“No taxation without representation” was the catchy and quite effective battle cry back then. While today’s “Close The Loophole” by San Francisco Assessor-Recorder Phil Ting simply doesn’t have the same ring.

We’ve been saving the topic for this long weekend which seems especially well suited for a Proposition 13 discussion and debate. Bonus points for a better slogan.

118 thoughts on “Full Taxation On Your Location? (The Great Proposition 13 Debate)”
  1. By the way, Phil Ting, the issue isn’t enough tax revenue — IT’S TOO MUCH SPENDING.
    I got your loophole right here, buddy. Come and get it.

  2. i have been paying my truly assessed value since 1999. i want prop 13 tossed entirely, for commercial and residential values.

  3. If Prop 13 didn’t exist, I’d have been forced out of my home years ago. I’m in agreement with getting rid of Prop 13 with regard to commercial properties. But the doubling and tripling of property taxes within a short time as values rise – something completely out of any homeowner’s control – just isn’t fair, particularly to those on fixed incomes whose income does not rise with the real estate market.
    The problem is on the spending side, not the revenue side — the modest annual increase in assessed value should be plenty to keep up with modest annual increases in spending (the key word being “modest.”
    The same people that think the property owners should have to subsidize the rents of their tenants also think that it’s okay to force owners out of their homes as a result of market price increases. Incredible.

  4. Just zero the property tax. That’s the only way to end this Ponzi Scheme.
    California derives such little income from property tax revenue anyway.
    Other taxes can be raised, let’s just get rid of the asymmetry.

  5. The residential tax scheme has got to change. Disabled and elderly aside, one ought not be required to pay 5x the taxes of a neighbor with the same freakin’ house.
    Yeah, I agree that taxes should not pop-up in sync with RE ‘bubble’ spikes, but the current rate limiter is waaaay too tight.

  6. Dubocer, sorry, you won’t get any sympathy from me when your house increases in value by 5x (which is the only way that your property tax bill could increase by five times). Get a reverse mortgage if you don’t want to be kicked out of your house. The increased equity would pay for decades of property taxes.

  7. Prop 13 has to be thrown out the door.
    It is gross.
    As far as I am concerned, the generation who voted it in stole from their kid’s generation.
    It is ROBBERY…from one generation to the next.

  8. “Close your piehole!” 🙂
    I quickly read Ting’s site. How do we know this “unfair” 43/57 corporate/residential split (down from the “fair” 59/41 thirty years ago) has a more innocuous explanation: a residential housing bubble + business converting to residential (consider all the new SOMA condos).
    If conversions move the “bad guys” to the “good guys”, and more tax revenue is generated (more good guy units, etc), I would characterize the imbalance as obvious and expected, not unfair.
    Too bad those good guys are going to have to commute out of the city to get to work 🙂
    Ting’s website doesn’t address these nuances at all. Awful. Hope I missed something.

  9. Let me offer my usual prop 13 plug here: as a renter I LOVE IT!
    I live in a $1.1M+ SFR in Tiburon and pay $2800/mo rent. My landlord can afford to maintain this arrangement because the grandfathered tax base means they only pay $1500 per year in property tax. As the child of the original purchaser, the landlord LOVES the system, as it increases the net income stream from renting it.
    And we love it because the school system is terrific, supported by the insane property taxes paid by the recent purchasers (about 10 times the amount tha I “pay” through my rent). The district is so rich that the school foundation has at least two full time employees whose entire job consists of collecting donations.
    Everybody wins! Thanks for “keeping granny in her home” all of you economic illiterates!

  10. How can Phil Ting fix the economy when he can’t even get his office in order? I’ve been waiting for over a month for a response to an email/letter I sent.
    PHIL, where are you?????

  11. Dubocer, your life in SF is being subsidized by the much higher property taxes that your neighbor is paying for the same (or even much smaller) house. What is “incredible” is your whining that taking this boondoggle away from you (who did nothing to “earn” it save come of age a generation ago) is “unfair.” Seriously, what an astounding sense of entitlement.
    If you can’t afford the property taxes on the actual value of your home, you should sell it (for enormous profits) and move into a smaller home or a rental. Or, as anon @ 2:59 points out, just take out a reverse mortgage.

