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The disparity in property taxes can be huge between two people who have an identically valued asset - and that is not right.
Then abandon property tax altogether (that the government is the real owner of real property, and you are just a tenant, is implicit in a property tax), or go with a parcel tax rather than an ad valorem tax. It's not as if the person in the cheap house uses less fire, police, or school services, so why should they pay less? If anything, the higher crime and larger families you see in poorer neighborhoods suggests they use a lot more of those services.
You call out the young family for using school services, what about the seniors? Chances are those retired couples are consuming a ton of government services as well - starting with SSI & Medicare. Not to mention the fact they may have put their kids through schools back in the day and the taxes they paid during those years probably did'nt fully pay for thier kids education either.
How do you justify that a family that has owned a house for 4 years has to pay taxes that are 5 times what their neghbors pay who live in an identical house just because the second family has owned their house for 30 years? That is just not right.
Unless you work for one of the few SSI exempt jobs... mostly goverment... I don't see how you can avoid being in the system...
As a side note... my Step Grandfather continued working till his death at 84 and NEVER received a penny in Social Security... He declined it, even though he was working and payed into it at it's inception back in the 30's. My father deferred Social Security till he was 70 and died after getting 3 checks...
As far as education goes... I attended Catholic Schools at the insistence of my Mother... as did my siblings. My Mother also attended Catholic Schools... so right there... in one family is an example of people paying into the system and not receiving benefit.
Your second point is easy for me to defend... I'm one of those that bought my home a few years ago and pay nearly 8 times the property tax of the 80's something couple I bought my home from.
I knew going in what the taxes would be and I still choose to buy. The couple I bought the home from was a military family and their single child was schooled throughout the world and never attended public school in the district where the home is located.
The real point is I can only control what I spend... I can't control what someone else is willing to spend to live in my neighborhood... for me to be subject to the whims of others spending makes no fiscal sense... Just look at how many people threw caution to the wind and drove up prices and have abandoned properties.
I work with a number that did just this... and most could afford to stay... they made a decision not to continue paying on purchase that was declining in value... Vacant homes and neighborhoods with high turn-over do not benefit the community.
I'm counting on Prop 13 in my old age to afford me the ability to enjoy my home just as the couple that lived in my home for 50 years did.
I think what is missing is people equate abolishing Prop 13 with lowering taxes... I think in lite of how Sacramento works... any thought that taxes would actually be lowered for people that choose to pay high prices is naive and would be short lived.
Prop 13 provides predictability and this is a good thing.
Prop 13 also provides for increases beyond statutory limits. I live in Oakland CA and I can tell you that just about every property tax proposal get approved here... till recently... that is why my effective rate is more than 40% than Prop 13's limit.
Voters here pass property tax initiatives for the Oakland Coliseum, Schools, Fire, Police, After School Programs, Midnight Basket Ball, Extra Police, Weed Abatement, Landscaping, Fire Suppression, Street Lights, Libraries, Seismic Retrofits, etc...
Prop 13 is the ONLY saving grace we have... take Prop 13 away and all bets are off... it truly will be the end of California.
Last edited by Ultrarunner; 09-05-2009 at 09:40 PM..
I agree with you. Imho EVRYONE should pay some amount of taxes - just to "have skin in the game" so to speak. Federal and state income taxes as well.
But at least the people paying the higher income taxes actually have more income to be taxed. The disparity in property taxes can be huge between two people who have an identically valued asset - and that is not right.
Good Point... Unfortunately there is no correlation between owning a home and having money.
There is a correlation between paying taxes on earnings... if you earn nothing, you owe nothing.
Same with Sales Tax... no tax is due unless you choose to make a purchase.
Owning a home in America should not make one a sitting duck... subject to wild market fluctuation resulting in taxes owed when no money has changed hands... or as others have said... unrealized paper profits.
Just about all states are going through budget crisis, but it's nowhere as bad as in California. Schwarzenegger would be happy to have the problems of these states. Texas, with no state income tax, has a budget deficit of "only" $3.5 billion while California's deficit is about 10 times that. And unemployment in Texas is almost half that of California. How do they do it ?
Relative to Nevada's population, their budget crisis is very similar to California's. Obviously there's less of a total deficit because their population is much smaller. And Jim Gibbons' poll numbers are even lower than the CA state legislature's. He has the lowest poll numbers of any governor in the US.
