no third solution

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Category Archives: Taxation is Theft

What is a Land Patent?

April 17th, 2008

Someone using WOW! cable internet service was looking for information on allodial titles and land patents in Michigan.

Before I worked in market research, I worked in real estate as a title examiner. I saw one Land Patent during the three years I worked for the title insurance agency. When the city of Rochester (MI) was platted, someone left out a small parcel on the south end, near South Street and Diversion. It’s now a small office building. In any event, the Land Patent was in the chain of title and I had never seen one before. It was from 1806 or something ridiculous like that.

Presumably the problem back in the early 1980s, was that nobody would mortgage the property as long as it could not be proven to exist. And without a Land Patent, the property was kind of in Limbo. Ultimately, there was a Patent for that land somewhere in some hall of records in D.C., which put an end to the problem once it was properly recorded with the Oakland County Register of Deeds.

But what is a Land Patent, and how (if at all) is it related to Allodial title?

A Land Patent is a document that purports to establish the Government’s title to property, in order to legitimize future conveyances of same. The Government is claiming dominion over an unowned resource, and then selling that resource for a profit, without generally having done anything to the property other than survey it and draw it on a map. Once the illusion of ownership has been established, the Federal Government then deeds the property to a State or Territory, which deeds the property to an individual or a developer, and so on.

Technically, a Land Patent is part of the chain of title for all property within the United States, because of indemnification (an insured Warranty Deed or two, is generally sufficient), for underwriting purposes it is rarely necessary to look far enough back in time to find the original Land Patent.

What does this all have to do with allodial title? Unfortunately, not much, since you can’t buy allodial title to real estate (or anything else, for that matter) in the United States. The Land Patent destroys allodial title.

Some people are afraid of free markets in property because they think an evil capitalist would fence off all the land, and bleed the servile citizens—but that is precisely what Government has already done, by granting to itself the title to all unowned land.

I suppose that if you were fortunate enough to live on a parcel of land which by some error had never been patented, you might actually have allodial title to that parcel. You’d certainly have a strong case. Of course if the Government didn’t like that idea, they’d just have to drag you into one of their courts, and find one of their judges willing to rule in their favor. They would probably use some application of an argument from estoppel: The historical record of your actions is in contrast with what you now assert. You’ve been paying all of your property taxes as if the State had jurisdiction all along, therefore the State has jurisdiction.

You’d probably lose.

As far as I know, a Land Patent has no expiration and patented land cannot be abandoned in the legal sense. In theory, a Land Patent could probably be revoked by the Government, but in practice a Land Patent is only void by conquest. The Land Patent is essentially an instrument used by the government which says something to the effect of “Finders, keepers.” But since it also says that the government will kill brown-skinned aboriginal people contesting this claim (summarily contradicting the “finders, keepers” argument) it basically says that “might makes right.”

There’s government, in a nutshell for you. “If you don’t like it, we’ll fucking kill you.”

Comments on Comments #13

April 17th, 2008

Eric Sundwall encourages me to think about “Allodial title” in a comment left on The Zoning Board.

Nice piece David. This type of idiocy goes on unabated everywhere. Its nice to see a super critical eye make the effort that must be absolutely time and patience consuming . . . think Allodial title.

First, thank you for paying your compliments, they are appreciated. I had been drafting a post on the subject of allodial title for quite some time, without really knowing in which direction I wanted to take it. Your comment resulted in the completion of Why Can’t You Buy Allodial Title?

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FSK suggests that I made an error in Why Can’t You Buy Allodial Title?

Assume your land is worth 100 ounces of gold, and the price remains unchanged over time. Suppose property tax rates are 1%. In that case, your property tax bill is 1 ounce of gold per year *FOREVER*. What is the present value? It’s 1+1+1+1+1+1+1+…! In other words, the “present value of future property taxes” is *INFINITE*.

Since Government is always able to raise taxes or steal money through some other means, it need not concern itself with time preference. What I did not make clear is that the present value of future property taxes at the present, is infinite because Government doesn’t have a discount rate.

