While tethering is not illegal in many areas, there are things you can do to help make the situation better for a dog that is constantly tethered in the back yard without much human interaction.
When dealing with neighbors, it is always best to try to resolve things peacefully and amicably. Naturally, one of the key points is to make sure that your approach is positive, and that you don't come off sounding critical. The primary goal here is to get them to bring their dog inside, however they may not be willing to take that step right away. It can also be awkward (not to mention counter-productive) to knock on someone's door and lecture them about the evils of leaving a dog outside all day and night. So instead, you may want to try a softer approach. Tell them how much you love dogs, and how much you would like the chance to play with their dog a few times a week or take it for walks. If you make it seem more like they are doing you a favor by permitting this, it can sometimes open the doors to further discussions and you may end up being able to convince them to bring their dog inside later down the line.
This is one of those scenarios where you will usually get more flies with honey than with vinegar. By seeming grateful for the chance to spend time with their dog, you lower their defenses, and you may even be able to help them appreciate what a great dog they have. Very often when dogs are adopted or purchased, they are given lots of attention. When the novelty of the new pet wears off, they are condemned to exile in the backyard. If you are able to spend some time with the dog, you will often be able to form a friendly relationship with the dog's owners, and help them rekindle their affection for the animal.
Neighbor's reactions to these approaches vary widely, so its hard to predict exactly what your neighbor will do, but there are many success stories that have come out of this approach. In some cases, the dog's owners changed their ways and brought the animal inside. Other times, the concerned neighbor simply continues playing with the dog or walking it; the owner isn't objecting, but they are also unwilling to rethink their position. In some cases, the concerned neighbor has even wound up adopting the dog and becoming friends with the neighbor.
There are some excellent tips on how to talk to people about their tethered animals on UnchainYourDog.Org. The link also provides suggested alternatives to tethering, such as traditional fencing, electric fencing and dog runs. If you can get the neighbor to discuss this with you and it is clear that bringing the dog inside simply isn't going to be an option, it may help if you offer to assist them with building or installing one of the alternatives.
You will have to gauge their reaction to see if it would be appropriate to do so, but there is a powerful printable flyer that you can give them or leave on their doorstep. (Flyer is in PDF format)
If they are completely unreceptive with all of the approaches suggested and you are lucky enough to live in an area where tethering is illegal, the only option you may find yourself with is to call animal control or humane law enforcement and have them cited. Also check and see if your town has sheltering laws. If the dog house is constantly being overturned, you may be able to get humane law enforcement involved that way, even if there are no provisions against tethering in the local laws.