I don't think repealing Prop 13 is enough - there's plenty of waste in the state budget that could be cut, as well as all these expensive programs put in by the voters via initiative (another reason why CA needs a new Constitution). Not to mention there are a number of excessive regulations that could be cut to make the state more business friendly. Lowering fees and certain fines would help create jobs in CA, and without 13 there'd be no reason for them to be so high. It's not often that I praise Reagan, but he was able to pass the biggest tax increase in the history of the state up to that time by making cuts in the budget as well (although income taxes in CA are high enough as it is)
I'm also open to the idea of a flat tax with those under a certain income getting a negative income tax in lieu of some welfare programs that could be expendable.
Owning a home in America should not make one a sitting duck... subject to wild market fluctuation resulting in taxes owed when no money has changed hands... or as others have said... unrealized paper profits.
But yet this 'wild' ride is exactly, and precisely what CA has. Like a gold rush gone bad. Boom and bust. Boom and bust. Something, maybe or maybe not prop 13, has gone horribly wrong in CA in terms of RE. Your peers in states like TX, TN, KS, CO, VA, GA, and ever prop 13 importantly WEST VIRGINIA and so forth aren't being kicked from their homes.
What I see is a generation of Californians accepting a much lower standard of living. Perhaps they're foretelling the USA's fate. But it's hard to believe that if you see a place like TX, where the mega rich live side by side a rising middle class. No prop 13 in TX even though property taxes are very high, which helps to create stable RE prices.
TX- stable RE prices and rising middle and upper class.
CA- unstable RE prices and lowering middle and upper class.
But yet this 'wild' ride is exactly, and precisely what CA has. Like a gold rush gone bad. Boom and bust. Boom and bust. Something, maybe or maybe not prop 13, has gone horribly wrong in CA in terms of RE. Your peers in states like TX, TN, KS, CO, VA, GA, and ever prop 13 importantly WEST VIRGINIA and so forth aren't being kicked from their homes.
What I see is a generation of Californians accepting a much lower standard of living. Perhaps they're foretelling the USA's fate. But it's hard to believe that if you see a place like TX, where the mega rich live side by side a rising middle class. No prop 13 in TX even though property taxes are very high, which helps to create stable RE prices.
TX- stable RE prices and rising middle and upper class.
CA- unstable RE prices and lowering middle and upper class.
It's been 30 years since the Voters approved Prop 13...
I think CA Boom and Bust cycles go back to the Gold Rush
Many of my colleagues that bought and walked away from their homes are recent immigrants to CA... say in the last 10 to 15 years and all speak Spanish as their Native Language... maybe it's just where I live and work.
There certainly was a Gold Rush Fever regarding Real Estate that I've never seen before... I was always asked why I wasn't buying more property and my reply was always because the prices being paid no longer made sense to me... the prices could not be sustained by the expected rents...
So many times... I heard that today's high price is tomorrow's bargain...
Without Prop 13's protection... home owners not participating in wild speculation would have been faced with much higher property taxes simply because some fool was able to pay an incredible price for a neighborhood home.
Prop 13 saving grace is that it is not dependant on what someone else is willing to pay at some later date... it is based on value at time of transfer...
Prop 13 works because the Voters can and do exceed Prop 13 caps.
Prop 13 leaves Politics out of the Situation because Property Valuations are no longer subject to some bureaucrats opinion of what someone might pay for your home.. it is based on Real Numbers... what you actually paid, based on all your inspections, reports, findings, etc. at the time.
Prop 13 is simple to administer and easy to understand...
Every Property Owner paying property taxes benefits... if for no other reason than the taxation of Property has been reduced to a formula and predictability is now possible.
Aaaah, but if you transfer your property to a son/daughter/spouse
they get to keep the same value, you cannot support prop 13 by saying that
you support a reassessment at resale in which your property shouldn't be
taxed, if that's the case you minus well abolish property tax forever, if the
idea is that I have a house or even something material such as an antique or
a diamond ring, I buy it for a low price and you shouldn't tax me out of it , if
someone buys it from me they can understand what they are paying, in that
case you should be against property taxes altogether.
The problem is two identical homes or two identical objects pay different rates, and the relatives or son's and daughters get the scott free benefit.