Time preference suggests that money now is worth more than the same sum of money in the future. If you have a discount rate of 5%, and I owe you $100 in one year’s time, I ought to be able to satisfy my obligation by giving you about $95 today. But Governments don’t have time preference. If Governments had a discount rate, d, the NPV of expected future taxes would not be n(1) to infinity, but rather the geometric sum of: 1+(1/(1+d)^1)+(1/(1+d)^2)+…+(1/(1+d)^n-1)+(1/(1+d)^n). This geometric sum has a limit determined by d. If d = 5%, the present value of $1, say, 80 years hence, is about two cents and after about 300 years, Excel tells me that the series sums to $21. That is, $21 today at 5% is equivalent to receiving a perpetual annuity in the amount of $1.

I might not have done it correctly, but I checked my math here .

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In reference to What to do When You Can’t Refinance, FSK says I’ve made a huge error.

With fiat debt-based money, it’s irrelevant to talk about “time preference”. If you are prudent and “save money” in a money market account, you’re *GUARANTEED* to be ripped off by inflation.

You don’t necessarily need to “save” money in a market account, per se in order to exercise time preference. But you do need to live within reasonable expectations of your future economic means. If you’d like to eat some cake tomorrow, you can’t eat it all today. If you’d like to enjoy some luxuries tomorrow, don’t spend all your money, today. That’s what I mean by time preference. A lot of people got themselves into financial trouble because they wanted to have their cake and eat it, too.

Of course, the case could be made that the government can rob you as much in the future as now, but I think people should still avoid over-leveraging themselves as much as possible in order to best weather whatever the future brings.

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Olly comments on State Evicts Man from Land Nobody Owns:

David — do some reading on Seattle’s mayor, and our general city council — you’ll get the picture of political correctness and “properness” taken to new extremes. After all, we’re the supposedly “liberal” city that banned lap dances.

This makes me so freakin’ angry. With all the homelessness everywhere, we can’t even see fit to leave a guy alone who’s managed to make his own way in the world, without being a burden on anyone, and we’re going to turn him into a shelter victim?

Among other things, Olly! Seattle’s brand of “liberalism” would make Mises roll in his grave. Seattle’s “liberalism” succeeded in banning malt liquor in certain neighborhoods, and according to the sheriff, resulted in some people being “run out of town.”

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Regarding The Benevolent Invader, FSK says that I make

[A]n argument that seems sort of silly. Suppose you are invaded by a dictator who offers SLIGHTLY BETTER TERMS than the current government? Technically, you should not resist the invasion. That’s thinking in the wrong direction.

Technically, what I said was that your current government should not resist the invasion, if it is in-fact interested in your freedom. “The Benevolent Invader” was set up to demonstrate that States don’t protect your freedom. If State B says to State A, “Relinquish power over your citizens to us, we promise that they will have a better life and that they can leave whenever they want,” State A will not permit this. The fact that State A will not permit its citizens to choose between Dictators is proof that the State is not interested in protecting their freedom.

“The Benevolent Invader” began as a precursor to the subsequent How is a Government Established?, in which I make an argument for self-governance. I felt that both posts were stronger standing alone.

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In a comment left onIs Resale a Copyright Infringement?, Kip, Esquire says:

[L]et’s not overreach. “There is no upside to this sort of prohibition”? Really? Never ever?”

Contract rights can indeed supercede property rights. But like all contracts, the terms should be clear and the parties should be entering into it voluntarily and fully informed.”

As I commented on his post:

I have no qualms with the point you make with regards to contracts. But I don’t see “copyright” and “contract” being synonymous terms. In fact, I don’t think that “copyright” as we know it is a valid “contract” at all.

Of course contracts could be written in such a manner to aim at securing something similar to “copyright”, but I don’t think it’s likely that anything approaching copyright as we know it could be sustained by a free market. In fact, I conclude that the likelihood that a free market could (or would) concern itself with copyright infringement is near zero.

I don’t think that “contract” and “copyright” are synonymous, or even near-substitutes, because the environment under which copyright exists is the brutality of government. “Copyright” is no more freely consented to than taxes. We can’t pretend that copyright is a contract to which parties freely consent; the very system of “copyright” is created and enforced by governments.

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In Comments #12, Tony inquires about my opposition to fractional reserve banking:

As you understand it, how much of the problem with fractional reserve banking is the concept and how much is the people who practice it? How, if at all, is your objection tied in with fiat currency?

Is that clear? It’s open-ended, I know. I’m just trying to get an understanding of an anarchist approach to the topic. Thanks.

Tony, I’m working on a well-thought out response to this inquiry which will be a stand-alone post. Right now, it is a work in progress.

