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In many ways simply indexing the Home Owner Exemption would have protected folks of moderate means from being taxed out...
I will never understand why the Legislature rejected this until the eleventh hour when Prop 13 was predicted to be unstoppable...
Yes, curious.
Government's role is to serve the population's interests in life (safety), liberty, and pursuit of happiness. It is a not-for-profit commitment. It is for the greatest good and balance of the majority. To do this includes making ongoing home ownership a possibility for citizens, with regard to taxation burden -- including as they age, or suffer setbacks, or even if they are simply not able to compete at the higher levels of earnings. Prop 13 is a good concept -- excellent, in this regard. But to extend its full benefits to folks that enjoy the attainments of the highest socio-economic levels is to cut off a very reasonable and fair source of revenue for maintaining infrastructure.
As structured, I also see that Prop 13 fails to fulfill the promise of making home ownership a possibility for new buyers in inflated economies. A person who has been renting while under years and years of adversity, cannot now afford the taxes on homes at today's prices. So there is protection for people who bought back when -- including the very wealthy ... but no opportunity for low-income to enter the market.
Government's role is to serve the population's interests in life (safety), liberty, and pursuit of happiness. It is a not-for-profit commitment. It is for the greatest good and balance of the majority. To do this includes making ongoing home ownership a possibility for citizens, with regard to taxation burden -- including as they age, or suffer setbacks, or even if they are simply not able to compete at the higher levels of earnings. Prop 13 is a good concept -- excellent, in this regard. But to extend its full benefits to folks that enjoy the attainments of the highest socio-economic levels is to cut off a very reasonable and fair source of revenue for maintaining infrastructure.
As structured, I also see that Prop 13 fails to fulfill the promise of making home ownership a possibility for new buyers in inflated economies. A person who has been renting while under years and years of adversity, cannot now afford the taxes on homes at today's prices. So there is protection for people who bought back when -- including the very wealthy ... but no opportunity for low-income to enter the market.
It is a mixed bag... the receptionist at work and the clerk at the local Safeway each bought several homes in the housing boom... both are now renters.
The boom certainly made it easy to own... at least for awhile.
More than a few were shocked when the tax bills started to arrive... a neighbor from Mexico was so proud of being a homeowner... he had bought a modest home in Oakland's fruitvale district and came to me when he got a tax bill for $7,500... he asked if this was a one time thing and I told him no...
He gave up his home that he paid 510k for and the bank later sold it for 80k to an investor that later resold it for 150k... so the new owner's tax about $2,300 almost a third of what Jose' was paying.
Many that bought did not realize the full ramifications of being a home owner.
By the same token... prices in these area are in some cases back to 1990 or 1995 price levels... wages were much less then so affordability should be up...
The best areas always seem to weather well... like Piedmont... no shortage of buyers and over bids...
I know more than a few that could buy and they are so turned off of home ownership that they don't even consider it...
Yep. And if special interests -- including the very wealthy -- don't grasp the need for real balance in society, it always eventually gets forced down their throats one way or another anyway.
Any number of places that become popular for the well-to-do end up in a quandary along these lines. I have properties in two areas of Washington state that have become wealthy enclaves. I am allowed tax protection for one primary residence only due to a provision for disabled veterans. The other property pays through the nose. I have pretty considerable net worth, but only very low income, as I rent the places out but don't rent them at potential. So I am very cash / income poor (but by choice). I can, and do, however, charge sufficiently for enough of the units to cover my butt. While all around me over the years, properties have been purchased and developed by wealthy folks, driving up my values -- and taxes. Without my exemption, I'd be forced to charge full rents for all units or give up owning there -- as most of my former working class and middle-income neighbors have.
What happens though, is that places like the San Juan Islands and Key West Florida, to name a couple, have lost their service communities due to isolation of the enclave: too damn far and expensive for worker-bees to commute to fix the toilets. My favored property (and my best campsite!) sits on an island that many of the service / tradesmen won't ferry out to even for an upcharge to cover the transportation. And the wealthy have a terrible time getting their toilets cleared. (tsk)
There is one 9-unit property on my island that was expressly created as a low-income co-op just to keep some balance to the little community. You won't find that in a more urban setting though -- thus service comes from increasingly ghetto-ized remnant satellite communities.
Ultrarunner supports Prop 13 because he is a landlord......not much more to it than that.
Prop 13 is bad on so many levels its amazing its lasted this long, goes to show how hard it is to change policies once they well entrenched.
I support prop 13 for many reasons...
If I had to pick one... it is hands down the provision requiring voter approval for new taxes...
Remember... there has not or will ever be enough Landlords to pass any initiative in California... the ranks of Landlords are minuscule compared to that of Property Tax Payers... and even then... there were not enough Property Tax Payers to garner the support Prop 13 received.
So... yes, even non Landlords, and non Property Tax Payers voted for Prop 13, including renters...
At the time it was passed, it included my High School Teacher and my Uncle... both were renters and both hoped to be home owners someday... and both saw a rent reduction after Prop 13 passed.
It didn't take any special insight to see how double digit property tax increases were forcing everyday people out... the wealthy can always fend for themselves... but what about the family just trying to keep up with the bills and pay for the kids and getting a tax bill increase that wipes out any hope of realizing a better life for the family?
The 70's were a time of gas lines, huge unemployment, car maker bailouts and while all this was happening... taxes were going through the roof...
