Earlier this week the Supreme Court handed down its decision in the case of Armour v. Indianapolis. At issue was a property assessment levied by Indianapolis in order to pay for a sewer project in a housing subdivision. Property owners in that subdivision were given the option of paying the $9,000 assessment in installments or in a lump sum. Most selected the installment plan. When the city announced a revised and cheaper assessment plan a few years later, the small group of property owners who initially paid a lump sum asked for a refund. Their request was denied so they took the city to court. In its ruling on Monday, the Supreme Court sided with Indianapolis. Writing at the Hoover Institution’s Defining Ideas journal, New York University law professor Richard Epstein explains why this ruling “encapsulates what goes wrong when the Supreme Court abandons its constitutional obligation to prevent the nonstop shenanigans of local governments.” Epstein writes:

The moment local governments can renege on promises with impunity, no one in his right mind would choose the lump sum payment. At this point, two bad consequences follow. First, a deep sense of social unfairness leads to a net loss in public confidence in government. Second, wealth transfers wholly gratuitously from one group of citizens to another. At this point, wasteful lobbying could set in to make those transfers happen. The best way to think about Armour is not as some sterile equal protection case, but as a taking of property, through the conscious maladministration of the city, from the members of group A to those of group B. That level of misconduct deserves more scrutiny than the rational basis test supplies....

Some skeptics might ask why anyone would get bent out of shape in a case where the claims of all class members total less than $300,000. The answer is because bad rules in small cases lead to horrific consequences in bigger ones. As a matter of first principle, the rational basis test lets all courts turn a blind eye to various programs of business and fiscal madness.

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