Is anyone leaving California or wanting to leave?? (Los Angeles, Santa Monica: comparable sales, mortgage)
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Is this (assesor opinion) a big problem in other states?
The only other State I can speak with knowledge is Washington State... and yes, it is a huge problem...
Case in point... you can go about living your life in the modest 900 square foot home you built 50 years ago on a nice plot of land... someone from out of State comes and pays a ridiculously high price for some neighboring acreage with plans of sub-dividing and making a fortune... eventually the buyer gives up because sub-dividing isn't possible... however, the damage is already done... all of the neighbors see huge increases in their tax bills because some fool with grand plans not grounded in reality was able to pay several times what locals knew the land was worth...
The only option is to contest the value... often the hearing can happen 24 months later and even if you are successful in getting a reduction it means you will be getting a refund because you already had to pay the tax bill as presented AND you get the privilege of repeating the entire process next year if you disagree....
One of the Best Attributes for Prop 13 is that values are based on real market value at the time of transfer AND Prop 13 keeps Taxes somewhat predictable...
Also, Prop 13 gives the voters the ability to increase taxes at the polls if the voters believe the need warrants... my city has a history of passing most increases.
Are they going to turn prop 13? I keep hearing about it over and over. The only ones who seem to not want it overturned are the people it will affect.
There are always moves to change Prop 13... some have been successful.
School Construction Funding no longer requires Prop 13's 2/3 vote to pass... it only takes 55%.
The latest move is a Constitutional Convention... if this happens... it is any one's guess what the result would be.
It is important to note the Prop 13 has already survived challenges all the way to the Supreme Court and has been law of the land for more than 30 years...
Prop 13 is blamed for CA problems... seems plenty of other States without Prop 13's have their share of problems too.
All we can do is go with the best information at the time...
And you can update that information every year with the "best information at the the time". Accessing the value of properties is not exactly problematic, the entire mortgage and real estate industry relies on reliable appraisals.
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Originally Posted by Ultrarunner
It's about choice, no one forced me to buy and no one should force an older person out of their home of decades either over property taxes.
Unless you plan to be homeless you have no real choice in the matter. You'll be paying property taxes directly or indirectly.
Quote:
Originally Posted by Ultrarunner
Property Value established by any means other than a bonifide fair market transaction is nothing more than an opinion...
Appraisals are usually pretty straight forward and could even have a downward bias. Most states do this things way, its not a problem. How California's system worked before Prop 13 is irrelevant, you don't need to return to that particular system. Mimic Texas' system and get rid of income taxes while you're at it.
Quote:
Originally Posted by Ultrarunner
Thankfully, the voters of California realized this more than 30 years ago and swept Prop 13 into law.
Voters always vote for lower taxes no matter how shortsighted.
Quote:
Originally Posted by Ultrarunner
As for inflation... buyers today are paying less then buyers paid 5 years ago in some cases... appreciation isn't a given... yet Prop 13 provides for a 2% yearly increase even in times of deflation.
This is not accurate, you can get your basis adjusted if your property goes down in value. Prop 13 allows downward adjustments, but not upward! I guess appraisals work after all!
Quote:
Originally Posted by Ultrarunner
Property Taxes are the worst form of Taxation because people need food shelter and clothing... the three essentials of life.
Like I said rent seekers will always complain about property taxes, the lack of meaty property taxes gives them the ability to extract wealth from productive society. People pay taxes regardless, shifting the taxes to property taxes vs income taxes will not hurt the average joe at all. Just look at Texas.
Heavily taxing production rather than property is one of our societies greatest sins and this practice is in full force in California. Why do I want to live in a state that transfers wealth from my business to land owners? I don't.
So keep Prop 13, I can move. Sooner or later the blood will run dry and there will no longer be any production to tax.
Quote:
Originally Posted by Ultrarunner
to the point of forcing elderly from their homes of many years.