Unlike, personal property such as rings or cars or antiques, prop 13 discourages new home investment and encourages people to live in the same home for a long time, its kinda like rent control , only the rent is between the government and the property owner.
Also, commercial property owners like Disney can afford to have a much lower tax bill then someone who decides to build a new tower or skyscraper or a new home, this discourages new homes that may be more efficient , have different architecture and so on and favors homes that have appreciated more quickly or in the case of commerical have higher rents quicker but lower property taxes to keep up.
The problem is two identical homes or two identical objects pay different rates, and the relatives or son's and daughters get the scott free benefit.
Not exactly... and this is why Prop 13 has withstood every legal challenge.
All property subject to property tax pay the exact same State wide rate of 1%. Many confuse the Assessed Value with rate.
Prop 13 establishes the Assessed Value at Transfer and then provides for yearly increases of 2% and a means to add additional levies with voter approval... 55% of the vote in favor of building a new school is all that is needed.
Parent/Child transfer is not without limits... and it has nothing to do with Prop 13.
The Parent/Child Transfer, or Grand Parent/Grand Child Transfer in the case the Parent is deceased was created by Props 58 and 193 about 10 years after Prop 13 was voted into law.
Also, there is a monetary limit as to how much can be transferred this way... so it is not a blank check.
Transfers between Spouses are also tax exempt and through multiple divorces... there have been some interesting cases where a 19 year old ends up with property not re-assessed through several marriages because she is the last spouse standing. I've never heard of someone getting married for Prop 13 benefits... but in CA anything is possible.
Quote:
Originally Posted by tech2enable
Unlike, personal property such as rings or cars or antiques, prop 13 discourages new home investment and encourages people to live in the same home for a long time, its kinda like rent control , only the rent is between the government and the property owner.
Not exactly... Proposition 60 permits Seniors, defined as those 55 or older, to downsize in the same county... precisely to encourage people to move...
Quote:
Originally Posted by tech2enable
Also, commercial property owners like Disney can afford to have a much lower tax bill then someone who decides to build a new tower or skyscraper or a new home, this discourages new homes that may be more efficient , have different architecture and so on and favors homes that have appreciated more quickly or in the case of commerical have higher rents quicker but lower property taxes to keep up.
Yes.. what you are referring to is having a split Tax Roll in which commercial property is taxed at a different rate... California specifically prohibits taxing property in the same jurisdiction at different rates... Longevity is rewarded to an extent... On the other hand... communities often give lavish concessions to attract new business...
However... if Disney or anyone else builds a new tower... that tower is Assessed at full market value at the time of completion. So Disney does have an incentive to remain in Anaheim because of land holdings... Disney is not exempt on new construction.
City, State and Federal recently provided many millions in incentives for a Solar Company to build a manufacturing plant in Fremont CA... The idea is to retain business.
Not exactly... and this is why Prop 13 has withstood every legal challenge.
All property subject to property tax pay the exact same State wide rate of 1%. Many confuse the Assessed Value with rate.
Prop 13 establishes the Assessed Value at Transfer and then provides for yearly increases of 2% and a means to add additional levies with voter approval... 55% of the vote in favor of building a new school is all that is needed.
Parent/Child transfer is not without limits... and it has nothing to do with Prop 13.
The Parent/Child Transfer, or Grand Parent/Grand Child Transfer in the case the Parent is deceased was created by Props 58 and 193 about 10 years after Prop 13 was voted into law.
Also, there is a monetary limit as to how much can be transferred this way... so it is not a blank check.
Transfers between Spouses are also tax exempt and through multiple divorces... there have been some interesting cases where a 19 year old ends up with property not re-assessed through several marriages because she is the last spouse standing. I've never heard of someone getting married for Prop 13 benefits... but in CA anything is possible.
Not exactly... Proposition 60 permits Seniors, defined as those 55 or older, to downsize in the same county... precisely to encourage people to move...
Yes.. what you are referring to is having a split Tax Roll in which commercial property is taxed at a different rate... California specifically prohibits taxing property in the same jurisdiction at different rates... Longevity is rewarded to an extent... On the other hand... communities often give lavish concessions to attract new business...
However... if Disney or anyone else builds a new tower... that tower is Assessed at full market value at the time of completion. So Disney does have an incentive to remain in Anaheim because of land holdings... Disney is not exempt on new construction.