  12. Um, I bought my home in 2001. My income has not doubled since then, but the value of my property has (yes, probably even at today’s values.) The neighbor next door who, hypothetically, paid twice as much for their property — they bought the property KNOWING they would be paying twice the property taxes, and obviously being able to afford that.
    It’s not a sense of entitlement — I pay my fair share (probably a lot more in property taxes alone than many of you pay in rent) but why should I be forced out of the home I put my life savings into, simply because the market has doubled in a few years?
    I think it’s perfectly appropriate to set a base value for residential property at the purchase price, and raise it a little bit annually. The alternative is to force thousands of people out of their homes every year during real estate booms.
    Why I should I pay the same property tax as somebody who bought a 2x or 3x more expensive property? I love how you want to push the tax burden off on those who can least afford it in order to benefit those who can most afford it.

  13. Again, Dubocer: If you can’t afford the property taxes on the actual value of your home, you should sell it (for enormous profits) and move into a smaller home or a rental.
    And you don’t pay your fair share, actually. You’ve made windfall profits for free. They’re just paper profits at this point, understood. But your net worth has obviously more than doubled, given the leveraged nature of the [investment].
    I paid nearly $200k in [federal and state income & payroll taxes] last year. When I make more money this year, I’ll pay more taxes. And that’s as a result of me doing something that’s actually productive, as opposed to you making enormous profits by simply parking on an asset. It seems to me the better public policy would be to incentivize my productive labor and not your buy-and-hold.
    One last point – I hope you see the ridiculous hypocrisy in your criticizing rent control on one hand and demanding your own subsidy on the other (on the basis that each should pay according to his wealth/ability, to wit — “I love how you want to push the tax burden off on those who can least afford it in order to benefit those who can most afford it”).
    Again, “incredible.”

  14. If you can’t afford the property taxes on the actual value of your home, you should sell it
    Indeed, I’ve never understood this complaining about property taxes “that I have no control over”. Who has control over appreciation? The value of a property is almost entirely derived from what is outside the property line. If you don’t believe this, then imagine airlifting that victorian into the middle of Montana, and see what would happen to the value. If anyone is willing to sell for San Francisco prices, instead of “bare-value” Montana prices, then they should be willing to pay San Francisco taxes as well.
    Because of this, “owning” land, has always been a funny thing. It’s not like owning a pencil. You are squatting on a scarce resource in the middle of a community — a resource that you did not create, cannot consume, and that your neighbors depend upon, since the entire city consists of each of these little slices of privately owned land — and so you are obligated to provide services to the rest of the community along with everyone else. If, for some reason, you stop being able to provide those services, you get replaced with someone that can provide them.
    For some background color, I’d recommend Medieval Culture and Society by David Herlihy, which contains source material, including an essay on the requirements for english manor owners. I.e. they must maintain the roads and fisheries, send wine, food, and finished goods to the king on various feast days, perform certain social services, and of course fight in the king’s wars. If the owners of the manor were unable to perform these duties, then they were replaced with someone who would. Or, pick up a copy of Patronage in Ancient Society that includes descriptions of property tax and service obligations of land owners in ancient Syria and Egypt. Historically, the rates always reflect the value/scarcity of the property, not the ability of the owner to pay.
    This goes back to the dawn of time, so no need to pretend to have discovered some unfairness about not being able to monopolize “prime” land without paying taxes to support the local services.
    Now, in my own ahistorical utopia, I don’t like property taxes in general, and think that we should only tax income, but all income, independent of the means of acquiring it, with absolutely no breaks or deductions for inheritance, dividends, munis, loans, discovering gold in the backyard, etc. and that we should never tax any transactions, including corporate transactions, with the exception of international transfers.
    But, in either case, taxes will vary based on where you live, and if you cannot afford them, then move to where the burden is lower, and allow your place to be occupied by someone else.

  15. Dubocer, if you just bought in 2001 but would have been forced out of your house “years ago” if not for the Prop 13 subsidy, then you really can’t afford your house even at its original purchase price. Property taxes are only 1.135%. If doubling that (if you spent 1M and your home is worth 2M, we’re only talking $13,500) is enough to force a sale because you have so slight of a budget margin, then you’re stretching big time as is. (More likely, you wouldn’t be forced to sell and you’re just being provocative and inflammatory in a blog comment.)

  16. Re: “The residential tax scheme has got to change. Disabled and elderly aside, one ought not be required to pay 5x the taxes of a neighbor with the same freakin’ house.”
    I wholeheartedly agree. Any tax scheme like Prop 13 that doesn’t tax similarly situated people similarly is fundamentally unfair and wrong, and leads to suspicion and cynicism about raising revenue for the provision of public services that benefit the community as a whole.

