On August 2, the United States Court of Appeals for the Fourth Circuit ruled that Prince George's County's tax lien scheme is unconstitutional under the Privileges and Immunities Clause Clause of the U.S. Constitution. The decision upholds the rights to own property and to pursue a common calling (to work and make money) as fundamental rights protected from a Maryland law limiting sales only to local residents. The unanimous opinion from judges appointed by Presidents George W. Bush, Obama, and Trump is an important holding for economic rights going forward.
The case, Brusznicki v. Prince George’s County, involved a Maryland law that allowed only local residents (or government workers) to bid first on buying property in a tax foreclosure sale, before the general public. The Maryland statute was comprehensive in excluding nonresidents, even stopping a buyer from assigning (selling or transferring) their interest on the back end to a nonresident.
Bruszniki and the other challengers attempted to buy tax lien certificates at auction, but since they were neither from Prince George’s County nor were government employees, they had to wait for the general public auction, if it happened at all.
The Constitution’s Privileges and Immunities Clause, Article IV, Section 2, states that “the citizens of each state shall be entitled to all privileges and immunities of citizens in the several states.” (There is a similar clause in the Fourteenth Amendment, Section 1.) As NTUF wrote at length to the Supreme Court recently, the Privileges and Immunities Clause, like the whole of the Constitution, is aimed precisely at facilitating interstate commerce and trade — that is, economic liberty.
The court found that the Privileges and Immunities Clause applied because the clause was meant to assure residents and nonresidents have the same freedoms of acquiring property. The appellate court walked through multiple cases to show that discriminatory burdens on owning property violated the clause. Even just having an interest in the property, such as a tax lien certificate, was enough for constitutional protection. As the Fourth Circuit said, “the Privileges and Immunities Clause thus compels the conclusion that the statute abridges a fundamental right.”
This win will matter for more than just Maryland tax lien auctions. The decision recognizes that citizens have a protected fundamental right to “ply their trade, practice their occupation, [and] pursue a common calling.” That is, a state may not give its own citizens a competitive advantage in business against out-of-state businesses. Here Maryland attempted to allow resident buyers at tax lien sales to buy foreclosed property before nonresidents, and get a better deal.
Court cases are incremental: each decision helps build upon another over time. Brusznicki is a unanimous decision upholding key economic rights as protected by an under-utilized section of the Constitution. While other barriers to interstate commerce continue to exist — like Certificate of Need laws, licensing regimes, and protectionist tax structures — this case can be an important first step in again protecting economic liberties.