8/26 Does anyone know how prop 13 even come about? On one hand it makes
sense that old people who owned homes for 30 years should not have
to pay mortgage up their nose. On the other hand, new home-owners
many who are young and owning homes for the first time have to pay
MORE than old home-owners, many who are corporate land owners, or
individual investors owning and controlling vast amounts of lands?
We talk about flat tax, but this is the opposite of that. Is this
even fair?
\_ How about taking an end-run around prop13 by abusing the newly
refined powers of eminent domain (thanks SCOTUS) to force longtime
landowners to sell in order to bring the property taxes on
their properties in line with current valuations of the property.
Yeah!
\_ "old people who owned homes for 30 years should not have to pay
mortgage up their nose" You mean pay taxes up their nose. Let's
see...is it fair for the government to reassess your property and
then tax you on their assessment? That sounds a bit scary doesn't
it?
\_ This is how government has been raising taxes as long
as there has been government and still how it is done
all over the world. Don't know why it scares you so much.
\_ It's not fair at all. It passed because people were sold fake
images of old people sitting on extremely valuable property,
losing their homes because they couldn't pay property tax. -tom
\_ Well, the people who voted for it were people who owned
land. In another word poor people didn't vote, and people
who wanted to protect their assets, did so regardless of
consequences like less funding for infrastructures, etc...
\_ Were you in CA at the time prop 13 passed? I was. People were
selling houses left n right and moving out of state because they
couldn't afford to own their houses anymore. They were taxed
out of home ownership.
\_ True, but you didn't answer the question about fairness. Why
is it fair that new hard-working home owners have to pay
more than everyone else? Whatever happened to meritocracy,
where the harder you work, the more you should get back?
What about the fact that old timers usually own properties
close to down-town or working areas where they no longer
work, forcing young home owners to buy properties much
farther away, and causing traffic? You mentioned one effect
of not having Prop-13, but what about its side-effects?
\_ The idea is that over time people will sell and the house
will be reappraised at market value or die or whatever.
The effect is to slow down the overall rate of increase of
property taxes across the state. Those same young people
(but really *any* new buyer) who pay current value rates
will be paying next to nothing in 30 years, the same as
that "old couple" who stayed in their house. I see nothing
wrong with encouraging and even rewarding people to stay
in the same neighborhood, helping to build a community
instead of the super transient "don't know who my next
door neighbor is and don't care" nature of many people
today. Those old people paid high rates when they were
young. They pay low now. Same thing for current young
people. No issue.
\_ The issue is that the cost of the services keeps going
up, so other taxes, like sales tax, get raised to
pay for them. So Prop 13 transfers the tax burden
onto people who don't happen to be sitting on half
a million dollars in equity. -tom
\_ I'm not the pp but I think he will respond like
this: "No. The old couples were once young and
had to share the burden of having to pay more.
Now new young couples have to share the burden
of paying more but when they're older, new
young couples will share their burden, so on and
so forth. No issue."
\_ Uh, you might not realize this, but there are
a lot of people in California who don't own
property and are not likely to ever own
property. So they get to pay more for their
whole lives. -tom
\_ That isn't the first thing I thought of, but
yes I believe that's true. In direct response
to tom above, "the cost of the services keeps
going up" is not just an inflationary measure
but also an ever increasing number of 'services'.
I'll happily pay my share of roads, schools, etc,
but there's a zillion other "services" I'll never
use which are just vote buying at best and high
corruption and criminal at worst.
\_ That's a red herring argument; the vast bulk
of municipal government expense is roads,
schools, police and fire. -tom
\_ When Warren Buffet advised Ah-nold to repeal Prop-13 to raise
revenue, Ah-nold said "If he mentions Prop-13 again I will make
him do 500 push-ups." Thank god for Ah-nold, thank god I
voted for him. -going to inherit 3 properties from my parents
\_ If you're inheriting properties from parents, don't worry.
There's a law protecting that.
\_ Why should this be "protected"?
\_ It's written into the Prop. It was part of the selling
package. Sold as "preserving" neighborhoods and avoiding
"poor kids inherit pricy house - must sell" scenario.
\_ Where do people get the idea that government has a right to
endlessly tax your house, and raise those taxes without limits?
