Following a dollar
A professor told me once that buying private property is a great education in capitalism. I was a lowly graduate student in his political theory class so I didn’t think I’d ever be in a position to test his idea, but I was wrong. When we moved to Philadelphia, we could afford to buy a house, and I got my education in capitalism, which it turns out is also a good education in school finance since schools get most of their money from taxes on property. School finance is a pretty intimidating subject. But once you watch the dollars come and go from the perspective of your own little piece of residential private property, the subject goes from intimidating to intimate.
Entering into private property ownership relations is quite a ritual. There are stacks of forms to sign, payouts going in multiple directions, and a confusing relationship with mortgage lenders and banks. Once we were properly settled into this nested bureaucratic balance I saw the flows happening, I could feel them actually, and as a socialist studying school finance it was endlessly fascinating to follow the dollars and thus, like a stain on a microscope slide, make the cell structure of racial capitalism appear.
Margins of marginalization
Before we get the dollars themselves, just a note about buying a house or any private property. It’s so normal in our society that it can be hard to appreciate how abstracted and individualistic it is. My partner and I could go wherever we wanted and bid on a house, and if the buyer liked that bid and the banks thought we were upstanding enough to loan us money, then the deal would get done. There’s no cultural or historical or other sorts of protocols we have to follow. We can just go into a neighborhood and buy. I could see and feel the racial capitalism.
Take the ritual I mentioned of signing all the paperwork. As the buyers, we sat on one side of a big table at the mortgage lender’s office. Me, my partner, our real estate agent, the lender. We were all white. On the other side of the table were the sellers, who all were Black. We bought the house from an older woman who wanted to downsize and be closer to her sister. She’d worked in facilities her whole life at a nearby university.
During and after the process, I had some ideas that sounded a little out there when I talked through them with my partner, but now that I think about it, there were reasons I was having these ideas.
Nobody had to approve our bid, a young white couple from New York City, to purchase the property. There were no community organizations devoted to the protection of any pre-existing communities or cultures or economies. We didn’t know much about the neighborhood other than that we liked it and the price was right. We didn’t know anyone in the neighborhood. We didn’t know much about the older lady we were selling too. All we knew was that she was selling and we wanted to buy. I had the somewhat perverse fantasy that there should be a committee or office of the city government whose job is to investigate and approve our attempt to buy this house. It felt perverse, because I can just imagine how difficult and drawn-out this process would be, maybe even corrupt, and that it’d make it more difficult if not impossible for us to buy the house we wanted. At the same time, it didn’t feel right to just be able to buy this house.
Also, I thought our seller maybe deserved more than just the market price of her house, particularly given the fees she’d pay to her real estate agents. I knew that she was making money on the house—the price had risen exponentially since she’d bought it decades earlier—and I guess that was enough, but it didn’t feel like it. I didn’t know her particular history, but I could guess. I know about redlining. I know about predatory inclusion in the housing market. I’m aware of the inheritances of slavery, colonialism, Jim Crow, mass incarceration, drug wars, civil rights and how all these large social tendencies were and are immanent in things like buying property. I know about the great migrations of African-Americans, newly freed and supported during the Reconstruction period and thereafter, moving to cities in the north like Philadelphia and settling, looking for work and stability and maybe finding some, but also getting slammed with higher mortgage rates, lower paying jobs, and a diffuse second-class citizenship enforced through the successive insults of white flight, deindustrialization, and neoliberal austerity—not to mention street crime and police brutality.
As I sat there signing our mortgage, I thought: shouldn’t any of this be a consideration in the transaction? Even if our seller didn’t have a heritage impacted by any of this injustice—which I find highly unlikely—shouldn’t there be a process whereby we could find out without her having to divulge it? What about others who had? The practice of buying and selling houses felt like the perfect site for material reparations: people whose histories of being subject to injustices that have set them back in resources, wealth, and earning—this was a perfect sort of moment to provide a break or even compensation. I had the unnerving desire to quantify all this into a dollar amount and pay her more for the house than she asked; unnerving, again, because this would cost us more of our money, which we need and want for our own purposes, some of which had been given to us by our parents, who certainly wouldn’t agree with us paying more for political reasons.