As to the Landlord part... yes, it is true and you can find me Moderating the Rent and House Forums.
I bought my first home while still in school and working 3 jobs and I still have it today and the rent charged is still the same as it was many years ago when my tenant moved in...
Remember... there has not or will ever be enough Landlords to pass any initiative in California... the ranks of Landlords are minuscule compared to that of Property Tax Payers... and even then... there were not enough Property Tax Payers to garner the support Prop 13 received.
Small groups often influence the masses into supporting what benefits them.... Prop 13 was easy to push on the voters since it seemed, at least superficially, to be good for them.
Prop 13 didn't lower any taxes in the long run it just transferred the tax burden from property taxes to productivity taxes.
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Originally Posted by Ultrarunner
... but what about the family just trying to keep up with the bills and pay for the kids and getting a tax bill increase that wipes out any hope of realizing a better life for the family?
Property taxes shouldn't be highly volatile and you can easily prevent large spikes in property taxes while ditching Prop 13. Prop 13 doesn't even allow for inflation... I know someone in their 60's that just sold their home, their property taxes were $700/year... How much is the young family going to pay that purchased the house? $3,500/year. In California the young are subsiding the old....... The worse situation for someone to be in tax wise in California is to be young and have a high income.....
Small groups often influence the masses into supporting what benefits them.... Prop 13 was easy to push on the voters since it seemed, at least superficially, to be good for them.
Prop 13 didn't lower any taxes in the long run it just transferred the tax burden from property taxes to productivity taxes.
Property taxes shouldn't be highly volatile and you can easily prevent large spikes in property taxes while ditching Prop 13. Prop 13 doesn't even allow for inflation... I know someone in their 60's that just sold their home, their property taxes were $700/year... How much is the young family going to pay that purchased the house? $3,500/year. In California the young are subsiding the old....... The worse situation for someone to be in tax wise in California is to be young and have a high income.....
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I wouldn't call Sales Tax a productivity tax...
Although, given the option, I would much prefer a tax that is based on some type of active activity... i.e the more I spend or earn the greater my tax contribution...
Taxing someone based solely on opinion of value is just wrong... almost anyone will agree that Real Estate run-up was due to a bubble and irrational expectation on the part of many that today's high price will be considered tomorrow's bargain...
Without a Prop 13 to add some stability... I can only imagine the additional turmoil and upheaval... in my city homes went from $150k to $500k during the bubble and are now back to $150k... all in the span of 8 to 10 years.
What many fail to consider is Prop 13 has a built in mechanism to adjust revenues by simply having the support of the voters... a concept I fully endorse!
As you mentioned, a small group will often exert influence... just imagine the influence of a large voting block... nearly unstoppable.
Regarding the young family... I am certain their earning potential will far exceed anything the man in his 60's could imagine and chances are he will be long gone while they are hitting their peak earning potential...
I'm not happy with the 24 months my county has to act on my Decline of Value based Appeal and that I must now pay a non-refundable filing fee just to be considered...
I also don't begrudge the family I bought my home from and the $1300 yearly tax they paid... as they and those like them spent a lifetime putting in place the infrastructure that I now enjoy...
My one wish is that people become familiar with Prop 13... it is easy to read and would avoid many misunderstandings...
Some very intelligent people don't have a clue how it functions.
Without a Prop 13 to add some stability... I can only imagine the additional turmoil and upheaval...
You don't need Prop 13 to have "some stability" and restricting property tax increases below the usual rate of inflation guarantees that it will result in the young subsiding older residents.
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Originally Posted by Ultrarunner
As to the young family... I am certain their earning potential will far exceed anything the man in his 60's could imagine and chances are he will be long gone while they are hitting their peak earning potential...
People tend to earn more, not less, as they age as a result Prop 13 puts major burdens on younger families.
Given older residents whether they are seniors or not makes no sense, younger workers are already supporting those that are retired. If you maintain the same level of benefits but also give large tax breaks to seniors the burdens will be too large....
But there are no free lunches, the invisible hand will have its vengeance.
You don't need Prop 13 to have "some stability" and restricting property tax increases below the usual rate of inflation guarantees that it will result in the young subsiding older residents
Only if the old buy and hold and CA stats say the typical family moves every 7 years... don't know if this is still true as it was from 2008.
The beauty is the young can buy and hold too and they can do it today with 30 year mortgages in the 4% range which is unbelievable
My neighbor bought in 82 with a 17% mortgage rate... talk about limiting ones options.
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People tend to earn more, not less, as they age as a result Prop 13 puts major burdens on younger families.
Yes to a point and then income drops sharply for most... no one in my family has ever had a retirement other than Social Security and we mostly work till we can't.
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Given older residents whether they are seniors or not makes no sense, younger workers are already supporting those that are retired. If you maintain the same level of benefits but also give large tax breaks to seniors the burdens will be too large....
Just as those that came before them built the cities and infrastructure for future generations to enjoy... I look at it as paying my dues... but then I'm the youngest in my neighborhood by a long shot.
Case in point... the voters here approved a park bond measure 25 years ago that more than doubled the holdings of the regional parks... a perfect case of "Older" citizens providing for the next generation...
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But there are no free lunches, the invisible hand will have its vengeance.
From your finger tips to the Legislatures Ears... one can only hope...
How many people would lose their home immediately if prop 13 were removed.
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