Capitalizing on the Urban Fiscal Crisis: Predatory Tax Buyers in 1970s Chicago

The discriminatory overassessment of properties in heavily black and minority neighborhoods was a pervasive, if often hidden, feature of urban governance in post–World War II America. ¹ Comparatively high property taxes in minority neighborhoods became a powerful force in shaping the racial geography of cities and suburbs and an important, if previously unrecognized, factor in the deterioration of urban minority neighborhoods. During the same decades when standardized property appraisal guidelines used by the federal government and real estate industry systematically lowered the market value of properties in heavily black, racially transitional, or integrated neighborhoods (and made them ineligible for federally backed mortgages in what came to be known as “redlining”), in cities such as Chicago, Illinois, tax assessors consistently overvalued property in African American neighborhoods relative to white neighborhoods. ² Higher property taxes inflicted a double, mutually reinforcing penalty on black homeowners, forcing them to shoulder a heavier tax burden (for inferior public services) than whites and, because of this, reducing the market value of their homes even further. Inequitable modes of property assessment not only compounded the financial challenges facing homeowners and tenants in poorer neighborhoods but also made this class of taxpayers disproportionately targeted by speculative investors who used Illinois’s harsh penalties for tax delinquency to amass fortunes. So-called tax buyers annually bought thousands of liens on tax delinquent properties in Cook County. The possession of a tax lien allowed its holder to saddle financially distressed homeowners with crippling debts and, if the homeowners failed to settle, take possession of their home and all its equity.

The age of urban crisis provided a fertile ground for investment practices and market-oriented approaches to bureaucratic administration and local law enforcement to grow. The exodus of people and industries from central cities decimated urban finances, and sent public officials scrambling to find new sources of revenue. At the same time, rates of property tax delinquency rose sharply in many of the city’s poorer and heavily minority neighborhoods. Tax buyers seized on the investment opportunities created by the urban fiscal crisis. And as investor dollars poured into Cook County’s treasury, public officials and bureaucratic administrators increasingly became agents and promoters of an industry that preyed on its own citizens, bending the laws governing tax assessments and tax delinquency to facilitate and protect exploitative practices. Desperate for revenue, public officials tacitly encouraged predatory tax buying and, in spite of public outcry over the industry’s practices, its devastating effects on individual homeowners, and the havoc it wreaked on poorer neighborhoods, resisted calls for reform.

In 1960s and 1970s Chicago, tax buyers turned one of the most basic functions of local government—property tax collection and enforcement—into a mechanism of personal enrichment and private investment. As they did, tax buyers contributed to a broader redefinition of the purpose of fines and penalties in municipal legal and tax codes—from an enforcement mechanism to a vital source of public revenue and creditor confidence to a carrot for corporate investors and outsourcing firms. This article examines a point of origin in the making of modern urban fiscal policy and administration. It traces the emergence of tax lien speculation in the city of Chicago in the wake of reforms to the state’s property tax lien law in 1951. These reforms greatly enhanced the ability of lien holders to acquire deed to the property and increased their ability to exact onerous fees and interest payments on delinquent taxpayers. It is also the story of one man, Allan Blair, whose name became, for Chicagoans, synonymous with predatory tax buying.

By the early 1950s, it seemed, the mechanisms for enforcing property tax payments in the state of Illinois had broken down. Annually, roughly 34 percent of all property taxes in the state went uncollected. ³ Some cited the state’s lax enforcement mechanisms as the culprit. It encouraged tax evasion and discouraged professional tax buyers from participating in counties’ annual tax auctions, thereby depriving local governments of a valuable source of revenue, they said. “Had the annual tax sale been deliberately designed to discourage purchase to acquire title,” tax scholar William H. Speck wrote, “a better process could hardly have been devised.” ⁴ Critics pointed to provisions that allowed property owners to reclaim title an additional seven years after the two-year redemption period, and to the tendency of judges to resolve any dispute in favor of the tax delinquent property owner. So in 1951, the state legislature passed an amendment to the state tax code that removed many of the obstacles that had protected delinquent taxpayers from the threat of forfeiture and vastly expanded the profit potential of tax liens for investors. Numerous provisions and qualifications that tax delinquents could employ in court to prevent loss of title (or redeem after a tax title had been issued) were removed. In its place, the state provided tax buyers a simplified, streamlined set of procedures to follow, and saddled delinquent taxpayers with new, potentially crippling interest and fees. If there were no competitive bids on a lien at auction, tax buyers could charge up to 24 percent annual interest rate over the two-year redemption period. (At tax auctions, parties bid down on the rate of interest, with the lowest bid awarded the lien.) In addition, the law allowed the tax buyer or a third party to pay all taxes and special assessments on the property during the redemption period; those costs (along with a state-mandated 7 percent interest charge) were tacked onto the total bill, which, by the end of the redemption window, also included a host of processing fees. If the two-year redemption period ended without full settlement, the tax buyer was immediately entitled to the deed to the property, which he or she secured from the Circuit Court, rather than the county clerk, as had been the case before. This made the deed incontestable in court and immediately merchantable. ⁵ The law even provided tax buyers the opportunity to petition the court to issue a conditional tax deed as early as five months prior to the taxpayer’s deadline. ⁶

For tax buyers, the county’s annual auction now provided both an opportunity to profit handsomely from interest payments, and a real chance to acquire real estate for pennies on the dollar. ⁷ With requirements and procedures that only a tax attorney could understand, the new tax law also effectively prevented the public from participating in tax auctions, allowing it to be dominated by a few knowledgeable and highly capitalized investors. ⁸

Among the first investors to take advantage of Illinois’s new law was an old hand at the tax buying business. The Interstate Bond Company was founded in Atlanta, Georgia, in the late 1920s, just as the market for farmland bottomed out and the number of tax delinquencies in rural counties rose. The company marketed itself to distressed landowners, promising to pay their property taxes on time and save them the embarrassment of having their names appear in the local newspaper among the list of delinquent taxpayers. In exchange, the landowner would enter into a repayment plan. After five years in operation, the company had accumulated over $2.2 million in assets, making most of its profits during the worst years of the Great Depression. ⁹

By the early 1940s, Interstate was doing business in several states and investing heavily in the purchase of liens on tax delinquent properties. Lobbying state legislatures to pass harsher tax redemption laws became a key component of Interstate’s business model. In 1943, Interstate expanded its operations into Illinois and quickly got to work in Springfield. In 1951, its team of lawyers, led by Chicago attorney Robert S. Cushman, helped to author the Revenue Act, which overhauled the state’s tax redemption procedures. From the perspective of county treasurers, the new law was an unqualified success. In the two decades after passage of the 1951 Revenue Act, rates of property tax collection in Illinois rose dramatically, from an average of 66 percent in the late 1940s to 96 percent by the late 1960s. ¹⁰ Whether the harsh new provisions led to greater compliance, though, was unclear. Rates of collection had been rising prior to the law’s passage. One reason was the nation’s emergence from the Great Depression, a period when tax delinquency rates in cities, towns, and rural counties skyrocketed and open revolts against property taxes gripped many American cities. ¹¹ Casting further doubt on the role of the law in generating greater compliance was the fact that ignorance of the law or a missed payment (not deliberate avoidance) was the chief cause of property tax delinquency.