  17. Robert, I think the complaining comes not liking property or asset taxes in general, a viewpoint you seem to share. My strong preference would be to dial the clock back and prevent prop 13 from ever happening. However, now that it has had 30 years to work its perverse magic, the consequences of repealing it for residential property would be dramatic. As LMRiM alludes to, rents would rise and housing prices would fall.
    Most of the better SFH rental seem to be owned by people who have a few properties. They traded up and never sold, or took advantage of good deals when they came along. If their carry costs increased 10x or more, I’d be shocked if they didn’t prefer to dump them instead.

  18. One of the primary reasons for my leaving California was excessive taxation – both state income tax as well as property tax. It is inherently unfair for me to pay dramatically more in property taxes for the same services than my wealthier neighbors purely because I was born more recently than they were.
    Now I live in a state with no income tax and property tax based on the assessed value of my home and tax increases limited on an annual basis. You guys can have California.

  19. “Now I live in a state with … property tax based on the assessed value of my home and tax increases limited on an annual basis.”
    But this is exactly what prop 13 is! To the renters here, prop 13 simply limits the amount of an annual increase after purchase.
    The vampyric parent/child tax base transfer LMRiM is exploiting is not prop 13 per se — as I learned here on SS, that’s prop 58, which should be repealed immediately (but won’t).
    You can also transfer your tax base once within any county in california if you are over 55 (prop 60). Some counties (not SF) allow you to import the tax base (prop 90). I’m not crazy about these either, but as long as it ends with the death of the owner, it will eventually work out.
    But none of this is on the table — the quoted article is about some alleged unfairness between the corporate/residential property tax split which I’m not even convinced exists.
    Be careful what you sign, or at least read it first.

  20. I’m wondering why putting residential real estate into LLCs and transferring the company instead of selling the property hasn’t taken off.
    This is essentially the same thing that causes the commercial property “loophole”, isn’t it? I would think the incentive to sell your property years down the line with the property tax assessment you had when you bought it would be enough of an incentive for at least a few properties in SF to be under this form of ownership.
    Anyone have a good reason this hasn’t caught on in the residential market?

  21. I was thinking about the Proposition 13 issue this holiday while visiting my grandparents who told me they “cannot afford” to sell their 6 bd home that is now worth over 3.5m that they purchased for about 290K (1972)and pay about 4,600 (guessing) a year in property taxes. They live in a neighborhood above Pasadena called Flintridge and the whole neighborhood is full of large estate homes built in the 1920’s, many of which are now empty, or only with a surviving widow and live in caretaker. If they had to pay their fair share in taxes, these homes would have families and children, and the elderly would be moving into condos which require almost no upkeep. The estate next door has been empty for 8 years because the owners are in a care facility and “cannot afford” to sell. The adjacent property has a stable, a pool, tennis court, and a now ruined garden terrace, and it just sits empty because it is cheaper to remain uninhabited, than to sell it for enormous profit?
    The whole Prop 13 tax situation is completely insane.

  22. If Prop 13 didn’t exist, I’d have been forced out of my home years ago. I’m in agreement with getting rid of Prop 13 with regard to commercial properties. But the doubling and tripling of property taxes within a short time as values rise – something completely out of any homeowner’s control – just isn’t fair, particularly to those on fixed incomes whose income does not rise with the real estate market.
    Old Widow Jones bogey, an old argument 100 years ago.

  23. I’m wondering why putting residential real estate into LLCs and transferring the company instead of selling the property hasn’t taken off.
    It is my understanding that whenever ownership of the closely-held shell corporation changes (50%?) the property gets reassessed.

  24. Why dont we only tax renters, call it a housing subsidy tax.
    Economically speaking, that’s actually not a bad idea. A 100% rent tax would cut rents going to the landlords in half.
    Never fly politically of course.

  25. As far as I am concerned, the generation who voted it in stole from their kid’s generation.
    Nope, thanks to Prop [58] I stand to inherit my mom’s $100/mo tax assessment on her property bought in 1981.
    What Prop 13 is [wealth shift] from the wage-earners and (true) capitalists to the land-owners.