City, State and Federal recently provided many millions in incentives for a Solar Company to build a manufacturing plant in Fremont CA... The idea is to retain business.
Well okay put those were added to proposition 13, if Disney makes an improvement to the property , the entire property is not assessed at full market value, if my property is assessed at 80% below market value and an improvement adds 30% or rather is worth it to assessed value, its property tax assessments may not be added 30% because the improvement may increase the value of the property by more than 30%.
For instance a $5 million house, is improved by $1 million in renovations, the property tax is 5000/year, the property's tax may go up by $10,000 right, but the property's value may now be worth $7-8 million on the improvement, because the materials used may be worth more money or the improvement may have added something to the property such as a better view , or something that occurred before a zoning change and grandfather clauses.
Proposition 60, is more like a one time clause, so its just a once exception.
Those added provisions and propositions were based on proposition 13 . If prop 13 weren't enacted those provisions wouldn't be voted in since they have to do with strengthening or adding people to proposition 13 longer term saving's with the exception of the part where a lower vote threshold would be needed to pass bonds and improvements.
City,federal, and state breaks often go to well-connected corporations and lobbyists some of whom already benefit from prop 13. You also forget to mention that many corporations have the ability to have their properties in one corporate under different names to keep the prop 13 tax breaks, unlike typical residential home owners.
Proposition 13 is bad policy, of course unless you really benefit from it, you can only move once to keep your savings, and it benefits older homes, and those have had it for a long time, ie warren buffet and others
Well okay put those were added to proposition 13, if Disney makes an improvement to the property , the entire property is not assessed at full market value, if my property is assessed at 80% below market value and an improvement adds 30% or rather is worth it to assessed value, its property tax assessments may not be added 30% because the improvement may increase the value of the property by more than 30%.
For instance a $5 million house, is improved by $1 million in renovations, the property tax is 5000/year, the property's tax may go up by $10,000 right, but the property's value may now be worth $7-8 million on the improvement, because the materials used may be worth more money or the improvement may have added something to the property such as a better view , or something that occurred before a zoning change and grandfather clauses.
Proposition 60, is more like a one time clause, so its just a once exception.
Those added provisions and propositions were based on proposition 13 . If prop 13 weren't enacted those provisions wouldn't be voted in since they have to do with strengthening or adding people to proposition 13 longer term savings with the exception of the part where a lower vote threshold would be needed to pass bonds and improvements.
City,federal, and state breaks often go to well-connected corporations and lobbyists some of whom already benefit from prop 13. You also forget to mention that many corporations have the ability to have their properties in one corporate under different names to keep the prop 13 tax breaks, unlike typical residential home owners.
Proposition 13 is bad policy, of course unless you really benefit from it, you can only move once to keep your savings, and it benefits older homes, and those have had it for a long time, ie warren buffet and others
Changes in ownership... even in a Corporate Holdings, trigger reassessment.
The San Francisco Tax Assessor is very aggressive in going after large SF corps when the make-up of share holders change... I don't know if other counties are anywhere near as aggressive... although I would think Los Angeles would have a lot of incentive.
As for improvements... the value added is supposed to be the determining factor... It is common in Alameda County for the Assessor to disregard the actual cost of construction and to focus on added value. Of course, the pre-existing improvements are not subject to re-assessment.
I pay the highest property tax in my neighborhood and I have the smallest and one of the oldest homes... I'm also the newest person on the block and youngest.
By this logic, I should be opposed to Prop 13 and I'm not... I fully intend to be on of the oldsters someday enjoying my home with the peace of mind that taxes won't drive me out...
Maybe it's because I tend to look at things long term... I still own the car I drove in High School and I don't plan on moving.
My mostly retired neighbors all built their homes and have an average approaching 50 years paying property taxes in the community... Most have no children and a couple have only one child... so there will be few to take advantage of the Parent/Child transfer exclusion.
My seller had asked his son, who in nearing retirement in Florida, if he wanted the home... the son said his life was in Florida and he had no desire to return the 50 year old home of his youth...
The problem isn't Prop 13... the problem is Government has an insatiable desire for money... My city passed taxes knowing full well the likelihood they would be found unconstitutional... yet they passed them anyway citing the immediate need for funds and rationalizing it would be 3 to 4 years down the road should the tax be found unconstitutional... how's that for honoring the public trust?
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