The new law not only allowed companies like Interstate to earn more from interest payments on delinquent tax bills but also gave rise to a new cottage industry in tax deed acquisition. One of the consequences of the harsh new law was that far more delinquent taxpayers failed to settle their debts before the close of the redemption period. Companies like Interstate were only interested in the interest; threatening to take someone’s home was merely the means to ensuring payment. The process of acquiring title to a property was tedious and time-consuming, requiring numerous court appearances, mounds of paperwork, and the constant threat of angry reprisals from outraged homeowners. Moreover, for a company that had marketed itself as providing a service to distressed property owners, the prospect of throwing people out onto the streets over a missed tax bill and seizing their property was less than appealing.

Allan Blair had no such qualms, and came fully equipped with the legal knowledge and tenacity needed to successfully acquire title to tax delinquent properties. Shortly after the passage of the 1951 Revenue Act, Blair’s law firm entered into a contractual agreement with Interstate Bond Company to buy all of their tax certificates on properties that remained unredeemed one and a half years after the tax sale, or 3/4s of the way into the two-year redemption period. Whereas Interstate enjoyed a steady stream of profits from fees and interest payments, Blair made his money by obtaining title to properties for next to nothing. And during that six-month window before the close of the redemption period, Blair stretched the limits of the law to ensure that those properties would remain unredeemed.

Blair’s law firm turned the speculative art of tax buying into a science. After personally inspecting all properties he stood to gain via tax deed, Blair rated each on a scale from A (most desirable) to E (least desirable). Blair subjected owners of high-rated properties to aggressive and deceptive tactics meant to ensure eventual forfeiture. For mid-range properties, Blair waited until after the redemption period ended before petitioning for title. For the least desirable properties, Blair hoped that the owner would redeem and that he would not be saddled with what he referred to as “the junk.” ¹² The type of property owner and the property’s location went into determining a tax lien’s rating. While major tax buying firms like Interstate (whose profits came from interest payments) had historically targeted property owners who understood the law and the consequences for failing to pay, ¹³ Blair and his associates preyed on those who were least likely to understand redemption procedures and the tax delinquent’s rights under the law (the poor and illiterate, the elderly and senile, widows and shut-ins, the mentally disabled, persons who did not speak English), and thus most susceptible to forms of trickery and deception.

The new law provided Blair and other savvy, unscrupulous tax buyers a variety of methods for increasing the chances of forfeiture. For one, it allowed tax buyers to pay additional taxes on the delinquent property during the redemption period, which would then be added to the taxpayers’ final bill. Just days before the deadline for redemption, Blair would pay the current taxes and any special assessments on the property. While the person who paid taxes on another person’s property was legally obligated to notify the owner of these additional debts by certified mail, this letter, by design, did not arrive until after the deadline for redemption had passed. The owners often only learned of these additional debts (which, under the new law, they were required to pay before receiving a certificate of redemption) when they went to clerk’s office to make what they assumed was their final payment. Unable to quickly round up the additional cash needed to settle, the owners watched helplessly as Blair successfully filed a petition for deed to their home. ¹⁴ This was how Ben and Berta Hagen lost their Oak Forest home. A working couple nearing retirement, the Hagens failed to pay their taxes in 1964. Nearing the deadline, Bertha Hagen contacted the County Treasurer to learn the cost of redemption. However, before she arrived with check in hand, Blair had paid additional back taxes on the home, which were added to the cost of redemption. With the Hagens unable to cobble together the necessary funds, Blair successfully secured the deed to their home.

While the law was exacting when it came to taxpayers’ responsibilities, it was hazy regarding the obligations of tax buyers. Blair routinely waited until just prior to the deadline to notify an owner of his intention to claim the property. Several victims testified as to having never received any notice from Blair, and in one instance, one of Blair’s employees perjured himself by testifying that he hand delivered a notice to a property owner who, it was later learned, was dead. ¹⁵ If a homeowner did learn that Blair bought the lien, Blair used it as an opportunity to confuse and mislead. When Mary Agnes Cahill, the widow of a Chicago policeman, learned she was delinquent on her taxes and that Blair had petitioned for title to her property, she contacted Blair’s office. She was told that the hearing (at which time Cahill could contest the deed transfer) had been postponed and that Blair’s office would contact her when a new date had been set. Cahill never received that call and she missed the hearing; Blair acquired the deed and began eviction proceedings. ¹⁶ Several other persons who lost their homes for unpaid property taxes claimed to have been deliberately misled by Blair’s office in a manner that ensured that final payment would not reach the clerk’s office prior to the last date of redemption. ¹⁷

Blair’s treachery knew no bounds, and respected no holidays. In a case that would draw unwanted attention to the tax buying industry and generate widespread condemnation of its practices, Blair asked the circuit court to grant an extension of the redemption period to Lillian Ware, an elderly African American Evanston homeowner, whose property had a lien placed on it after she had failed to pay the final, $41.57 installment for a special assessment on improvements to the alley that ran behind her home. The extension moved the final day of redemption to December 27, 1972, two days after Christmas, when Ware was more likely to be distracted by family obligations and less likely to have the requisite funds in her bank account to make final payment. ¹⁸ Indeed, Blair proved to be a skilled manipulator of the elderly. Seeking to minimize conflict and future litigation, Blair allowed elderly persons whose properties he had acquired to continue to live in their homes rent-free until they died, whereupon he quickly resold their home, often to the surprise of the deceased’s children and relatives. ¹⁹