Imagine paying $24K for your house in 1970, as my parents did,
now their house is worth $600K. If they paid property taxes
on 600K as they would without prop 13, they would be spending
100% of their retirement income on those taxes alone. -ax
\_ They're sitting on $600K in equity and you don't think they can
afford, what, $5K/year? And of course, the services they
receive from property taxes still cost the same as they did
in 1970. -tom
\_ When the premise of your argument is that we aren't taxed
enough, I give up and walk away right there. -ax
\_ The premise is that the *wrong people* are taxed. -tom
\_ Under what conditions should someone escape taxes?
Shouldn't retired poor people pay the least amount
of taxes, if any? You want a flat tax? -ax
\_ I think it's fair to say that property owners
should be taxed more than non-property-owners.
The beneficiaries of Prop 13 are almost
exclusively not retired poor people. -tom
\_ I'd like to see the numbers. I know a lot
of retirees in my neighborhood benefit
from Prop 13. You call them rich because
they own a $700K house free and clear,
but the reality is they have very little
income and would have nowhere to go if
they sold. By the way, if you raise taxes
on property owners then guess who will
eat that? Owners will pass the costs on
to the renters anyway.
\_ Look, it's pretty simple. The proportion
of tax paid by property owners after
prop 13 is less than before. This is
trivially obvious even if you account
for rents rising to pay property tax.
Therefore, non-owners pay a greater
proportion than they used to.
And it is also trivially obvious that
poor retirees who own their own homes are
a tiny portion of all property owners
in CA. -tom
\_ It is not trivially obvious that
the beneficiaries of Prop 13 are
almost exclusively not retired poor
people. Young people tend to move
much more often. It is also not
obvious that non-owners pay more
now than they did. Essentially,
the same people pay either way
(the wealthy landowners) whether
it is in the form of income tax
or property tax. Renters can pay
more rent (w/o Prop 13) or more
in other taxes (w/ Prop 13). Sales
tax is a red herring, because it is
about as high even in states w/o Prop
13. At issue is whether the state is
collecting enough, not who is
paying for it. The poor are never
paying for it, unless you consider
the poor retirees who would pay
if Prop 13 is repealed. Given state
revenues, I think the state is
collecting more than enough as-is.
\_ OK, given that the state is in
deficit, and two-thirds of the
budget is schools and health care,
what do you think should be cut?
-tom
\_ Whatever we've pumped money
into recently. The State
spent a lot of money in the
<DEAD>dot.com<DEAD> years when we were
flush with cash. What did we
spend it on? I also guess
I am not opposed to raising,
say, income taxes or the
VLF. I just think going after
Prop 13 is barking up the wrong
tree. Here's the budget:
http://tinyurl.com/ckduv
If you look at previous
years you see we spent now
than before, so it's not
that anyone wants to 'cut
education' but instead
change how we spend some of
the money allocated to it.
years you see we spend more now
than before. Why?
\_ Because of increasing
education and health care
costs, mostly. -tom
\_ Health care costs are
rising faster than
inflation, but what
about education? Why
would that be true?
\_ Because we're comparing
against historically
low (abysmal) school
spending from the
Wilson years. -tom
\_ What about before
that? Prop 13 was
around a long time
before Wilson.
\_ Equity is meaningless until you sell your home. When you
sell your home, you don't need to pay property tax.
\_ Umm, the whole economy is currently being powered by
cash-out-equity financing. Don't forget there is always
the reverse mortgage for old folks. So equity is NOT
meaningless until you sell your home.
\_ So you get to determine how much someone can pay? In a city
that has normal property turnover, aggregate taxes will go up.
That doesn't give gov't the right to decide what property
values are and then tax you on it.
\_ Alright. No do you feel the same way about commercial property?
I.e., would you oppose something that specifically repealed
prop 13 with regards to commercial property alone? -- ulysses
\_ YES. A general pholosophy of taxing: Taxing on real gains,
fine. Taxing on paper gains, NOT GOOD. My fater recently
sold his business's building for about 2x what he paid.
But if property tax kept going up on PAPER gains before
he sold it, it would have been a significant additional
expense.
\_ Alright. Now does that same approach apply to the
massive land value appreciation of, say, the Shorenstein-
owned buildings in downtown San Francisco or the hundreds
of square miles developed into office parks by Kaufman and
Broad - which have, incidentally, made outfits like these
the most powerful political players in the State?