  26. Everybody wins! Thanks for “keeping granny in her home” all of you economic illiterates!
    LRMiM, Prop 13 /58 valuations are orthogonal to market rents.
    Intelligent, economically-literate landowners charge what the market will bear, nothing less and nothing more.
    All Taxes Come out of Rents

  27. Hey, Shza – please, please find a tax shelter and stop whining about the taxes you pay. Any decent accountant should be able to help you. I think anybody who makes 10x the national median income forfeits whining rights.

  28. One more then goodnight:
    Article Henry George and his links to the SF and California economy of the 1870s. It saddens me that the home of his ideas is in such ignorance of them today. . .

  29. Thanks for the unsolicited advice, “aaanon.” But I wasn’t whining about my taxes; I was suggesting that Dubocer not whine about an equitable increase of his.

  30. The folks that are paying higher taxes knew what they were getting into when they bought. They agreed to pay the higher taxes when they bought the expensive property. The folks that bought years and years ago had a budget based on the taxes at that time and why should they pay more because speculation drives up values.
    I have an expensive property that I bought in 2006 and my property taxes are crazy high. But I knew that when I bought so it was my choice to pay what I am paying. My neighbor’s are way lower but I’m ok with that.

  31. How many other states have the equivalent of Prop 13? The many that don’t would seem to be definitive evidence rebutting the horror stories about all the poor homeowners being forced to walk the trail of tears out of SF due to the tragedy of their own windfall profits.

  32. The folks that bought years and years ago had a budget based on the taxes at that time and why should they pay more because speculation drives up values.
    It’s not about individuals, in the case of prop 13. The aggregate effects of placing bad incentives on certain behaviors has a terrible long term affect on the state. That’s why I don’t support it, even though it personally benefits me (at the current time – my place that I bought in 1997 is probably still worth more than what I paid for it then).

  33. Wow, don’t get me started on Proposition 13… There used to be only one way to shoot yourself in the foot, but then came Prop 13.
    Prop 13 is purely and simply generational confiscation, even within the same family! This can sound counter-intituitive, but I’ll expand on that a little later.
    Also Prop 13 maintains high prices artificially making it a catch-22: you keep it because of high prices, but you keep prices high because of it.
    If Prop 13 were to be voted off overnight, what would be the direct consequence? A good number of long time owners would be forced to sell. But where would they go? They would have to move to a cheaper area. East Bay? Out of state? High desert?
    Now, people are quick to say that SF’s RE prices are expensive because SF is unique, special, and cannot expand.
    That’s not the whole picture.
    A big reason prices are very high is the lack of supply/turn-over. You have plenty of retired people who still live in their large family homes where they had kids, a life and that’s natural that they want to stay home even as empty nesters.
    But someone who would like to leave his home and scale down often cannot do it without punishing himself or his heirs due to Prop 13:
    1 – You sell to buy a smaller place. That smaller place might cost 1/2 of what you got for the house but the property taxes will often be many times what you paid in the bigger house. How sick is that? Why move?
    2 – You do not want to sell because you want to pass the cheap property taxes to your kids. One day they will want to live there maybe. That removes a lot of homes from the market. And the premise that the children would one day move in is not guaranteed! I explain with an example that I am seeing firsthand:
    A retired couple I used to be neighbors with in NV had their kid in the house. They raised her there, she got married, moved to the East Bay, bought a house had kids herself. The parents are keeping the house due to stupid Prop 13 because their daughter might one day want to come back to SF. But her parents still have (hopefully) 2 decades or more ahead of them. She could be in her 60s when she’ll be able to move into her folks’ place and at that time she might not want to live there, the place being so big. What will she do? Sell? Probably.
    Net result: parents who stayed in a house too big but didn’t want to sell, and the next generation who moved out forever (indirectly kicked out by Prop 13. That’s confiscation and that’s one of the many many unintended consequences of prop 13.
    Now, the only thing that could mitigate Prop 13 is plummeting property values. It looks like it’s happening. With cheap houses will come cheaper taxes. Who’s getting hosed? The CA budget.
    Governors never had the guts to really fight Prop 13 and now they are paying for it.
    Remember Ahnold telling Buffet he’d have to do 500 sit ups if he mentioned Prop 13 again?
    Well, Ahnold: your lack of foresight during the recall campaign brought us here. Warren was right and Gray Davis must be laughing his a$$ off today, girlie man or not…

  34. You sell to buy a smaller place. That smaller place might cost 1/2 of what you got for the house but the property taxes will often be many times what you paid in the bigger house. How sick is that? Why move
    Actually Props 60 & 90 were added to address this.