For Blair and fellow investors, post–World War II Chicago was a buyers’ paradise, a city where “junk” lots were transformed, thanks to the invisible hands of the state, into gold. Prior to the war, in 1940, Chicago’s city council passed a bill authorizing the construction of a series of expressways that would radiate out from the city’s downtown. It was not until the late 1940s, after the state, county, and city resolved funding issues, that Chicago began implementing those plans and using the power of eminent domain to condemn property in the path of construction. Chicago’s plans for urban renewal, which would become a model for the nation’s, coincided with its mass acquisition of properties for highways. In 1947, the state of Illinois passed the Blighted Areas Redevelopment Act. The act empowered a new public agency, the Land Clearance Commission, to acquire land in “blighted areas” for the purpose of demolition and redevelopment. In the coming years, the Commission used the powers of eminent domain to buy out property owners and displace residents throughout many of the heavily black neighborhoods on the city’s south and west sides. ²⁰

Highway construction, urban renewal, and, later, gentrification turned vast swaths of the city previously shunned by tax buyers into potential investment opportunities. Over the next two decades, Blair and his associates would lean on public officials for insider information, and buy large quantities of liens on properties in areas targeted for future condemnation or redevelopment. ²¹ In the areas surrounding the University of Chicago, the site for pitched battles over urban renewal and neighborhood redevelopment, one of Blair’s chief partners, David R. Gray, bought hundreds of liens on properties in the Woodlawn, Kenwood, Oakland, Hyde Park, and South Shore neighborhoods, which he subsequently sold to speculators. One inquiry into Gray’s activities in black Chicago neighborhoods found that, during a six-month stretch in 1973, Gray gained deeds to ninety-three properties in Woodlawn for a total cost of $70,000. The market value of these properties at the time ranged from $10,000 to $20,000 per parcel. “[A]nd the land,” the reporter noted, “could be worth far more than that to speculators with plans to redevelop the area after the present ghetto inhabitants have been driven out.” ²²

Tax lien buyers had their fingerprints on many of the most unscrupulous practices that would come to characterize Chicago’s “urban crisis.” In 1965, Blair sold a south-side Chicago house on contract to Rufus Thomas for $15,000 after having acquired the tax deed in 1963, allegedly for less than $1,500. As recounted in Beryl Satter’s groundbreaking study Family Properties, contract sales preyed on African Americans who were denied home mortgages from lending institutions, and provided opportunistic lawyers and real estate investors the chance to reap obscene profits off the backs of black families struggling to enter the middle class. ²³ In this case, as in numerous others, Blair knowingly failed to notify Thomas of numerous building code violations at the time of sale. When the summons to appear in Building Court came, Blair pressured Thomas to sign an affidavit stating that he, not Blair, was the property owner (even though Blair, as contract seller, held title until the property was paid in full). Thomas was fined $2,000, and shortly thereafter, Blair served him notice of forfeiture on the contract. ²⁴

By the late 1960s, Blair and his associates had amassed a fortune acquiring deeds to tax delinquent properties. They had turned the rare into the routine, annually filing for deeds to hundreds of properties. Circuit court records listed the law firm of Blair and Buyer as the attorney of record in over 200 petitions for deeds in 1968, and in 175 petitions filed in 1969. In February 1968 alone, Blair’s law firm filed petitions to acquire deeds to forty-six properties. During one stretch of 1968, records showed, Blair was listed as the attorney in fifty-seven consecutive tax deed petitions filed in Cook County Circuit Court. ²⁵ By then, Blair and Gray had built up enough capital to begin buying tax liens en masse rather than wait to collect on Interstate’s unredeemed properties. In 1965, Gray and Blair founded DRG, Inc., and in the coming years consistently purchased more liens than any other bidder at the annual tax auction. ²⁶ For DRG, Inc., the big money still came from those properties that owners failed to redeem. Indeed, while less than 1 percent of the tax liens DRG, Inc., purchased each year (which, in some years, numbered over 6,000) eventually resulted in the issuance of a deed, the sale of these properties accounted for over one-half of the company’s annual earnings. ²⁷

By 1969, Blair and Gray had cornered the market on tax deeds in Cook County. According to one administrative assistant at the county clerk’s office, auctions that used to attract roughly twenty-five bidders now only drew “only about one or two.” ²⁸ As he reaped its rewards, Blair took on a more active role in shaping tax laws to his benefit. Blair’s associate Bruce Buyer sat on the Chicago Bar Association’s (CBA) legislative committee, where he helped to push through several bills that sharpened tax deed laws. “The effect of these modifications,” public interest attorney and Blair’s chief nemesis Marshall Patner claimed, “is to make certain that there are no defenses to the hapless victim.” ²⁹

Blair was quick to convert his wealth into public prestige and political power. Colleagues and critics alike described him as “extremely ambitious” and a “compulsive social climber.” As the profits from other people’s property poured in, Blair moved his family from a middle-class suburb to an apartment on the fiftieth floor of 1000 Lake Shore Drive in the heart of Chicago’s Gold Coast. ³⁰ Later, he bought a summer cabin in Eagle River, Wisconsin. Blair and his wife Jocelyn’s names began appearing in the society pages of the city’s newspapers. In 1968, he was named chairman of the CBA’s ethics committee, the next step in his quest to become a judge.

It was somewhat fitting that Blair spent a portion of his wealth on a downtown apartment, for it was here where we find one symptom of a larger set of inequitable assessment practices that, ultimately, fueled the tax buying industry and the decline of urban minority neighborhoods during these years. When compared with the rest of the city, downtown property owners, as well as the predominantly white residents of the county’s booming suburbs, enjoyed scandalously low tax assessments. Vague state guidelines and lack of oversight allowed local assessors to abuse their powers with virtual impunity. While the state of Illinois mandated that assessors assess property at fair cash value, it provided no guidelines for determining fair cash value, and no state supervision of local assessors’ offices. ³¹ As a result, assessors were free to interpret these guidelines as they pleased. Cook County assessor P. J. Cullerton notoriously rewarded large corporations and allies of the Daley Machine with generous tax breaks. ³² In 1971, the Saul Alinsky–founded organization Campaign Against Pollution (later renamed Citizens Action Program [CAP]) uncovered a pattern of gross underassessment of Cook County’s steel mills, horse racing tracks, real estate owned by the Illinois Central Railroad, and skyscrapers in the Loop. U.S. Steel’s Southern Works, it found, received an annual $17 million tax break from the county. Overall, it estimated that selective undervaluations of these properties removed over $100 million from Cook County’s property tax base. Public outrage over CAP’s findings led the assessor’s office to hastily reassess properties identified in the report and forced Cullerton off the ticket in the 1974 county assessor’s race. ³³

Simply removing a crooked assessor from office did not promise residents of poorer neighborhoods relief from overtaxation. The Cook County assessor’s office adopted a “replacement cost” approach to valuation. This meant that structures were valued based on the cost of the building materials, not necessarily on location. This “fraudulent uniformity,” as critics labeled it, meant that buildings located in expensive, appreciating neighborhoods might receive the same tax bill as those located in declining ones simply because they shared the same structural features. ³⁴

