Government's Hand in Our Investments Reforming Proposition 13

San Francisco Chronicle ^ | September 2, 2003 | Jonathan Berk

[hedgetrimmer]

California's property tax could well be the most regressive tax on the planet. The passage of Proposition 13 and the subsequent large increase in real-estate values provide a tax system in which the wealthier pay, even on an absolute basis, considerably less tax.

[hedgetrimmer]

Hang onto your hats California, because when the state puts a lien on your property so they can float bonds on the balance due on your property taxes, we will have reached the final solution, your property will no longer be yours, at all. No more private property in California.

Toss in the indian nations option to declare your property a sacred site in a closed door session and an in camera tribunal to inform the property owne they've just lost their property, this state is moving more and more to Joseph Stalins dream.

[hedgetrimmer]

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[hedgetrimmer]

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[visualops]

I don't have any management/business chair anywhere, but the guy's assumption is false to begin with.
It isn't "welfare" for the wealthy. No one is giving them any money.
If one was lucky enough to have bought a house and kept it for 20+ years, then over time the increased property value may make one wealthy if at the same time the state didn't suck you dry through taxes.
Having bought a house 20+ years ago in an area where values increased alot would produce the same results, even without Prop 13. "Reasonable" (if there is such a thing) property taxes would still allow the increased gain. As an example, my parents bought a house in Bethesda, 4 miles out from the DC line, back in the 60's. They sold the house some 20+ years later and did quite well, since property values in the DC suburbs had increased alot. That's the whole idea, a house is an investment.
NYC before the real estate boom started in the 80's is another example. $350/mo apartments in buildings that went co-op suddenly were very valuable.

[Rabid Dog]

I don't want to make this a Tom/Arnold thread but Tom did have some insight onto this.

In Defense of Proposition 13

Senator Tom McClintock

Date: April 7, 2003

Just for fun, take the current value of your home and multiply it by 2.67 percent. Look hard at that number, and then imagine paying it this year as property tax. This isn’t a theoretical exercise – if not for Proposition 13, that’s what you would now owe to the county tax collector. Prop. 13 made two critical changes in California property taxation. It reduced the tax rate from the average 2.67 percent to one percent. And instead of basing the tax on your home’s current value, it based the tax on the price you paid for it.

The difference is staggering. Suppose you bought your home five years ago at the median price of $186,490. Today that home is worth $316,000. The Prop. 13 property tax paid on that home today is roughly $1,900. Without Prop. 13, the property tax would be $8,400. How long do you think you could keep up with those taxes?

This is an important question as the landmark taxpayer protection law celebrates its 25th anniversary under a new round of attacks by California’s insatiable spending lobby.

To hear them tell it, Prop. 13 decimated state and local finances and it’s long overdue for some “adjustments.”

But the facts paint a completely different picture. Between 1977 (the year before Prop. 13) and 1999 (the latest year for which complete data is available), inflation and population grew at a combined rate of 235 percent. State revenues grew 448 percent, California city revenues grew 333 percent and county revenues grew 326 percent. If Prop. 13 was supposed to slow government spending, it was a complete failure. Governments simply shifted to other taxes.

Prop. 13 was actually supposed to keep a lot of California families from losing their homes to galloping property taxes. And there, it succeeded.

When the facts don’t fit the appetite of the spending lobby, an appeal is made to “fairness.” Since the tax is established by the price of the home when it was purchased – and not by the current market value -- identical homes purchased at different times can end up with different tax bills. But consider the alternative: a system where taxes that were affordable when you bought your home make it impossible for you to keep it just a few years later.

When a home is purchased, the buyer knows the cost of the mortgage payments and the property taxes and can calculate his or her ability to afford the home based on these predictable costs. Before Proposition 13, property taxes presented an unpredictable wildcard that was as erratic as California’s peripatetic housing market.

It is true that the relative property tax burden has shifted from commercial to residential property, since residential properties sell more often.

But once again, consider the alternative. If commercial property is removed from Prop. 13, skyrocketing business taxes will ultimately fall on the same families in one of three ways: as consumers through higher prices, as employees through lower wages, or as investors through lower earnings. And most investments aren’t the fortunes of wealthy fatcats; they’re Mom and Dad’s retirement savings.

You never see a proposal to tie an increase in commercial property taxes to a decrease in residential property taxes. The reason should be obvious: the objective isn’t fairness – it’s more money.

And that’s what’s at the heart of the latest attacks on Proposition 13. It’s something to think about as you pay your property tax bill this month.

http://republican.sen.ca.gov/web/mcclintock/article_detail.asp?PID=242

[Rabid Dog]

My other suggestion would be to start with terminating the employement of that professor from our taxpayer financed University system.

[hedgetrimmer]

In California, the power elites hate the idea of private property very much. They think any tax reduction in property taxes is welfare for the rich. In my town, some community members are attempting to change the county plan so that no one can build a house larger than 4000 sq. feet. The man said, I don't want to look up in the hills and see mini villas-- his reason for limiting the size of your home.

Also, in another area, a builder had to install low flow toilets in 4 houses surrounding his lot, so his house wouldn't have such an impact on the "environment" and water supply.

The people who have gotten into office, or gotten power through other means in this state are completely anti-American, anti-property rights and down right nuts.

[hedgetrimmer]

That seems like an equitable solution to the problem of fomenting communism, don't you think?

[Lancey Howard]

Where do you even begin with this kind of simple-minded claptrap?

Hard-working, overtaxed Mom and Dad, who moved into their modest home in 1978 and still dread their monthly electric bill (and also hope the Taurus won't need brakes this year), are suddenly "wealthy" people who get "welfare for the rich".

So California should be able to slap a lien on their home and confiscate thousands upon thousands of dollars from Mom and Dad when they finally sell their home so they can go off and try to enjoy a comfortable, well-deserved retirement.

Who else but some scumbag socialist "associate professor" at Berkeley would have the gall to, apparently with a straight face, put forth a hare-brained scheme like this?

[hedgetrimmer]

This isn't the first time the idea has been floated. The democrat party is taking in the chin right now with Gray Davis. I think they put this guys opinion out to float the idea without linking it to themselves if there is blowback.