\_ It is a NECESSARY evil when you get bubbles in the market.
I'm all for taxes on real gains and real property, but being
taxed on paper gains is, emm, problematic. Would you like to
be like my friend in Virginia who's property tax went up
by $5000 a year because his rather modest suburban townhouses'
appraised value went up by ~$200k?
\_ I think it is fair to be taxed $5000 a year. It's called
natural forces of capitalism. If you have to pay more, you
work harder. If you can't afford it, then you leave so that
someone else more capable or more desperate can take your
place. Look at Silicon Valley. Half of the inhabitants are
tech-related workers but can't afford housing, thanks to
land investment companies that lock down land, or people who
locked properties from generations and generations even though
they have nothing to do with the local industry they're in.
You either help with progress, or inhibit progress.
\_ I think it's fair if you are taxed $100000 a year. It's not
natural forces of capitalism, because the person didn't sell
their property. It's an artificial reassessment by the
government who then tells you to hand over more cash. Doesn't
sound fair to me.
\_ My issue with granting immunity to land owners is that
often times they own a huge amount of land and lock
them down for things that are not necessarily good for
the people. For example, a Sunnyvale nursery built 100
years ago, now surrounded by young working people who are
desperate to find housing in one of the most expensive
places in South Bay. This is not helping everyone.
\_ Actually, in spite ofyour communist rant about
'helping everyone' it might be nice to have things
like a nursery within a 100 mile drive of your
house, right? Some of those old mom and pop
businesses are valuable to the community. Tearing
them all up for (what exactly?) doesn't sound good
to me.
\_ What if the property-owner enjoys letting the field
lie fallow and unused?
\_ You gonna tell him how to use his land, comrade?
\_ Not me, but that fellow a few posts up ("My
issue with...") sounds like he's got a few
ideas. -pp
\_ Well, the law could build in some hysteresis and do the
increase as an increment every few years based on the
difference or sth. But permanently exempting prop owners from
tax reassessment is bullshit when those taxes are what's used
to support community services that all use. It makes the
rates higher for the rest of us. (And doesn't the tax base
get transferred on an inheritance? And of course to rental
investment properties.)
If values go up like crazy then at some point that tax rate
should be cut also, since services costs probably don't
go up linearly.
Not wanting to pay taxes in general isn't a good enough reason.
\_ Prop 13 doesn't exempt property owners from reassessment.
It limits the amount the assessment can be raised each
year. Also, if you do something like improve your home
you will trigger a reassessment on the new construction.
In short, I think people opposed to Prop 13 are whiners.
The government doesn't tax you on stocks until you sell,
so why tax on property? My coworker just received a
'special assessment' of $40K from his city in order to
upgrade the sewer even though he has a septic tank which
he just installed a few years back. He has no choice but
to pay. This is fair? If shit like this happens with Prop
13 in place can you imagine what will happen without Prop
13? Every time the city or county needs money they will
take it rather than make the necessary cuts. In LA, even
with Prop 13, there was an unexpected windfall because of
property taxes. Most people sell after ~7 years. If Prop
13 is ever repealed the CA economy will be screwed.
\_ I paid plenty of AMT tax on stocks I didn't sell, so the
statement that the government doesn't tax you on stocks
until you sell doesn't work for stock options.
\_ Sure it does. Did you exercise the options or not?
If you didn't then you shouldn't have owed any
tax. You mean you exercised them and then didn't
sell the stock afterward. Not quite the same.
\_ Exercising is not the same as selling. You can
exercise the stock, the company can go bankrupt
and not be able to sell the stock ... You've now
paid taxes on paper value only. The statement
was "The government doesn't tax you on stocks
until you sell" -- I didn't sell and still paid
tax. This is not advanced logic here, the
statement is simply WRONG.
\_ He said "stocks". Not "stock options". No
matter how bitter you may be, he is right.
\_ When you exercise an option you are 'selling'
the option. A transaction has taken place.
People are taxed (generally) on
transactions. If you don't exercise you
don't pay tax. Same idea.