Those seeking to contest an unfairly high tax assessment entered into a bureaucratic maze littered with roadblocks and various obstacles that required a team of lawyers to navigate. By the early 1970s, the county’s Board of Appeals adhered to a set of policies aimed, above all, at limiting the ability of taxpayers to contest their bills. Required by law to publish notice of upcoming hearings in a newspaper of general circulation at least seven days prior, it chose Chicago Today. Of the city’s four dailies, it had by far the smallest circulation. In other instances, it openly defied state guidelines, failing to maintain a public office or make public records available to the public. It provided taxpayers no means to determine the basis for a particular assessment, and destroyed records relating to appeals subsequent to a hearing. A 1972 report by the Illinois Department of Local Government Affairs lambasted the Board’s practices, describing its operations as “veiled . . . in a shroud of secrecy[,]” claiming that its officers failed to perform “the functions of the office as required by [law], and good faith,” and charging it was in “violation of a public trust.” The end result, the report concluded, was that the average taxpayers had no practical means to contest their tax assessment. ³⁵

The very manner in which assessments were made allowed for wide disparities and gross injustices. In Chicago and across the county, the assessed value of a property is often a fraction of its appraised value. The purpose of this practice is to allow assessors to assess different types of property (commercial, industrial, residential) at different fractions of its appraisal, providing relief for owners of some types of property over others. In practice, though, it served to disguise wild fluctuations among properties of the same type. Along with uncovering tax breaks in the form of underassessments for steel yards, skyscrapers, and race tracks, CAP also found a pattern of overassessment in lower-income, minority, and transitional neighborhoods. Whereas the citywide standard for noncommercial properties was 22 percent of appraised value, CAP found that properties in the city’s South Shore neighborhood, which in the previous decade had gone from all-white to heavily black, were assessed between 35 and 44 percent of appraised value. ³⁶ A separate study by the Illinois state Department of Local Government Affairs in 1972 detected a similar pattern of nonuniformity, concluding, “Disproportionate shares of the property tax burden are imposed upon the property owner in the declining neighborhood[.]” ³⁷ This was the case across the country. A 1973 study by the Department of Housing and Urban Development (HUD) of ten large cities found a “general tendency for assessment ratios to be higher in so-called blighted and downward transitional neighborhoods than in upward and stable neighborhoods.” ³⁸

Such disparities were often the result of the assessor’s inactions. Across the post–World War II metropolitan landscape, property tax assessments played an important, and mostly unheralded, role in shaping patterns of development and the dynamics of local real estate markets. In suburban districts, artificially low property assessments became one of the many carrots developers and public officials dangled before middle-class white families, while in the city, officials feverishly worked to keep existing middle-class white neighborhoods intact, in part, by keeping assessments low. In both instances, they did so by failing to regularly reassess properties following development and failing to account for broader trends in the real estate market. Upwardly transitional neighborhoods and new subdivisions became the beneficiaries of what came to be known as “assessment lag,” which became a strategy of economic development in itself. Public officials pressured assessors (who were themselves elected by the voters) not to touch assessments in neighborhoods where property values were rising, seeing such a move as threatening to slow growth and alienate middle-class voters. Not coincidentally, the most underassessed neighborhoods in Chicago also tended to produce the highest number of complaints to the assessor’s office over high property tax bills. ³⁹

At the same time, though, cities were in desperate need of revenue and under great pressure from bond rating agencies to adopt more stringent tax collection enforcement measures. In 1974, Cook County failed to collect $67.3 million in property taxes. The Second City was second only to New York City in the amount of annual uncollected property tax revenue, which failed to collect $191.3 million in property taxes in 1974. ⁴⁰ The credit rating agency Moody’s tracked cities’ tax collection rates. Its annual Municipal and Government Manual listed data on total real estate taxes levied and percentage collected for major U.S. cities, and cited cities’ tax delinquency rates as a major factor in determining its bond rating. ⁴¹ Caught between the desire to retain middle- and upper-income homeowners and businesses through favorable tax assessments and the need for revenue, assessors turned to their city’s poorest, most expendable, and least mobile taxpayers. In fiscally distressed cities, assessors found themselves under enormous pressure not to adjust assessments downward on properties in neighborhoods with high rates of tenancy, where the effects of higher than average property taxes were less apparent to this segment of voters. The overassessment of “slum properties,” in particular, which property tax expert Dick Netzer described as “the rule, rather than the exception” in Chicago and several other major cities, allowed for regressive tax policies to hide in plain sight, embedded in the administrative practices of ostensibly flat or progressive policies. ⁴²

Although often invisible to the individual taxpayer, the tax breaks enjoyed by businesses, industries, and owners of higher-value residential properties bore a direct relation to the onerous tax burdens shouldered by the poor and working class in other ways, too. A city’s property tax base is the sum of all assessed values on properties. The amount of money a city needs divided by its tax base determines the tax rate for all property owners. Assuming a city’s budgetary needs remain constant, for each property that is undervalued, the tax rate for everyone rises. The proportion of the city’s budget paid by each property owner depends on the assessed valuations of all other properties.

Higher than average tax bills in downwardly transitional neighborhoods were not simply unfair. They also had a perverse effect on local real estate markets. For rental units, high assessments lowered property values, as the reduced cash flow was capitalized into lower market price. This, in turn, gave rise to a class of well-connected and deep-pocketed investors who bought overassessed properties, appealed the assessment (citing the purchase price as evidence of diminished value), and then, upon securing a reduced assessment, resold for a modest profit. ⁴³ Assessors’ offices and appeals’ boards were often accused of playing an active part in these ventures. In 1970s Philadelphia, for example, community activists charged that the city’s Board of Revision of Taxes (BRT) colluded with developers to spur the gentrification of “certain neighborhoods” of the inner city by overtaxing properties beyond the capacity of owners to pay. Buyers of these properties tended to be someone with ties to the BRT, who, subsequent to receiving a drastically reduced assessment based on the sales price, resold “at a dramatic profit” to young white professionals. ⁴⁴

