appeals their property tax bill does not have the right to be heard by a jury. A tax appeal board, not a jury, decides the issue. Taxpayers have no say in the amount of the taxes or whether or not they are lawful.

Some may say that blaming Democrats for this is an exercise of partisan politics. But the Center for Responsive Politics reports that the landed gentry, the two national teacher unions, AFSCME and the SEIU, gave 99% of their campaign money to Democrats. Of the six biggest national campaign contributors, four are public sector unions.  Big oil, big steel, and automakers haven’t been the biggest campaign contributors for decades.

In Illinois the public sector unions have not seized ownership of the land. They shrewdly allow the owners of the land to keep their names on the deeds but raise rent -- taxes paid to fund their pensions -- constantly and without any input from the property owners. The unions protect their pensions through a clause of the Illinois constitution that states public union pension contracts may not be impaired or reduced. However, this clause may violate the equal protection clause of the 14th Amendment since it sets up separate treatment under state law for those who are in public sector unions. Similarly, the extortion of residential property taxes under threat of tax sale for unpaid taxes without market value compensation violates the 5th Amendment: “nor shall private property be taken for public use, without just compensation.” Market value compensation is never paid to homeowners who lose homes to tax sales, as it is when property is taken through eminent domain.

It is not just the Constitution that is being violated but state and Federal laws. For example, private businesses that do work for the state of Illinois are not allowed to make campaign contributions, but public unions are. It is a policy of Federal law that government money cannot be used to influence elections, yet teachers in Illinois are the biggest campaign contributors, kicking back their property tax-funded salaries to the lawmakers who vote for their contracts and protect them with the Illinois constitution.

Public sector unions and their legislative enablers have shrewdly planned to violate the Constitution and pursue a strategy to make themselves a permanent landed gentry class throughout the U.S. Public sector unions are not legally based on the Constitution and someone must challenge these violations of the Constitution before the Supreme Court.