\_ Thx for overwriting my response. And the
argument here is about SELLING stock you
don't SELL options. You
\_ Of course you can buy and sell options.
http://www.cboe.com
\_ Funny I sat through hours of stuff
and my company never mentioned
selling my options, because that
doesn't apply here. And matters
not since I'm not selling the
option anyhow.
\_ You made a categorical statement
that was factually incorrect.
\_ Ok I probably should have
said "I couldn't sell MY
options"
can exercise an option and not be able to
sell the stock. You may never be able to
sell the stock. The statement was "The
government doesn't tax you on stocks until
you sell" -- NO STOCK SALE HAS OCCURRED!
Exercising options and selling stock are
totally different things, unless you believe
that BUYING stock and SELLING stock are
the same thing. And I'm not bitter about
anything, I did quite well. However, I
know many who had to declare bankruptcy
because of AMT taxes on now worthless stock.
\_ I'm opposed to AMT on stocks as well.
\_ Well, stock taxes aren't the same as yearly property
taxes. It almost sounds like you're opposed to those at
all. Basically I stand to benefit from this stuff
because my parents inherited some property, and I stand to
inherit that same property eventually, and I don't forsee
ever doing anything to trigger a tax reassessment. But I
still think it's unfair. They rented this prop out and I
probably would end up doing the same. Other thing are
bullshit like depreciation writeoffs, exemptions from
taxes on gains, etc. I believe all taxes should be very
clear and straightforward, not a myriad of special rules
that people manipulate and that interfere with the free
market. I also think it's bullshit that tax rules are
voted on in general propositions and the legislature is
crippled.
\_ Prop. 13 came during a housing bubble akin to what is happening
today. The initial proponents were small goverment conservatives
who saw the backlash against the huge rise in property tax as a
chance to "starve the beast" by limiting property tax increases and
reassessments to a minimal level. As such CA has become more
dependant on income and sales tax and fees for it's budget.
Unfortunately, those sources of revenue are not as reliable nor
as progressive as property tax, so you get CA's socially liberal
stance clashing with it's constant budgetary problems and failing
infrastructure.
until you sell doesn't work with stock options.
\_ I believe prop 13 is a good thing. Without prop 13, a lot
older retired and soon to be retired people will be forced
to leave, because there's no way they could afford to pay
property tax that's more than their retirement income.
Raising property tax without a limit is NOT FAIR any way
you cut it. Forcing people out of their homes because the
market has gone up (especially in a crazy time as now) is
not fair. Capping the gain is a reasonable compromise. I
suppose you are also against prop 60/90 that allows seniors
to carry over the current property tax to their new place.
I pay a premium now on my property tax, but knowing that it
will not grow without limit and I can have a comfortable
retirement life later in life sounds pretty fair to me. I
made a wise choice buying a home a few years ago, the
savings I get on property tax now is my reward, plain and
simple. Just like I have no problem with people making
millions because they bought Microsoft 10 years ago. It's
their reward and they earned it. There are other ways to
solve the housing shortage problem. Most retired people
does not want to sell because they have no place to go and
anywhere they go they cannot afford the new property tax.
Prop 60/90 is a step in the right direction.
\_ Your reasoning is flawed. Seniors are by far the richest age
segment today and most likely to afford increases in taxes.
Before Prop. 13, you could have your property reassessed or
apply for property tax relief. Those imaginary poor old people
being "forced" out of their houses? The state would have had
them jump through a few hoops, but they wouldn't have to pay
anything close to the full amount. This is how it works in
other places. Your whining about having to pay property taxes
is nothing more than more self-interest. It's always amusing
to hear people speak of the downfall of American communities and
society, and yet when it gets down to brass "taxes," forget it.
It's all about the individual.
\_ I don't think anyone is whining about paying property
taxes. Prop 13 doesn't eliminate that. What it *does* do
is set a reasonable rate that taxes can be raised. You
might think seniors are the wealthiest, but they are not, by
the way. They might have high net worths if they happened
to own a home (which many do not) but their incomes are
low in any case and much of the income they do have goes to
medical care. If this real estate bubble crashes many
seniors won't have any money at all beyond Social
Security. In fact, many people depend solely on Social
Security as it is. I am going to guess that you are
either a wealthy limousine liberal (in which case you
can afford to fund the government's waste) or else someone
who doesn't own any property and thus doesn't care. |
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