There is no need to force elderly people out of their homes, this is just a straw-man real estate interests use to support Prop 13. You could easily give elderly special treatment, for example after the age of say 62~65 you could fix their yearly increases to the rate of inflation.
Originally Posted by Ultrarunner
All we can do is go with the best information at the time...
And you can update that information every year with the "best information at the the time". Accessing the value of properties is not exactly problematic, the entire mortgage and real estate industry relies on reliable appraisals.
And this is a problem with Real Estate today... the appraisal process. By definition, every Real Property is unique and going on past sales tells you the price of property no longer on the market...
I can say Hamburger cost 25 cents a pound yesterday... it has no bearing on what it costs today and this is where the appraisal system is flawed... it would be more accurate if we compared to available properties instead of sold properties.
Quote:
Originally Posted by Ultrarunner
It's about choice, no one forced me to buy and no one should force an older person out of their home of decades either over property taxes.
Unless you plan to be homeless you have no real choice in the matter. You'll be paying property taxes directly or indirectly.
I can think of several other choices... join a religious order or be in the military for starters... the man I bought my home from was career military and lived all over the world between 1944 and 1975... or you can live a Nomadic lifestyle as a retired Doctor I know... he sold everything, moved to OR and bought a huge motorhome to live in year round... no Property Taxes at all
Quote:
Originally Posted by Ultrarunner
Property Value established by any means other than a bonafide fair market transaction is nothing more than an opinion...
Appraisals are usually pretty straight forward and could even have a downward bias. Most states do this things way, its not a problem. How California's system worked before Prop 13 is irrelevant, you don't need to return to that particular system. Mimic Texas' system and get rid of income taxes while you're at it.
I was specifically addressing a previous post stating CA had good roads, infrastructure, education, etc., prior to Prop 13. Just refuting another example of how ALL California's woes derive from Prop 13
Quote:
Originally Posted by Ultrarunner
Thankfully, the voters of California realized this more than 30 years ago and swept Prop 13 into law.
Voters always vote for lower taxes no matter how shortsighted.
I take it you have never lived in Oakland CA?
Quote:
Originally Posted by Ultrarunner
As for inflation... buyers today are paying less then buyers paid 5 years ago in some cases... appreciation isn't a given... yet Prop 13 provides for a 2% yearly increase even in times of deflation.
This is not accurate, you can get your basis adjusted if your property goes down in value. Prop 13 allows downward adjustments, but not upward! I guess appraisals work after all!
Not true... unless you refer to temporary reductions? I have had property adjusted downward... never below purchase price though. As soon as the prices "Recovered" I was right back to the maximum... no 2% increases... it was almost 14% in one year...
Quote:
Originally Posted by Ultrarunner
Property Taxes are the worst form of Taxation because people need food shelter and clothing... the three essentials of life.
Like I said rent seekers will always complain about property taxes, the lack of meaty property taxes gives them the ability to extract wealth from productive society. People pay taxes regardless, shifting the taxes to property taxes vs income taxes will not hurt the average joe at all. Just look at Texas.
Providing Shelter is productive... maintaining, improving and paying the never ending stream of goverment fees is not without cost...
If rent seeking was a such a sure thing... there wouldn't be apartment house after apartment house in foreclosure in my city... the rent seekers would never give up such a "Golden Goose"
Besides, Oakland CA has Rent Control.
Heavily taxing production rather than property is one of our societies greatest sins and this practice is in full force in California. Why do I want to live in a state that transfers wealth from my business to land owners? I don't.
So keep Prop 13, I can move. Sooner or later the blood will run dry and there will no longer be any production to tax.
Moving is the American way... some of us do choose to put down roots, serve on civic boards and volunteer our time... my pet project the last few years is cleaning out city storm drains and I receive a letter each year thanking me for my community service.
Speaking of "Sins"... sin taxes are some of the highest... alcohol, cigarettes, gambling...