While large, well-connected investors shrewdly manipulated the assessment appeals process to their advantage, individual homeowners often assumed that their assessment was an accurate representation of the home’s value. One study of Chicago’s declining neighborhoods found that many homeowners, especially longtime homeowners, tended to be only dimly aware of recent market trends and reliant on tax assessments for a marker of their home’s worth, creating what could best be described as a “bubble” that was sure to burst whenever a city conducted a mass reassessment or when an owner attempted to sell. ⁴⁵ Indeed, many a homeowner who had invested so much, both materially and emotionally, in the promise of homeownership wanted to believe what their tax bill reported. As black commentator Charles Price put it, “Everybody likes to think that his property is worth the world and its gold. So there is never a complaint when property is over valued. The higher the value placed on the property, the happier the owner.” Writing on Atlanta, where the overassessment of properties in black neighborhoods became the subject of a National Association for the Advancement of Colored People (NAACP) lawsuit in 1974, Price said the city’s conscious decision to “hit the residents hard and lighten up on the businesses” in the wake of white flight “exploits the ego trip of many brothers.” ⁴⁶ In one city, local community leaders and grassroots activists in a neighborhood actually lobbied city officials not to reassess properties downward, for fear that it would “promote the impression” that the decline was the result of the increase in minority homeowners in previous years. ⁴⁷

To be clear, high property taxes did not instigate the deterioration of the housing stock of Chicago’s and other cities’ poorer neighborhoods. Nor does it explain why slumlords put so little money into the maintenance and improvement of their properties, despite their claims. Indeed, the 1973 HUD-commissioned study of property taxes in ten major cities “found no examples of reassessments occurring as a result of property improvement” and thus “no support for the contention that the property tax significantly discourages marginal upgrading of blighted properties.” ⁴⁸ Rather than instigating the flight of capital, overassessment and one of its most predictable outcomes—tax delinquency—instead turned poor neighborhoods and their most vulnerable property owners into targets for exploitation.

It was Allan Blair’s brazen attempt in 1965 to exploit Rufus Thomas—first by selling him a home on contract at a grossly inflated price, then by tricking him into signing an affidavit that ultimately allowed Blair to repossess that home and threatened to land Thomas in jail for unpaid housing violation fines—that brought his unscrupulous practices to the attention of public interest attorney Marshall Patner and, soon after, to the public at large. After receiving an eviction notice from Blair, Thomas came to Patner. A lawyer for the Illinois American Civil Liberties Union (ACLU) who had represented tenants in suits against the Chicago Housing Authority and would, in 1969, found the public interest law firm Business and Professional People for the Public Interest (BPI), Patner filed a suit against Blair on Thomas’s behalf for causing a false affidavit to be prepared and filed with the building department. Thomas’s $2,000 was vacated and Blair was slapped with a $1,000 fine for building code violations. ⁴⁹

Blair’s troubles were only beginning. Patner began to unravel Blair’s complex tax buying scheme, first as a private attorney and then as the first executive director of BPI, determined to find a case strong enough to bring to federal court. As he did, Patner also fed stories of Blair’s unscrupulous activities to news outlets, among others, Chicago Daily News columnist Mike Royko. In 1969, Royko penned the first in a series of devastating articles on Blair, his associates, and some of their victims. In March, he told the story of Wilhelmina Schutty, whose run-down, two-flat apartment on Maxwell Street Blair had recently acquired via tax deed after the elderly, reclusive woman had failed to pay a $135 property tax bill. As he did with many of the persons who unwittingly forfeited title to their homes, Blair was attempting to resell the house to Schutty for $7,500 or, failing that, rent to her for $70 a month. ⁵⁰ Royko contrasted Schutty’s suffering with the lavish lifestyle Blair enjoyed at her and others’ expense. He wrote of Blair’s plush Gold Coast apartment, replete with grand piano, top-of-the-line stereo system, assortment of expensive paintings, and rare antiques, paid for with the windfall profits the state’s tax laws made possible.

Public outcry was immediate. Blair was forced to resign his position as chairman of the CBA’s ethics committee, which subsequently launched a blue-ribbon investigation into the tax buying practices of Chicago attorneys. Its report determined that Blair had “acted within existing laws in the conduct of his tax business” and was not in violation of the legal profession’s code of ethics. When a reporter asked CBA president John L. Sullivan if Blair was violating a more general human code of ethics, he responded, “No comment.” ⁵¹

For the next year, Royko continued to assail Blair and explain to his readers, in plain English, the business of tax buying, which had thrived, in part, because it was difficult for the average citizen to comprehend. “If you don’t pay your real estate tax,” he warned readers,

somebody else can. Then you have two years to repay that person his investment plus interest. If you don’t [the tax buyer] owns your property. . . . It happens often, usually to people on the borderline of poverty, or incapable of handling their own affairs, old, senile, demented or foolish. Men like Blair have become rich doing it. ⁵²

Soon, reports of Blair acquiring and reselling properties via tax forfeitures began to trickle in from counties across Illinois. On September 16, 1965, for example, Blair walked into the Peoria County courthouse and walked out with deeds to seven properties acquired via tax forfeiture. “You’d be surprised at the amount of property Blair buys and sells down here,” one Peoria attorney told a reporter. Illinois, it was later learned, was not the only state where Blair did business, but was one of six so-called harsh law states where a tax buying industry had emerged. Indeed, Blair and others only dealt in states that provided tax buyers the opportunity to obtain clean title to forfeited properties. ⁵³

Around the same time that Chicagoans were voicing outrage over Blair’s activities on call-in radio programs and in fiery letters to editors, a letter landed on Patner’s desk, written by an elderly woman named Catherine Catoor who in 1969 had lost her $85,000 Lake Forest home to one of Blair’s associates for $2,000 in unpaid taxes. Barely legible, the letter itself betrayed Catoor’s diminished mental capacity and susceptibility to Blair’s machinations. Catoor had initially enlisted the help of a Waukegan attorney, who argued before a lower court that Catoor’s mental state rendered the forfeiture null and void. The court determined Catoor to be mentally incompetent but nonetheless awarded title to Blair’s associate, Geraldine Hoffman, who then proceeded to sell it to Blair. It was at that juncture that Patner became involved in the case. Before Patner filed an appeal, though, Blair tried to secure Catoor’s compliance by hiring her to work as his family’s live-in cook at his summer home in Eagle River. Shortly thereafter, Catoor signed an affidavit, notarized by Blair’s wife Jocelyn, stating that she had never authorized Patner to assist her in reclaiming her home, that she “[didn’t] . . . care about getting it back,” and that she “expressly does not want any suit brought on her behalf by . . . [Patner] or anyone else, against . . . Blair.” Patner charged that the affidavit was obtained under duress and filed to have it thrown out of court. ⁵⁴ That same year, Patner sued Cook County on behalf of Louis Balthazer, who lost his $16,000 Monroe St. home to Blair for a missed $500 tax payment. Patner argued that the Illinois tax sale law violated both the Fifth and Fourteenth Amendments in that it allowed for the taking of private property without just compensation and without due process of law. The law allowed Blair and other tax buyers to acquire the “surplus value” of the property in addition to the costs of the tax payment, interest, and fees. “There is no parallel in law where people can be deprived of more than they owe,” Patner argued. “Instead of only selling the property and paying the tax debt and penalties—as is the case with a foreclosed mortgage—they take everything.” ⁵⁵ The circuit court rejected the suit, ruling that the two-year redemption period allowed delinquent taxpayers ample time to sell the property and recover surplus value. ⁵⁶

