Prop 13 (megatopic) (Oakland, Alameda: neighborhoods, purchasing, calculator)

[KathiOH1]

Oh gosh. I'm glad I live in Knoxville, Tennessee and that our family property is in Michigan rather than California. Our TN property taxes are reasonable, our schools are well funded, and we have no income tax. I just wish I had the same comfort level with property beyond Tennessee.

[bobbymcG]

Pros and cons to both sides of the fence.

property tax inflation caps prevents property taxes from increasing more than 2% per year aside from special taxes requiring 2/3 vote. This lowers the carrying costs for property owners. Lowering carrying costs of property owners tends to lower turnover of the asset in question, all else being equal. Lower turnover tends to increase the price of the asset, again all else being equal. Combined with significant population increases, population movement towards job centers, and lower interest rates; housing prices have increased substantially since prop 13 took effect. So the positives are greater stability in nominal property taxes leading to less people being priced out of their homes.

The flip side is associated with negative effects of lower property tax revenue and lower real estate turnover. There are long time homeowners that do not need a property tax break. Property taxes are much higher for new home buyers as the property is reassessed upon sale. Lower property tax revenues encourage local governments to cut services, increase commercial building and discourage residential building. During the 1960's, California K-12 education was ranked top 10 in the US. Since then, California K-12 hit bottom 2 in the country(1990's) and is currently bottom 10.

Because property tax caps lowered local government property tax revenue and negatively affected K-12 education, the State had to increase sales and income tax to make up the shortfall. The state established a minimum K-12 funding level and funded it with State funding(prop 30, prop 98). This wouldn't hit long-time retired homeowners as hard as it would hit new employed homeowners.

All these effects are much more pronounced when property prices increase more than 2% per year.

High level view -

Pros
- less long time homeowners priced out of their homes
- less residential development(pro&con depending on viewpoint)

Cons
- less well funded schools, lower quality K-12 education
- higher property taxes for new homeowners
- higher income and sales tax
- less residential development(pro&con depending on viewpoint)

[Pyramidsurf]

Originally Posted by NoMoreSnowForMe

The argument that I hear a lot from critics of Prop 13 that is, in my opinion, ridiculous - is saying that it's so unfair that one house on a street pays a really cheap tax, while another home pays a high tax right next door. But, that's like saying that all houses should always sell for the same price, too. I mean, is it reasonable to be angry that the guy who bought his house in 1960 for $16,000 that is now worth $800,000 - and someone buying the house next door had to buy it in 2018 for $800,000, should get to buy it for only $16,000, too? I mean, hey, it's right next door to the one that was last sold for only $16,000!

And what these guys don't understand is that the house they are now buying for $800,000, might be worth 3 million dollars in 10 years. Do they get to cash out the 3 million? Or should their selling price be capped at the purchase price forever?

This argument is absurd.

What my neighbor paid for his house is none of my business since it only affects him and his family. Taxes affect all of us since it pays for services. One person paying 1K and another paying 9K creates a large disparity and forces the state to figure out other ways to fund services.

There are other ways to keep property taxes low without the effects of Prop 13. Getting a huge tax break and expecting your neighbor to pick up the tab is why some people despise prop 13.

[davidt1]

Prop 13 works exactly the way everything else works. One person buys a 10 year old car for $4K and pays taxes on that car. Another person buys a new car for $40K and pays taxes on that car, which is 10 times what the other person pays. Seems fair and no one complains about that.

[expatCA]

Originally Posted by Pyramidsurf

This argument is absurd.

What my neighbor paid for his house is none of my business since it only affects him and his family. Taxes affect all of us since it pays for services. One person paying 1K and another paying 9K creates a large disparity and forces the state to figure out other ways to fund services.

There are other ways to keep property taxes low without the effects of Prop 13. Getting a huge tax break and expecting your neighbor to pick up the tab is why some people despise prop 13.

Nope or Prop 13 would never have occurred.



Taxes will always go up and the Prop helps those who for years paid the taxes on the buildings such as schools, parks etc., that were built with their taxes and are used by later property owners who paid nothing for what is in existence. They benefit, and like the previous owners, get to pay for the new things and they have a higher salary to pay for it.



The State would have no problems with paying for things if they didn't waste it and instead used it wisely. They don't.



One person paying 1K and another paying 9K is a choice. They can buy and pay or not, as no one forces them to do so. Pay was lower when the one with less tax was working, so higher tax now to people making more, makes sense. Tax the richer right?


The State keeps taxing everyone and only charges more and more.

[CA4Now]

Originally Posted by KathiOH1

Oh gosh. I'm glad I live in Knoxville, Tennessee and that our family property is in Michigan rather than California.

My aunt and uncle pay over $20,000 annually in property taxes for their home in Michigan.

[Pyramidsurf]

Originally Posted by davidt1

Prop 13 works exactly the way everything else works. One person buys a 10 year old car for $4K and pays taxes on that car. Another person buys a new car for $40K and pays taxes on that car, which is 10 times what the other person pays. Seems fair and no one complains about that.

Except both cars aren't equal in value like houses are. Cars depreciate over their lifetime. Most houses don't.

[JGC97]

Originally Posted by Pyramidsurf

This argument is absurd.

What my neighbor paid for his house is none of my business since it only affects him and his family. Taxes affect all of us since it pays for services. One person paying 1K and another paying 9K creates a large disparity and forces the state to figure out other ways to fund services.

There are other ways to keep property taxes low without the effects of Prop 13. Getting a huge tax break and expecting your neighbor to pick up the tab is why some people despise prop 13.

And you're argument is absurd, as well. You're right, though. It's none of your business what your neighbor paid for their home like it's none of their business what you paid for yours.

One thing you never mentioned but might want to consider. The neighbor who lives with relatively lower property taxes has probably been in that home for years ... decades, maybe. Maybe even longer than you've been alive, which means they've been paying property taxes longer than you. Another thing, they are probably older and no longer working so essentially living on a fixed income. In order to pay the exorbitant amount of taxes, these people would have to have an income equal to the neighbor who's still working and paying more in taxes.

People who stay in a home for decades decided a long time ago to make a life there, not look at it as a way to make a quick profit by buying and selling over and over again. But, if you can find a way to balance it so you don't bankrupt someone or drive them out, then please, share that info. I know the state would like to know since they're scraping the bottom of the barrel, looking for any way to increase revenue.

[expatCA]

Originally Posted by HereOnMars

And you're argument is absurd, as well. You're right, though. It's none of your business what your neighbor paid for their home like it's none of their business what you paid for yours.

One thing you never mentioned but might want to consider. The neighbor who lives with relatively lower property taxes has probably been in that home for years ... decades, maybe. Maybe even longer than you've been alive, which means they've been paying property taxes longer than you. Another thing, they are probably older and no longer working so essentially living on a fixed income. In order to pay the exorbitant amount of taxes, these people would have to have an income equal to the neighbor who's still working and paying more in taxes.

People who stay in a home for decades decided a long time ago to make a life there, not look at it as a way to make a quick profit by buying and selling over and over again. But, if you can find a way to balance it so you don't bankrupt someone or drive them out, then please, share that info. I know the state would like to know since they're scraping the bottom of the barrel, looking for any way to increase revenue.

So true. Tax others so I benefit is a recurring theme here.

[Pyramidsurf]

Originally Posted by expatCA

So true. Tax others so I benefit is a recurring theme here.

Which is exactly what prop 13 proponents want. Over tax new buyers to keep their own taxes low.