But when I think about where that money comes from, and moments when, in the generational process of accumulating it, me and my recent ancestors didn’t face the kinds of injustice that our seller most likely did, I didn’t feel like that was my money to begin with. I felt like I owed it to her. The critical race theorist of education Gloria Ladson-Billings actually says that the various gaps so trendy in educational research—achievement gaps, etc—are actually education debts. These debts are moral, historical, political, and economic. When certain communities benefit at the expense of other communities, one facing unjust recognition and distribution, then one side owes the other the difference. There are margins to marginalization.
Bruce Baker, Preston Green III, and Joseph Oluwole propose just such policies in their article “School finance, race, and reparations.” After giving a thorough overview of federal and state legal attempts to rectify school finance inequities across diverse working class school districts in the United States, they point to residential private property markets, specifically the past and present of buying a house, as a place where laws could make people who’ve been subject to injustice whole, and thus address the problem of school finance injustice, including compensating people for racialized fluctuations in housing prices.
From what I could guess about our histories, my partner and I were coming from a different place than our seller. The money that we were using to buy this house came from our savings, and that savings was built from what our parents had lent and given us directly to help buy it, but also our inheritance of education and earning power. Their money came from their professional-managerial work as professors, scientists, lawyers, and corporate writers. They’d grown up with resources as well, though of course, as Jewish people, the stories from the beginning and middle of the twentieth centuries in our families were full of atrocity.
Haunted dollars
My great grandfather on my father’s side, also named David Backer, fled the pogroms in Prussia in the late 19th century with my great grandmother. Our family name was, apparently, changed at Ellis Island when he and his wife Bubbe Backer arrived, but none of us know the actual name. David was a bricklayer and they lived in tenements on the Lower East Side of Manhattan. They were poor. Apparently my great grandmother Bubbe came back to their apartment one night and found David with his head in the oven, overwrought with depression from their situation—the story goes that she yanked him out and said, “nope you’re staying here to help!” and slammed the oven off. Despite this poverty, his son Max, my grandfather, got a good public education in New York City and eventually went to medical school (he had to go to Bern, Switzerland because apparently New York University wasn’t admitting Jews in the early 1930s, but he did it). He my grandmother, the daughter of a leather tanner who went to a public university and became a public school teacher. Max got a public health job with New York State, moved the family to Long Island, where my father got another good public-school education and went to a private college and then law school and became a lawyer.
My great grandmother on mother’s side, Helen, got lucky and traveled to the US from Hungary in the early 1920’s, setting up a family in Coney Island. Her sister wasn’t so fortunate. Margarite stayed in Budapest and was shot in the street by Nazi police officers trying to separate her from her young children and husband and bring them to concentration camps. My great grandmother stayed in Brooklyn and ran a hardware store with my great grandfather. My grandmother, her daughter, became a teacher with a pension, married an accountant, and they had enough money to buy a house in Brooklyn and send my mother to summer camps and good public schools and then a good college where she met my father, became a corporate writer and married my dad the lawyer, and they who then made enough money to raise me in Connecticut in good schools, send me to private college and then graduate school—all of us at first passing as white and then becoming white in US racial capitalism—and helped me buy a house and pay taxes to the school district in Philadelphia.
All this history haunts the dollars that flow from my bank account to the school district. All our money has this story. It’s not some abstracted and aloof thing from the political economies of our cultures and lives. Even though the money changes hands, that doesn’t change the heritages of hands that pass it back and forth. But there’s nothing in the process of purchasing private property that makes us reflect on this in any meaningful way, and thus school finance, the cell structure of racial capitalism, churns on.
Sitting across from our seller and her two real estate agents, all of whom were Black, I wondered: should we be buying this property? When it came to the community were we moving to, going to be living out lives in, were we hurting, helping, or something else? Was there a way to feel like we’d help rather than hurt? I have a doctorate in educational theory and teach classes on policy, law, and social justice. I know how ethnos—what the Fields sisters call the witchcraft of race—gets created and articulated and connected structurally with distributions of resources like housing, income, and other aspects of material life. These practices, the rituals of purchase and the private relationship to land and infrastructure, is the pulp of social structure, the microfibers society.
Someone might say that the very fact of our purchasing the property, and the ‘privilege’ (is it a privilege to benefit from a structure that, in the very act of benefiting you, hurts others?) surrounding the money with which we were accomplishing it, was supporting the school district. Instead of a rich white suburb we were putting our roots, and thus our resources, down in the city. But this isn’t so comforting when you think about the contribution our purchase has to the increase of the property value, and the knock-on impacts of that increase. It’s been detailed elsewhere, but put simply there’s no structure in place to make sure these increasing prices don’t price out our neighbors and their communities, creating a push force as taxes and rents increase, and conflicts in the schools when unthoughtful privileged people move into the schools to mold them according to their preferences. There’s no structure or protocol in place to prevent that dispossession, or what the Integrated Schools podcast calls colonization.