In the wake of Royko’s expose and Patner’s legal actions, public officials and community activists organized to amend or repeal the law. Others worked to gather the facts and connect the dots. The late 1960s and early 1970s saw the release of a spate of studies that uncovered and detailed widespread inequities in the city’s tax assessment practices that resulted in systemic overtaxation of poor and minority neighborhoods. ⁵⁷ In black Chicago, The Woodlawn Organization (TWO) investigated and reported the extent of Blair and Gray’s land grabbing activities, and organized educational sessions in targeted neighborhoods. ⁵⁸ A consortium of community advocacy groups formed the Metropolitan Area Housing Alliance on Tax Law, which lobbied for a series of reforms. ⁵⁹ Jesse Jackson’s People United to Save Humanity (PUSH) held planning sessions at its headquarters for what it described as an “attack against tax scavengers that take peoples [sic] properties[.]” ⁶⁰ In Springfield, Representative Harold Washington introduced a bill aimed at closing the loophole that allowed purchasers of tax certificates to gain title to property without the knowledge of the original owner. Washington’s bill would have “require[ed] county clerks to send proper, clear, and speedy notice to any person who falls behind.” The bill easily passed the state assembly but Senate Republicans killed it in committee. ⁶¹

For progressive tax reformers, the problem of tax sales exemplified the array of inequities embedded into federal, state, and local tax codes and administrative bodies. By the early 1970s, movements for tax equity sprouted up across the nation, and coalesced into national organizations such as Ralph Nader’s Tax Reform Research Group. In 1971, Congressional hearings on property tax reform revealed wide differences in assessment ratios across metropolitan America. A report issued by Senators Charles H. Percy (R-IL) and Edmund Muskie (D-ME) in 1973 concluded, “All evidence indicates that the poorer neighborhoods of many cities are being forced to subsidize heavily, through tax payments, the residents most affluent.” ⁶²

In Chicago, the case of Lillian Ware brought the burgeoning tax justice movement and the city’s civil rights organizations together, and helped to put a human face on the complex, impersonal, and often invisible problem of tax lien exploitation. The retired African American nurse had failed to pay a $41.57 special assessment on her Evanston home in 1968. This was not the first time Ware had failed to pay her property taxes, as Blair and Gray discovered. Her habitual delinquency, and the property’s value, made it a prime target at that year’s tax auction. So confident that Ware would fail to redeem, DRG, Inc., agreed to charge 0 percent interest in exchange for the winning bid at the 1969 tax auction. Their bet paid off: in 1971, the two-year redemption window closed, and Gray subsequently petitioned for deed to the property and initiated eviction proceedings. Ware did not have a legal leg to stand on. (Blair and Gray’s ruthlessness was only matched by their meticulous adherence to the law, which formed the bedrock of their business and, in the face of withering criticism, public relations strategies.)

Facing the threat of losing her home, Ware turned to the public for support. The story of an elderly black woman threatened with the loss of her home over a measly $41 tax bill proved irresistible to local media outlets, which quickly turned the issue of tax sale exploitation into a human drama pitting a rapacious attorney against a helpless old woman. Civil rights organizations were quick to incorporate Ware’s case into existing narratives of housing discrimination and real estate exploitation. The Evanston chapter of the NAACP rushed to Ware’s defense, launching a fundraising campaign to challenge the law’s constitutionality and help Ware buy back her home. Politicians, likewise, saw Ware’s case as an opportunity to score some cheap political points with black and elderly voters. The state’s governor, Daniel Walker, hastily called a press conference, where he labeled Blair and Gray “unscrupulous men” and “the real lawbreakers” and called on the legislature to amend the law so as to “stop two real estate men from victimizing other sick and elderly homeowners.” (Blair and Gray sued Walker for libel, but the case was dismissed.) ⁶³ Letters and calls of sympathy and outrage poured in from around the world. The public outcry fueled Ware’s determination to take her case to court, and bring the problem of tax lien exploitation to the public’s attention. Comparing herself with Rosa Parks in one interview, Ware refused to buy her home back from Blair and Gray. “So many others have lost their homes this way, that I decided someone had to take a stand.” ⁶⁴

Facing an onslaught of negative media attention, and another push for tax law reform in Springfield, the professional tax buying industry launched a counteroffensive. Blair hired a publicist and granted interviews to newspaper reporters and appeared on local television talk shows, where he defended the tax sale as an essential component of tax collection, appealed to the fears of taxpayers in a down economy, and recast tax sale victims as nothing more than freeloaders and scofflaws. ⁶⁵ “You’re a homeowner,” he told Royko in an open letter, “so how would you like it if people like her went on and on not paying their taxes? Yours would go up.” Without the harsh tax lien law and the work of tax buyers, Blair warned, countless numbers of property owners would shirk their duties and “the entire tax burden [would fall] on the people who work and do pay their taxes.” ⁶⁶ Robert Cushman, the law’s author and one of its most vocal defenders, said the law-abiding taxpayer should not harbor any sympathy for Ware and others similarly situated, calling them “the deadest of the deadbeats.” ⁶⁷ Despite studies showing that the harsh law had no effect on whether or not property owners paid their taxes on time, defenders of the law insisted that any restrictions on tax sales would result in conscientious taxpayers being forced to pay higher rates. This argument resonated with the mostly middle-class white, suburban homeowners who filled the ranks of the growing number of taxpayer advocacy groups. Maurice Scott, spokesman for the fiscal watchdog group Taxpayer’s Federation of Illinois, expressed his organization’s support for the state’s tax sale law out of fear over the impact of its repeal. Without the threat of “total loss of deed,” Scott argued, more property owners would opt not to pay their taxes; moreover, “tax buyers would show no interest in tax sale proceedings if there was no possibility of a parcel of property going to deed,” depriving the state of an estimated $11 million in annual revenue. ⁶⁸ When the U.S. Supreme Court declined to hear her case, Ware quietly settled with Gray to repurchase the house. In a report on the problem of tax sales commissioned by the state assembly in the wake of the Ware case, the Illinois-Legislative Investigating Commission called the law “extremely harsh,” and castigated Blair and Gray for using the law as “a trap for their own personal enrichment[.]” But the report also noted that, as a habitual tax delinquent, who had had many brushes with forfeiture in the past, Ware was “totally unrepresentative” of the typical victim of tax liens. ⁶⁹

