Posted on 09/01/2020 5:23:01 AM PDT by karpov
California’s Proposition 13, the successful 1978 initiative that limited property-tax increases, has long been considered the third rail of the state’s politics. Former governor Jerry Brown, coasting to victory in the 2014 gubernatorial election, called the constitutional amendment “a sacred doctrine that should never be questioned.” But now a coalition of public-sector unions, school districts, progressive advocacy groups, and Democratic politicians are betting that they can overturn at least half of Prop. 13, in the process enacting a huge tax increase on state businesses during a steep recession. Theirs promises to be a hard-fought battle, pitting rich unions against well-financed business groups—a contest that will prove decisive for California’s future. If the union-led effort succeeds, it will show that the state has made a pivotal, if not permanent, move to the left, and the rest of Prop. 13 will likely be the progressive movement’s next target.
Prop. 13 limited the amount that commercial and residential properties could be taxed in California to 1 percent of value. Crucially, the constitutional amendment also restricted reassessments of value to when a property changes hands, or when construction enhances the value of a home or commercial property. Several trends encouraged public support for the proposition, including the rapid growth of California government, skyrocketing local taxes, and a series of state supreme court decisions that redistributed property taxes in some wealthy districts to poorer areas. Watching property assessments soar during the inflationary 1970s, older homeowners strongly supported the initiative.
Though Prop. 13 has been a boon for some owners, especially those who have retained their properties for a long time, it hasn’t restrained the overall growth of taxes in the Golden State, which ranks 11th in total tax burden on individuals, in part because of its steeply progressive income tax—the highest rate in the nation.
(Excerpt) Read more at city-journal.org ...
Just got back from LA. It is a garbage strewn dump. They certainly aren’t spending money keeping California clean.
The commies will have to rescind Prop 13. There’s a massive deficit because of monumental mismanagement. When that happens,I’m outta here. I’d leave today but I have to convince my boss. I’m working on her daily.
Well, now that property tax is not deductible on your federal return, the whole acceptance of it has changed.
California does not have a revenue problem, it has a spending problem. Rather than raise taxes, cut spending.
One easy way would be to cut off support for illegals.
Public employee unions are parasites, feeding off the host. Like most parasites they will eventually cause the death of the host.
If this passes, which is entirely possible due to the makeup of the electorate here in CA. It will be the Final Stake right through the heart of this godless cesspool of a State.
Please keep in mind that Los Angeles is not all there is in California, and skid row is not all there is in LA.
“Please keep in mind that Los Angeles is not all there is in California, and skid row is not all there is in LA.”
Give the Democrats time. It’s hard to completely destroy a state.
Question to ask, when those holding property are forced to sell because they cannot pay the next level taxation when their taxable values soar and they decide to leave the state, does the state tax their cap gain on house sales?? If so, they are even more screwed. The franchise tax board is worse than the IRS, like a gestapo on steroids.
Prop 13 is one of the only reasons for many to stay in the garbage state.
“Prop. 13 limited the amount that commercial and residential properties could be taxed in California to 1 percent of value. Crucially, the constitutional amendment also restricted reassessments of value to when a property changes hands”
That second part of the Proposition 13 rule - restricting reassessments - makes for very unequal taxation of property taxes. One property may have remained in the same hands for the last decade ((or more) and while property values on the street have gone up considerably it is being taxed on a an assessed base at least a decade old. Meanwhile a property on the same street that is exactly the same model house on exactly the same size lot, that sold just last month, is going to be paying much higher property taxes assessed according to today’s values. In concept, it’s no different than paying different sales taxes based on when you arrived at the store.
And what happens is the taxes for the newly sold homes are always going up so much above what incumbent home owners are paying, to make up for the inability to reassess, and change the taxes as much, on all the houses that haven’t sold. As much as the scheme helps “mom and dad”, it shifts a tax burden that is more than normal in any other state onto the sons and daughters buying their first home. In California you cannot use the current owner’s property taxes to help figure what your total monthly escrow costs will be. Your realtor has to reassess your property, see what portion of the market value would be included in the tax-assessed value, get the tax rate (and any additional special assessed fees) for the property area, and estimate what YOUR property tax would be.
Then Prop 90 was added, which allows home owners age 55 and older to “transfer” their old grandfathered “assessed value” from their existing home to another home they want to buy (certain things about the two homes have to be equal/similar to apply). Another proposition has allowed counties that choose to participate to allow home buyers from a different county “transfer in” their old home’s assessed value.
I suggest that some day the length of California’s tax codes concerning property taxes will be as long as the federal income tax code.
Proposition 13 has operated on the housing market much like rent control. Because proposition 13 favors, and rewards, holding onto an existing home, those houses grandfathered into the earlier assessed values are held off the market longer than they would otherwise have been. That helps boost the prices of those homes that are available for sale, just like rent control raises the rental rate for what rental units are remaining available. Although the credit situation was no different in California than nationally in the pre-2008 housing market boom era, the price bubble in California was just about the worst in the nation. Minus proposition 13, there would have been no tax favoring of holding onto a home, and a higher likely tax just for buying a different home, which, without those tax differences, the supply of homes for sale would not have been constrained by prop 13 tax advantages, and the level of the price bubble would have been reduced.
As is 100% always the case, with all things being equal, tax advantages to someone ALWAYS are covered by higher taxes to someone else.
There is never anything more universally equal and just than flat taxes applied to everyone without favor or disfavor.
Prop 13 is one part of the causes of the out of wack sale prices of existing homes in California. (there are other parts too - like all the state, county and local “fees” home builders/buyers pay just for the privilege of building a home in California (friends of mine built a home with the costs of all the fees becoming about 30% of the builder’s material and labor costs).
Another new law in California, is going to massively award ALL current existing home buyers. That law is requiring that every new home built in California MUST be built so it has solar energy. That is greatly adding to the costs, and related per sq ft sale price of all newly built homes, making older homes of exactly the same square feet more in demand. That will continue until that demand eventually raises the average price of older homes to the price the costlier solar homes have to sell for. Again, government will have artificially raised home prices in Kalifornia.
You can deduct your real estate taxes on your federal income tax return. But limits apply and you have to itemize to take the deduction. The Tax Cuts and Jobs Act limits the amount of property taxes you can deduct. For 2019, the IRS says you can deduct up to $10,000 ($5,000 if you’re married filing separately)
Yeah. I was being overly broad.
It’s not worth it to deduct my $250 a year. :)
“Skid Row”? Unless large parts of the San Fernando Valley are considered Skid Row, I was never there.
I was there for a wedding in Topanga Canyon. We drove thru Hollywood, Malibu, and several other places in LA County. Some were nice for sure, however, there was trash on the streets almost everywhere.
Granted I haven’t been to Malibu in a while, but I doubt it looks like a homeless camp on an overpass above the 11 freeway.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.