In fact, cities around the country have encouraged the process, creating complex incentives for developers and businesses and homeowners. In Philadelphia, the most significant of these policies was ten-year tax abatement on new construction, which meant that if you built a new house or commercial building you didn’t have to pay taxes on it for ten years. That’s ten years of zero money flowing to the school district. Other policies can include tax increment financing, which sets up property deals so developers can save taxes on the front end of the construction process, or opportunity zones where certain designated areas of the city have reduced taxes on certain projects, reduced regulations on building, etc. Also, places like Philadelphia have a preponderance of universities, who’s tuition revenue—fueled by a now-defunct dream of higher education leftover from an era when universities were inexpensive pathways to better jobs rather than the mandatory debt traps they’ve become—endowments and private and public grants, means that these huge nonprofits are exempt from property taxes. Philadelphia passed an amendment to the city charter in the 1990s with this exemption, asking universities like University of Pennsylvania—one of the biggest property owners and employers in the city—to pretty please pay their taxes. Penn hasn’t done that. All of these programs are meant to draw people and business to the city, no questions asked (at least in terms of the stuff I’ve been talking about) and actually lets these newcomers off the hook when it comes to the money the school district needs.
Whatever the answer to this question about whether or not we should’ve bought this property, or if someone else representing populations impacted by these injustices coagulated around and manifesting through practices like buying a house should have a say in whether we do, nobody even asks the question. The racial capitalism of it haunts the whole procedure. But it’s no small thing: I’m pretty sure this specific hauntology is at the heart of school finance and education policy generally, what I’ve been calling the cell structure of racial capitalism: who buys what private property in what location at what price which then gets taxed to fund certain public programs.
Millesium
Okay, back to following the dollars. My salary comes into our bank account. Ka-ching. Every month we pay the bank to ‘own’ the house (really the banks owns it, we just have rent control and they agree to give us back what we pay them if we sell). The bank figured out our monthly payment using the market value of the house when we bought it, our down payment, the interest rate we got on our loan from them (the mortgage), insurance costs, and the taxes we have to pay for owning and living in the property. It’s the last one I’m most interested in here, since it’s the local government—the city and the school district—that tax property as one of their main sources of income. Half of the school district’s operating budget comes from local sources. The majority of that local revenue comes from the property taxes that people like me and other homeowners and property-owners pay.
Living in Philadelphia, in our neighborhood of the city, the taxes are a relatively small amount of the monthly payment we make (though that changed recently, as I’ll mention later). That low amount happens for a couple reasons. First, the amount of money the property is worth. Second, the amount of money the city and school district decide they can get from it. We bought the house at a certain price. The city assesses the value of our house and taxes us based on that measurement. This assessed value is different than the market value. Usually assessed value is lower. But cities have decided that it’s better if they determine what the value is of the house rather than just the private property market. Which is pretty interesting: depending on who you ask, the local government assessor’s office or the real estate companies, my house is worth different amounts. (Notably, the neoliberal policies I described before like abatements and tax increment financing are structurally similar to this purposefully low assessment. They called the latter corruption and the former development.)
So the city determines how much the property is worth using a bunch of factors including but not limited to the market value. They also consider comparable properties nearby and historical price patterns. But that’s just half of the process. I’m trying to think of analogies here and I keep thinking of cake. A baker decides how big a cake they’re going to make based on the ingredients they need, and then people decide how to cut up the cake so they can eat it. But that doesn’t quite capture it. I’m also thinking of Nietzsche’s critique of objective theories of truth, where he likens it to someone putting a ball in a bush so they can’t see it, walking away, and then returning to find the ball and declaring they’ve discovered it. But neither of these work. How best to explain the dynamic of figuring out how much value there is and then figuring out the rate at which you’ll take that value, it’s like creating a certain mass and then deciding the cuts of that mass per population…is it like making balloon animals with certain amounts of air and a certain number of twists without popping the balloon making it good enough for the kids?