As a homeowner in a predominantly black neighborhood in Evanston, Ware was, however, representative of the typical victim of property tax discrimination. CAP’s 1971 investigation of unequal assessments provided some of the first clear evidence of a pattern of overtaxing property in minority neighborhoods. The report’s lead investigator, University of Illinois at Chicago Circle economist Arthur Lyons, continued to study property assessments in Cook County throughout the decade. In April 1979, Lyons released the findings of a multiyear study he and a team of graduate assistants conducted titled “Relative Tax Burdens in Black and White Neighborhoods of Cook County.” Lyons compared market prices and assessments on more than 4,000 properties in six predominantly white and six predominantly black neighborhoods in the city. Properties in all of the black neighborhoods, it found, were assessed at a higher rate than comparable properties in white neighborhoods. The percentage of overassessment above the countywide average in the six black neighborhoods ranged from 35 percent to over 100 percent. ⁷⁰

In the city’s black neighborhoods, the Lyons report generated widespread outrage even as its findings came as little surprise to many taxpayers. “We were not totally shocked to hear this,” State Senator Harold Washington said of the report’s findings. “[I]t’s something that’s been known on the South and West Sides for a long time. But none with the credibility of [Lyons’s team] has documented the issue before.” ⁷¹ Evanston Alderman Edna Summers concurred. “The black community of Evanston has long suspected that we pay a color tax for our property. That has been confirmed by the [report]—this is an outrage!” ⁷² Community groups and grassroots organizations staged protests in front of the assessor’s office in downtown Chicago. Lyons visited area churches and community centers, where he explained to black audiences the study’s findings and implications. Operation PUSH sponsored educational workshops that instructed homeowners on how to file an appeal. Groups circulated petitions calling for an end to what it called the “Black Tax.” ⁷³ Operation PUSH’s vice president George E. Riddick demanded that the county postpone its upcoming tax sale until the disparities uncovered in the report were resolved. ⁷⁴ In June, Harold Washington held a press conference, where he announced the formation of a Black Taxpayers’ Federation, a network of community organizers from twenty-one of the city’s neighborhoods, as well as plans to file a class-action lawsuit in U.S. District Court against the Assessor’s Office. By late summer, Washington characterized the fight for equitable taxation “one of the most intensely organized campaigns in the recent history of Chicago’s black community.” “This is THE issue,” he told reporters. ⁷⁵

OPEN IN VIEWER

Figure 1.

Racial disparities in property assessment levels in Cook County, ca. 1979. In April 1979, a team of researchers at the University of Illinois at Chicago Circle’s School of Urban Sciences, under the direction of economist Arthur Lyons, released the results of a study of assessment levels and relative tax burdens in white and black neighborhoods in Cook County. Comparing the market prices and tax assessments of over 4,000 properties in 12 neighborhoods, it found that properties in African American neighborhoods were assessed at a higher percentage of market value than properties in white neighborhoods. All six black neighborhoods exhibited “extreme non-uniformity” in assessment-to-market value ratios, resulting in overassessments and comparatively heavier tax burdens for property owners. In contrast, properties in all but one of the white neighborhoods studied were assessed at levels below market value.

Washington’s assessment of the tax justice movement proved overly optimistic. Despite (or, perhaps because of) the irrefutable evidence presented in the Lyons report, the issue of discriminatory taxation failed to generate much outrage among white Chicagoans, who were, after all, the main beneficiaries of the county’s assessment practices. Cook County assessor Thomas Hynes referred to the county’s use of a computerized assessment system to rebut charges of racism. “The computer is color-blind,” he told reporters. ⁷⁶ Hynes did agree to appoint a blue-ribbon commission to study the office’s assessment procedures for any signs of bias. Led by Loyola University law professor Richard Michael, the commission found no evidence of racial discrimination. ⁷⁷ Lyons issued a response to the report’s findings, highlighting a series of flaws in its methodology and selective use of evidence. ⁷⁸ But to the assessor’s office, the city’s major daily newspapers, and much of the general public, the matter appeared settled. Rather than sparking a wider movement, the stillborn movements against predatory tax buying and discriminatory assessments in 1970s Chicago instead signaled the demise of progressive struggles for tax fairness, the disappearance of the black taxpayer as a political figure, and the emergence of the “undeserving,” implicitly black, recipient of taxpayers’ support in the American political imagination.

To place this local history in a national context, we must take note of the reforms being implemented elsewhere in the United States during the period when corruption, favoritism, and taxpayer exploitation continued to thrive in Illinois. Nationwide, progressive and good government tax reformers fought to bring a level of professionalism and accountability to local assessors’ offices, and to institute tax administrative procedures that were fair, equitable, and transparent. State by state, legislatures in the 1960s and early 1970s passed tax reform bills that standardized the appraisal of real estate, empowered and required state tax commissions to enforce common standards across jurisdictions, removed the discretionary powers of assessors, and required them to pass competency tests and meet professional qualifications to hold the position. States consolidated jurisdictions that had previously served as little more than tax havens, and established mechanisms for the timely reappraisal of property to reflect changes in the market. ⁷⁹ These reforms, sociologist Isaac William Martin notes, were meant to ensure that tax bills reflected the actual value of property “rather than the social status or political party of the taxpayer.” ⁸⁰ For minority homeowners and other underrepresented groups, such reforms promised to bring a semblance of justice and equity to a system that historically rendered them susceptible to exploitation and abuse. But for majority of white homeowners, these reforms eliminated informal privileges bestowed on them by the state, and placed them at the mercy of a bureaucracy that treated all property equally and refused to recognize the political influence of its holders.

