Schwarzenegger Adviser Buffett Suggests California Property Taxes Are Too Low

The Wall Street Journal ^ | August 15, 2003 | JOSEPH T. HALLINAN

[buwaya]

I don't know why they like property taxes either.

Its hard to tell whether CA property tax increases or decreases property prices.

The California property tax actually adds a brake to the valuation bubble as it penalizes new home buyers, as they pay 1.1-1.2% on the current inflated value. For instance, I pay $ 3000 a year on my house purchased in 1996, but my neighbors who bought the same this year would be paying
$ 6000, and the old folks down the street who have owned theirs since 1961 could be paying maybe $ 300-400.

On the other hand, it is a disincentive for people to sell and move, as their living expenses will likely go up greatly.

Whats certain is that it is unfair to new homeowners.

The overall California state and local tax burden is above average for the US, but as a disincentive to business it is less so than the high cost of living, driven mainly by high property and rental costs.

I would be in favor of rationalization of the property tax situation, combined with a lowering of the income tax and a reduction of the obstacles to new housing development (the real culprit). More property tax and less income tax would even out state finances.

[RS]

""In California, he owns a Laguna Beach home valued at $4 million, or eight times as much. The annual property taxes on that home are just $2,264 -- a fraction of what he pays in Omaha"

If his home in CA is not his primary residence he might find a revised bill in his mailbox

[RightWhale]

There is one sure way to lose an election. Warren Buffet has named it.

[Uncle Hal]

If Warren pays taxes of $14,401 on a $500,000 house in Omaha and $2,264 of taxes on a $4 million house in CA. then Warren should lobby for property tax cuts in Nebraska. If Prop. 13 was in effect today and was administrated the same as when the law was changed, Warrens tax on his beach pad would be in the area of $100,000. Warren obviously bought his house many, many tears ago probably paying around $100,000 or maybe a little more. He thus benefited from the great appreciation of house prices in CA. Warren can afford to pay big taxes. But if he was the average retired Joe living on a pension he would have probably been forced out of his long time residence because he could not afford the taxes to keep it. This is exactly why Prop.13 was passed, so that the average person could stay in his long time residence without the fear of being forced out by high property taxes. Mr. Buffett should go back and review his CA. history. Prop 13 enabled home owners to fix their housing costs with some certainly.

[buwaya]

As far as I know all the US has property taxes.

There has to be some sort of tax.

[novacation]

CA propery tax is 1.25%, but a bunch of other crap gets tacked on from bonds and other fees. The top state income tax is over 10%. Sales tax in 7.something. You know davis and gang just tripled the rate to register a car.It ain't cheap to live in California if you work. Arnold better dump buffet. The first thing out of his mouth is overturn prop 13 and raise taxes? There would be a revolt and it wouldn't surprise me if there was violence.

[My2Cents]

My biggest concern about McClintock is that while he's not part of the problem in Sacramento, he's part of the fraternity. I think the best thing to do is to bring someone in who's truly an outsider. If not Arnold, then Simon is the more likely alternative. McClintock would make a great Director of Finance in whomever's Administration.

[Enterprise]

Well, I don't see what the problem here is. If Buffett really wants to pay his fair share of property taxes in California he should do the following:

1. Sell his house to a trusted friend for 4 million dollars. The State will get a 3% tax on the sale, and the house will be revalued and taxed at the higher level.

2. Have the trusted friend sell the house back to him for 4 million dollars. That way, he gets to pay another 3% tax on the sale of the house, he will own the house again, and he gets to pay a much higher property tax.

3. Or, he can do as others suggest. Send the Government more money, leave my property taxes alone, and JUST STFU!!

[leprechaun9]

Buffet should be asked how much tax should be paid on his CA property, AND THEN PAY IT! Put his level of charity to the test!

Is there a law prohibiting overpayment of property taxes?

[Ernest_at_the_Beach]

calgov2002:

Gray Must Pay
Cruz Must Lose

calgov2002: for new calgov2002 articles. 

Other Bump Lists at: Free Republic Bump List Register

[BlessedByLiberty]

...His pious schemes for other people's money are fine and dandy, it's just too bad he wants to enforce them at government gun point...

alter the pronoun and you have the Liberal / Dem spin on everything:

Their pious schemes for other people's money are fine and dandy, it's just too bad they want to enforce them at government gun point.

As I say to any of our liberal friends when they carp about the tax cuts or anything else Bush / Pubbies do to cut taxes, or heaven forbid cut spending, I always look them right in the eye and say "Donate to make a difference." Needless to say they don't often bring up the subject any longer. (It can also be phrased as a question: "How much did you donate to make a difference today?"

Yep, nasty, but effective.

[Eric in the Ozarks]

Warren may have a point, but his conclusion is wrong. What the California legislature did after Prop 13 was to shift their ever-increasing need for tax revenue to other sources, like commercial and industrial property.

[RS]

"Whats certain is that it is unfair to new homeowners. "

Just why is it unfair to new homeowners ?

They know exactly what the deal is when they buy in.

To penalize older homeowners - perhaps to the point of running them out of their homes, for things not under their control - is certainly unfairer then being totally upfront with new buyers.

[NormsRevenge]

Did you know that Tom is his own man, and doesn't get much positive feedback even from his colleagues.. because he is so damn serious about his political role and responsibilities inherent with them... and also, because he has a mind that works for the people and doesn't worry about what's in it for me like most politicos these days.

He is as outsider as he can be for being part of the "fraternity".

just some food for thought.

[Iwo Jima]

...if Davis is in there the pubbies will fight. If Ahnold is in there they'll roll over and surrender, just like the pubs in Washington. I might just be about to throw my support to Davis.

You have articulated the reason why if I lived in California I would vote against recall. It's not as though anyone who came into office now could do anything constructive anyway -- they'll just get the blame.

[b9]

Does anyone else see this as a sign that the recall itself may very well not pass?

The concensus might be, why bother?

[remember]

To penalize older homeowners - perhaps to the point of running them out of their homes, for things not under their control - is certainly unfairer then being totally upfront with new buyers.

There were plenty of solutions to that problem without capping property tax increases to 2% a year, less than enough to pay for the increase in services, such as the wages of the firemen that protect them. Increases could have been capped at the increase in services that they were paying for. Or taxes could have been deferred to when the property was sold. Instead, we came up Prop 13, an irrational overreaction so typical of our proposition process. As long as we have a proposition process that allows voters to vote for tax cuts without the necessary spending cuts to pay for them (or spending increases without the necessary tax increases), we will likely continue to have deficit problems in California.

[Eric in the Ozarks]

Its faily obvious the Cal legislature ignored the obvious.

[SolutionsOnly]

The fundamental problem here is the instinct to raise taxes first - BEFORE considering government waste and the outrageous spending of the California legislature. Buffet is a great investor and makes great business decisions BUT that's not what's needed! In this case the state takes on the role of a monopoly business with no competition to keep the prices it charges in check. A great situation if you're a business owner or stockholder. But what Californians really need is a consumer advocate! Stop reaching deeper into taxpayers pockets to finance a nanny state!

[NC Conservative]

In California, he owns a Laguna Beach home valued at $4 million, or eight times as much. The annual property taxes on that home are just $2,264 -- a fraction of what he pays in Omaha.

Sorry Warren "all you can eat" Buffet. But you can not justify this on your financial situation.