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Peter Boettke asks:

Right now the economics profession has not had a clear intellectual leader step forward to challenge the emerging statist hegemony…

How do we find [the next Ludwig von Mises, F.A. Hayek, or Milton Friedman] and how do we cultivate them? And without them can we survive the statist onslaught on our economic freedom?

It is hard to cultivate free-market thinkers in a system that is controlled by the Statist elite. Most education and academic research is publicly funded and directed. In “The Free Banking Alternative,” Lawrence H. White notes that:

[C]entral banks subsidize monetary policy research. The Federal Reserve System employs over 400 research economists on its staff, and subsidizes hundreds of academic economists each year as visiting scholars and consultants. Tariffs employ many fewer economists and have many fewer defenders.

This is still a battle of ideas and ideals, but I don’t think it will be won in the classroom. There are many people who espouse the same principles, and perhaps many more who might be inclined to do so, and I suppose its our job to find them and educate them a bit less formally. Not to discount the work done by those in Academia, but a thousand people believing and practicing and communicating these principles will be more effective in winning the battle than the next magnum opus like Human Action, which most professional economists have probably never read.

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Tony says that Barack Obama is a threat to your freedom of speech. “Senator Obama likes the outside role until he’s an insider. Just like every other politician.”

Apparently, Obama is for free speech, you see. As long as you express your freedom as a Republican or a Democrat. A third party might “overwhelm the system.”

Who knew?

Why Can’t You Buy Allodial Title?

April 14th, 2008

I believe that nobody should suffer under a government, and that nobody should have to buy their way out. But I’d prefer the opportunity to buy my way out than no opportunity at all. I assume that any slave in any time and place would be happy to buy his freedom. What if it were possible to buy allodial title1 from the State? For the time being, I’ll set aside the moral implications of buying one’s way out of the government system.

If you had saved enough money to buy allodial title, it would be yours for eternity, and could be passed on to your progeny and their progeny and so on, ad infinitum, obligation-free. No capital-gains tax, no inheritance tax, no property taxes for your children to assume when they inherit the property, and no taxes to be paid by anyone else, for that matter, should you opt to sell the property to someone else. Of course, a new owner could certainly opt back in to the government’s system of taxation, but I’m not sure as to why anyone would ever go this route. But other things being equal, a tax-free parcel should sell at a premium to government land2, and nobody in their right mind would pay extra for this “privilege” only to then begin paying taxes in addition to that premium. Would they?

What you ought to be able to do is make a lump-sum payment in an amount equal to the expected NPV of your future property tax liabilities.

Some governments have come close to offering this in the past, but probably none really do3. Why doesn’t government offer this option? Buying out your future tax liability assumes that government has a discount rate, i.e., is capable of rationally saving money for future expenses. But government doesn’t invest money in this manner whatsoever.

Ostensibly because taxes are levied for needed services all government does is spend the money that you earned in order to buy things it says that you need, that is, things you would’ve bought for yourself, anyways! Failure to spend the money on those services in favor of investing it could be a breach of whatever obligation government has4. More likely, though, they would argue that just as they deem you unqualified to provide for your present necessities, so too are you unqualified to properly forecast and save towards your future needs.

There is no price you can pay today, under some future circumstances which would be the greater of the amount the State might take from you on that occasion. Government derives its power from its ability to keep citizens enslaved, and if it concedes the right to your future earnings, it has no further means of controlling you.

Accordingly and unfortunately, there is no discount rate for your freedom.

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1. From the Wikipedia entry on allodial title: “Allodial lands are the absolute property of their owner and not subject to any service or acknowledgment to a superior. An allodial title is the opposite of a feudal tenure such as fee simple.”

2. Tax-free parcels must sell at a premium over property subject to tax. Other things being equal, the premium commanded in textbook terms, would be slightly less than the capitalized costs of expected future taxes, properly discounted. In order to maintain its footing, governments would have to lower taxes in order to compete, thus making it more affordable to acquire allodial title to its diminishing number of taxable properties, and further constraining its budget

3. Nevada, for example, limits allodial title to a “period equal to the life expectancy of the youngest titleholder of the property,” thus the State stakes perpetual claim to the property. cfEugene Volokh‘s comments.

Also, since allodial title referent to the state, I presume, does not preclude the Federal government from encumbering the property, the old Nevada statute and others like it, are moot.

4. Lysander Spooner maintains No Treason VI that governments neither are obliged, or could be obliged by anyone to anything.

no third solution

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