Croker Sack

"Democracy is the theory that the common people know what they want, and deserve to get it good and hard." — Henry Louis Mencken (1880-1956)

Tuesday, February 21, 2006

Of straw men and false analogies

A letter to the editor in today’s Kitsap Sun (fifth from the top) offers a strange and illogical argument against Initiative 933 (which would compensate landowners for the effects of some land-use restrictions enacted by government entities).

First, the writer, Linda Museus, set up a straw man and later attempted to knock it down:

People (almost exclusively landowners) who support Initiative 933, the initiative which will require taxpayers to pay any landowner whose property drops in value due to land-use changes, apparently feel that an investment in real estate, unlike investments in any other commodity, should be guaranteed.

Of course, no one argues that a real estate investment’s value should be guaranteed. The argument in favor of compensating landowners centers on the use of government power to deny landowners the use of their property.

Arguing by analogy is often difficult, since analogies are rarely perfect – and opponents tend to pick at the imperfections. But, arguing by presenting a false analogy is simply illogical – and that is what the writer did:

People who owned limited partnerships in the early 1980s (most of which involved large sums of money) saw their investment decrease and, in some cases, become worthless after Congress passed a law which turned the advantages of owning a limited partnership into a great disadvantage. Yet, no one proposed, and would have been laughed out of town if they had, that the U.S. taxpayer indemnify those investors for their losses.

The limited partnerships to which the writer referred were “tax shelters” – entered into primarily for the purpose of avoiding federal taxes on income that was unrelated to the partnership.

This article explains the history of limited partnerships in the 1980s and the effect of changes in federal tax law to eliminate those tax shelters.

There is no similarity between the elimination of tax shelters and the imposition of restrictions on the use and development of real estate. There being no similarity, there is no valid analogy from which to argue against I-933.

Finally, the writer states: “I really would like someone to tell me why I should subsidize an investment if it decreases in value.”

The straw man might be knocked down, but the actual argument in favor of compensating landowners remains untouched.

Landowners should be compensated when government imposes restrictions that significantly reduce the utility of the land and thereby reduce its market value – all for a purported public purpose or benefit.

For example, when King County prohibits landowners out in the suburbs and beyond from even removing the natural vegetation on two-thirds of their property, those landowners ought to be paid by the public. The use of their land has been taken from them for the benefit of other county residents, yet the cost of that public benefit is borne only by the affected landowners.

This has nothing to do with guaranteeing or subsidizing the value of the investment in that land. It has everything to do with respect for property rights and the obligation to pay for what you take.


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