No mention of the European Model based on Sales Tax or VAT?
Quote:
Originally Posted by Ultrarunner
to the point of forcing elderly from their homes of many years.
There is no need to force elderly people out of their homes, this is just a straw-man real estate interests use to support Prop 13. You could easily give elderly special treatment, for example after the age of say 62~65 you could fix their yearly increases to the rate of inflation.
No need to do that since we voted for Prop 13...
The reason Prop 13 came into being is because the legislature failed to act by indexing the Home Owner Exemption and the Serrano Decision... it would have been so simple to index the Home Owner Exemption... yet it didn't happen... no more that special treatment for the elderly would.
Prop 13 is a passion of mine... it is the only thing keeping a lid on goverment spending... I'm thankful every day the Supreme Court upheld Prop 13's constitutionality.
Plenty of people have left California only to regret it later... many find it very difficult to return as did my co-worker and her family that moved to Iron Mountain Nevada...
Oregon's Prop 66 an 67 were touted as the will of the poeple and rightly as the law of the land... same holds true for Prop 13 in California... once again... if California's woes were the result of Prop 13... every State without Prop 13 would be fine and this just isn't the case.
Last edited by Ultrarunner; 02-21-2010 at 05:02 PM..
Prop 13 should not apply to commercial real estate, and perhaps investment properties as well. Modifying the law in that way would be much more palatable, fix a lot of the budget issues and not force old people or fixed income people out of their homes due to increased taxation.
Of course I do agree with the idea of tax controls...the thing about no state income tax states is it forces efficiency...think of the uproar in going from NO tax to some income tax or sales tax...much easier to increase taxes from 8 to 9% or even from 3 to 4% than from 0 to 1%. California doesn't have 0 of any kind of tax, and the small, incremental tax increases really add up over time.
I think CA needs tax controls for sure, but I think it is better if they come in the form of having no sales tax/income tax as opposed to fixed/low property taxes which are inherently much more stable revenue sources. That said, repealing Prop 13 without implementing any kind of other tax control would simply give more drugs to the spending addict that is CA.
Prop 13 should not apply to commercial real estate, and perhaps investment properties as well. Modifying the law in that way would be much more palatable, fix a lot of the budget issues and not force old people or fixed income people out of their homes due to increased taxation.
Of course I do agree with the idea of tax controls...the thing about no state income tax states is it forces efficiency...think of the uproar in going from NO tax to some income tax...much easier to increase taxes from 8 to 9% or even from 3 to 4% than from 0 to 1%. California doesn't have 0 of any kind of tax, and the small, incremental tax increases really add up over time.
The idea would have worked by simply indexing the Home Owner Exemption because it only applies to owner occupied property... the legislature refused to do this.
California's Constitution prohibits a "Split" tax roll... in other words commercial and residential property must be treated the same.
The other side of the coin is how many more businesses would leave if they were taxed at a higher rate?
Property Tax approaches 1.5% in some areas... it is definitely not low as similar property in other states is often has a similar total tax bill.
The idea would have worked by simply indexing the Home Owner Exemption because it only applies to owner occupied property... the legislature refused to do this.
California's Constitution prohibits a "Split" tax roll... in other words commercial and residential property must be treated the same.
The other side of the coin is how many more businesses would leave if they were taxed at a higher rate?
Property Tax approaches 1.5% in some areas... it is definitely not low as similar property in other states is often has a similar total tax bill.
Well the constitution can be changed. But the real problem is CA's entire tax system needs an overhaul - it is too reliant on 9.3% capital gains as income tax on rich people...and more people are getting smart and moving to NV or TX (even for one year) and cashing out large sums of money to avoid paying the CA tax.
The issue is the money has to come from somewhere - either rich people or businesses. Spending can be cut, sure, but the real long term problem is the pension agreements and if those can't be overhauled, then you have a Detroitesque problem of legacy costs hampering the entire operation.