The timing of these good government reforms ultimately proved devastating to the movement for tax fairness. In California, the seedbed of the late 1970s tax revolt, tax assessment reforms were enacted at a time when wages remained stagnant but real estate values continued to rise sharply. Property owners in appreciating markets began receiving tax bills double or triple prereform bills. Conversely, owners of property in low-income and minority neighborhoods saw their tax bills remain stagnant or lowered to reflect drops in value that prereform assessors had quite deliberately ignored. Progressive property tax reforms not only subjected property owners to the shifting winds of the market, but, in the wake of the civil rights revolution, also placed them at the mercy of a bureaucratic apparatus reprogrammed to function with fairness and impartiality. ⁸¹

The tax revolts that began in California and soon swept across the nation marked the beginning of a long counterrevolution against this nondiscriminatory state. Instead of calling for a more equitable distribution of the tax burden, the suburban tax revolts of the late 1970s instead sought—and achieved—drastic, across-the-board tax reductions. Instead of a more fair method of taxation, the white voters who comprised the modern conservative movement fought instead to preserve white tax privilege by stripping a nondiscriminatory state of its powers. As the National Urban League executive director Vernon E. Jordan puts it, “The real aim of the so-called tax revolt isn’t so much cutting taxes as it is reducing government’s ability to function.” ⁸² Indeed, bitter denunciations of “bureaucracy” (today, used mostly as an epithet) were not directed at its inefficiencies, but rather at its potential to effectuate principles and goals that many white Americans publicly espoused but privately feared: equality under the law and the eradication of white privilege. The modern conservative movement that the tax revolts of the late 1970s helped to fuel was not antigovernment, per se, but rather anti-good government.

The tax revolts only strengthened the hand of tax buyers. Overwhelming public opposition to raising taxes combined with an equally fervent opposition to reducing funding for the very programs and services taxes support left municipal governments hamstrung and even more dependent on the revenue tax sales generated. The significant and far-reaching financial interests and fiscal concerns involved in this money-making and budget-balancing partnership ensured that tax buying would remain a protected industry. In Illinois, public outrage and politicians’ bluster failed to yield meaningful tax sale reform. Public officials such as state attorney general William B. Scott and state’s attorney Bernard Casey, who decried Blair’s actions and fashioned themselves as “champions of the downtrodden,” were conspicuously silent during Patner’s unsuccessful attempts to appeal his case challenging the constitutionality of the tax sale law to the U.S. Supreme Court. Both refused to sign on to his request for judicial review. Illinois lawmakers in the mid-1970s instead turned to their trusted consultants and experts on property tax collection for guidance on rewriting the law, including the disgraced but unbowed Blair. “I didn’t think the Legislature or the courts could stand by and do nothing about such a cruel injustice,” Royko wrote years after his first column on the issue. ⁸³

In the end, doing nothing might have been a better option. The reforms that were passed in the 1970s required better notification to property owners of the threat of forfeiture, and established an indemnity fund to compensate victims of forfeited property who are “without fault or negligence,” both of which proved to be more of a benefit than a hindrance to the tax buyer, further solidifying his legal foundation during a forfeiture proceeding and increasing the likelihood of a former owner buying his or her property back afterward. ⁸⁴ Blair and Gray continued to dominate tax buying in Chicago. Just before his untimely death in an airplane accident while flying to his second home in Wisconsin in January 1979, Blair, along with Gray, was charged with violation of the Illinois Antitrust Act for engaging in what prosecutors described as a conspiracy “to suppress and eliminate competition” at tax auctions. ⁸⁵ Gray remained one of the city’s largest tax buyers. In 2001, he was implicated in another scheme to fix bids at the Cook County Tax Auction. ⁸⁶

Tax buying in 1970s Chicago helps to put some of the predatory activities that emerged in the wake of the 2008 housing market crash into perspective, and it offers important lessons for understanding the relationship between capitalism and the state in modern America. Then, as now, we find in the tax buying industry an example of private investors and large financial institutions who are not merely benefiting from public policies they helped to write, but who are actually turning the administrative apparatus of the state into a vehicle for accumulating personal and corporate wealth, one that inflicts much collateral damage on both its principal victims and its client, the state.

This last point has become painfully evident to many counties and municipalities in the years since the housing market crashed. Beginning in the early 1990s, municipal governments across the United States began negotiating bulk sales of tax liens to Wall Street investment firms that specialized in securitizing and marketing unpaid tax debts to private investors. These and other new financial instruments that brought a profit-oriented, market-based approach to basic governmental administration quickly became popular among cities and counties suffering from cash-flow problems. Negotiated bulk sales and securitization of tax liens allowed Wall Street capital to flow into municipal coffers in return for providing private financial servicers the right to manage liens, collect unpaid taxes, and foreclose on properties. This, in turn, spawned the rise of companies such as Xspand, American Tax Funding (ATF), Aeon Financial, and Capital Asset Research Corporation, which got into the business of servicing property tax liens and marketing securitized bonds to investors. By the late 1990s, Wall Street had seemingly mastered the art of profiting from other people’s debts to the state. During those years, companies such as Capital Asset Research Group reported a rate of return on investment in the high double digits, in some cases over 100 percent.

As taxing authorities became more focused on incentivizing investment, they grew less concerned with protecting homeowners. Some cities and states raised the limit on interest rates, added new fines, increased court costs, allowed lien buyers to tack attorney’s fees onto the taxpayer’s final bill, and removed or narrowly interpreted provisions designed to protect homeowners and prevent profiteering. All neglected to provide oversight of the tax lien servicing industry and resisted calls for reform by consumer groups. As a number of recent studies and articles have shown, the privatization of tax collection has exacerbated the housing crisis in those cities, forcing substantially more homeowners into foreclosure and saddling families with crippling debt far in excess of what they would have been obligated to pay the state. ⁸⁷

The housing foreclosure crisis and Great Recession have only deepened cities’ dependence on a robust tax buying market, and hastened cities’ adoption of a new market innovation: the online tax sale. Online auctions draw in exponentially more bidders than in-person sales, and, as a 2010 investigation by the Center for Public Integrity found, have led banks and hedge funds (including, Bank of America and JPMorgan Chase) to incorporate dozens of shell companies working in hundreds of different taxing districts (or, as they see it, tax markets). ⁸⁸

The shrewd manipulation of local tax laws and exploitation of discriminatory administrative practices by tax buyers in 1970s Chicago speaks to the historical roots of current trends and developments in urban governance and finance. From private prisons to school vouchers, toll roads to parking meters, what were once public institutions and generators of public revenue are daily being converted into private, for-profit industries. As the findings of a 2015 investigation of policing practices in Ferguson, Missouri, by the U.S. Justice Department suggest, fines and arrests have increasingly become simply a means of generating revenue for local government, with police officers and judges assuming the role of tax collector and administrator. ⁸⁹

The seeds of today’s state-sanctioned predatory practices were being planted and nourished by men such as Allan Blair, who pioneered practices that would later be adopted by many of today’s largest global financial institutions and enfolded into a broader set of strategies for turning even the most basic government functions into profitable ventures. For predatory tax buyers, the lack of light shone on the administrative procedures of tax collection, its ability to remain incomprehensible to the general public, was what allowed their industry to grow and flourish, and what continues to drive some of the most egregious abuses of state power today.