Next, the city, in consultation with the school district and others, agree on a rate to tax property, like how much money they’ll get for every $1,000 of assessed property value that’s out there to tax. This rate is called the mill or millage rate. It’s called mill rate because it’s usually in the thousands, and millesium is Latin for thousand. Property taxation always needs both these elements to happen: assessed value and mill rate, the cake and the slicing. This point—that property taxes are always the value and the rate—is a powerful one. The mill rate in particular is the dirty little secret behind what’re colloquially called tax revolts, or when property owners get all hot and bothered about ‘how much’ they’re paying in taxes.
Tax revolts have been a traditionally suburban phenomenon, whose most famous moment in recent history was California’s prop 13. People, by which I mean wealthier white people though not exclusively, pay taxes on their property, which feel high for whatever reason. They get mad because they don’t want to pay all that money. If they’re older, they’re more mad because they don’t have kids in the schools anymore and they suspect the school district is corrupt and why should they have to pay so much every year if they’re not even using the schools, etc. Under certain conditions this property-owner attitude towards their taxes can be more or less volatile, like when there’s increasing inflation or there happens to be a prominent civil rights movement trying to force the private property system to be less awful racially, which the dominant racial group is less enthusiastic about since the whole reason they moved into their small town was to be in a ‘nice’ area with ‘good’ schools, both terms laced with racism. These people pay their taxes and for all these reasons and more they start to feel like they’re paying ‘too much’. So they demand the states and localities do something, and in the 70s and 80s states actually did do things to calm these voters down lest the politicians lose their next election. The dirty little secret here is that, when you look at the whole taxation process from the perspective of the millage rate, these people are objectively wrong. They actually pay less in taxes than pretty much everyone else.
The tax revolters don’t think about both the assessed value and the millage rate. Instead they’re thinking about their taxes in absolute and embarrassingly individualist terms, as though they live in a bubble-fortress and no one exists except them and their costs. Classic Americandreamitis. It’s true that these people pay ‘a lot’ in taxes if you only consider the value of their property. If they live in a high-property value place then they’ll pay more in taxes because the property is worth more. But when you look at their property along with the millage rate, we see that their millage rates are lower relative to their rural and urban neighbors. In fact, if you list all the millage rates in a state by school district, divide each of them by the average median property value in the district, and look at the trend line that forms in their relationship, you see that millage rate and property value are indirectly related. As the property value increases, the millage decreases, and vice versa.
This indirect relationship makes sense: if a district has high property value, then they can tax it at a lower rate to get what they need and more. It’s not in their interest to tax it higher (though this can happen when a community agrees they want to pay more for their stuff.) If a district has low property value, then they have to tax it at a higher rate to get what they need—which usually ends up not being enough. This problem is vicious because it creates the situation we see in school finance today, which is that high property value school districts (with relatively lower rates of poverty, special education students, language learners, trauma, etc) pay less than they should to have more than they need to educate their kids; while low property value districts (with relatively higher rates of poverty, special education students, language learners, etc) pay more than they should to get less than they need to educate their kids. I’ve come to think of this problem as super-regressiveness, since it’s not only that the poor pay more, but they pay more to get less than they need.
I do enjoy owning the cons by pointing this super-regressiveness out, but it’s a complex enough point that the venues in which I’m trying to own the cons don’t permit enough attention span to really get the point across. So it goes.
So when I get my property tax bill from the city, I can see the mill rate they’ve decided to use. When we bought our house it was about four dollars for every thousand of assessed value, which it still is. I pay the bill by setting aside the amount each month through the bank as part of my monthly mortgage payment. Again, in Philadelphia, the property taxes have been relatively low given that property values are somewhat low and at least relative to our income, the mill rate hasn’t been overly punishing. It’s the material conditions of why we were so happily shocked when we moved to Philly in the first place. But almost like clockwork, what I thought might happen actually did.
Over the pandemic, stuff went bananas all over the economy, including housing. One thing that happened was people bought more houses because interest rates on mortgages were lower than they’d basically ever been. But also, to take it slow and steady, the city didn’t reassess it’s properties according to the normal schedule. They also changed the way they assessed properties. As the pandemic receded in 2022, the city decided to go ahead with the new property valuations and lo and behold, the value of our house, according to the city, had nearly doubled since we bought it in 2016. Prices had generally been going up in the city and in our neighborhood generally, but throw in a few big developments and increasing higher-income demand and voila, the house is worth more. Because the assessed value almost doubled and the mill rate stayed the same, our taxes nearly doubled and our mortgage went up by more than a third. The same thing happened throughout our neighborhood, and I have to wonder at the longer-term impacts on my neighbors who’ve seen their taxes go up due to the demand from people with more resources to command.