I would much prefer that the government live within its means, but the reality is there is a budget problem and accounting tricks can only take it so far. Plus the government has clearly shown, time and time again, that it can not handle the variance in revenue that the tax system creates. So even if they can cut expenses to the degree that taxes don't need to be raised, which I hope they can do, the question is what happens in 5 years when the economy is good again and 10 years when the economy is bad again? Does anyone really trust the state to understand business cycles and "save" the extra money instead of spending it and making projections that assume we will never have another recession again?
I have a question about "fairness", since you brought it up? Do you think it's "fair" that state workers retire with paychecks that are the same as what they made when they were working? Paychecks that they get after having paid in a fraction of their worth? Just curious.
I work in the public sector for a local city, but the situation is similar for state workers. I'm not saying this can't happen, but it is definitely not the norm. Most CA public sector employees, if they have worked for 30 years or more, retire with pensions in the range of 60% to 75% of their final years salary.
Now police, firefighters and prison guards get more generous pensions, often going up to 90% of final year's pay. On top of that, in my city they have twice as many "medical retirements", as other cities do, which means they don't have to pay Federal income taxes on their pensions, effictively meaning they are retiring with full pay or better.
I DO think the pensions are overly generous. There's really no question about that. However, please don't exaggerage and make it sound like all state workers are retiring at 100% of their final pay. That is very rare.
First aim needs to be taken at police, firefighters, and prison guards. They not only have outsized pension benefits, but typically get larger raises than the other public sector workers as well. The outsized pay increases have been going on for a decade or more.
Well the constitution can be changed. But the real problem is CA's entire tax system needs an overhaul - it is too reliant on 9.3% capital gains as income tax on rich people...and more people are getting smart and moving to NV or TX (even for one year) and cashing out large sums of money to avoid paying the CA tax.
The issue is the money has to come from somewhere - either rich people or businesses. Spending can be cut, sure, but the real long term problem is the pension agreements and if those can't be overhauled, then you have a Detroitesque problem of legacy costs hampering the entire operation.
Yes, the constitution can be changed... Prop 13 amended the California Constitution.
CA property tax already supplies the lion's share of revenue to State Coffers and it is not as stable as some would have you believe... city after city is complaining of the impact of falling property values... at least those tenured home owners will continue paying the same amount, plus the annual 2% increase
The real problem is as mentioned... for years, public employees have been promised certain benefits to paid out in the future... well, the future is upon us and those that made the promises are long gone.
Many CA retired public employees also choose to leave the State that is paying their retirement... can't tell you of how many Law Enforcement types I know that moved to Nevada...
The city of Vallejo announced it may disband it's police department because it can no longer afford Police Officers.
Like I said rent seekers will always complain about property taxes, the lack of meaty property taxes gives them the ability to extract wealth from productive society. People pay taxes regardless, shifting the taxes to property taxes vs income taxes will not hurt the average joe at all. Just look at Texas.
And low income folks think someone else should pay all the taxes and they should be the beneficiaries of ever increasing government services.
I think you should be the one to take a look at Texas. They may have higher property tax rates, but property values are much lower, and the overall tax burden is lower (no income tax, lower sales tax). Yet, are their public services any worse than what we have in CA? For the most part, their public services are the same or better as what we have....but they pay a lot less for them.
....And it's not just me saying that. The LA Times recently said the same thing:
The Golden State isn't worth it
......Today's public benefits fail that test, as urban scholar Joel Kotkin of NewGeography.com and Chapman University told the Los Angeles Times in March: "Twenty years ago, you could go to Texas, where they had very low taxes, and you would see the difference between there and California. Today, you go to Texas, the roads are no worse, the public schools are not great but are better than or equal to ours, and their universities are good. The bargain between California's government and the middle class is constantly being renegotiated to the disadvantage of the middle class."
Last edited by mysticaltyger; 02-21-2010 at 05:23 PM..
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