  35. Prop 13/58 has to change. I’m a new homeowner who pays about 9,000$ a year in prop taxes while some of my neighbors in the same development are getting a 5000/year tax subsidy thanks to Prop 13. Now that the state is bankrupt and Arnold is cutting back education to the bone, we won’t be able to afford our mortgage/taxes and private school for our children. We’re throwing in the towel and looking to move back east for better public schools and lower home prices. California will be left with rich empty-nesters and their kids staying just to inherit the prop 13 assessments.
    This can be fixed. Propose the change as an overall tax cut by dropping the top rate to 0.80 percent (a 20% tax cut) but drop the assessment limits so everyone (commercial, residential) pays current market value assessments. This should help the younger families that are just getting into their first home.

  36. “Nope, thanks to Prop 13 I stand to inherit my mom’s $100/mo tax assessment on her property bought in 1981.”
    Troy, is this true? Would you really inherit the low assessment? I thought the property, when put in the new owner’s name (the heir), would be re-assessed at the new higher value?

  37. LRMiM, Prop 13 /58 valuations are orthogonal to market rents.
    Sure, at any given moment of time, Troy. Removing the Prop 13 distortion would not suddenly allow a landlord to raise rents – in the absence of rent controls, he is already charging what the market will bear (although on occasion, of course, there will be exceptions up or down because of clueless owners and/or tenants).
    However, as Fronzi (and steve) allude to, removing the condition of low taxes would likely decrease rental supply over time, which ceteris paribus would cause rents to rise.
    Now, it’s an open question in my mind whether rents actually would rise if prop 13 were to be fully removed. Steve and Fronzi hit the nail on the head with their observation that prices of housing would fall. I’d imagine that this effect would be greatest in areas (like SF and high value suburbs) where the ratios of older structures to newer ones are highest, and would decrease progressively as you go to areas that have been built out more recently.
    On balance, I guess I’d look at prop 13 as a distortion that causes misallocation (and particularly underutilization) of scarce housing resources. Removal of the distortion would lead to more efficient utilization and hence lower prices. Although rental supply would go down, some renters would become owners, and of course rents are to some degree an econonomic substitute for purchases. As the price to buy falls, through substitution effects some of the willingness to pay high rent falls as well. As I said, it’s an open question in my mind which effects would predominate as regards rental pricing, but I have no doubt purchase prices would fall – and probably dramatically in a few areas.
    BTW, I like Rob’s proposal to lower prop 13 assessment to 0.80% but institute a market valuation base. Also, no other state is dumb enough to have instituted a scheme like prop 13 – why am I not surprised? – although certain states (like Florida) have limited variations of the prop 13 scheme (limited to one owner occupied residence only, with some ability to “port” an older valuation base to a new place purchased by the homeowner).

  38. anonconfuesed, yes. you can transfer to your children.
    troy, while we are at it, let’s be like France and tax assets too. after all, the “money monopolist” just sits back enjoys services too.
    rob, you might want to think your stance through. again, prop 13 has been a tremendous disaster but what San FronziScheme writes is exactly correct. the day prop 13 is repealed (which, thanks to the 2/3rd requirement will never happen) your house will delcine 30% in value. personally, I’d take the 9K a year hit instead. besides, what do you think is going to happen to your taxes? do you really believe they will go down? haha — good one!

  39. “This can be fixed. Propose the change as an overall tax cut by dropping the top rate to 0.80 percent (a 20% tax cut) but drop the assessment limits so everyone (commercial, residential) pays current market value assessments.”
    When taxes are based on current market assessments the tax revenue stream becomes erratic and unpredictable. If prop 13 were to be repealed I fully expect our government to enact spending in boom years that can’t be funded in bust years. This unpredictability creates stress on the tax payers as well (“simply” doing a reverse mortgage or cash out refi to pay taxes is a wasteful PITA). I think the main problem with prop 13 is that the limits are simply too tight, as others have mentioned.
    I get most angry about prop 13 when I go past dilapidated buildings that investors have been sitting on for decades, paying minimal holding costs, as they wait for gentrification to enter their neighborhood so they can sell for a much greater profit. Beyond basic financial unfairness, this impedes and delays neighborhood progress. I believe that the building on 6th and Harrison with the furniture stuck to its exterior is a prime example of this. The owner could sell, but supposedly has turned down “reasonable” offers because there’s no reason not to wait for unreasonably high offers during the next boom. Make people do something with these properties.

  40. let’s be like France and tax assets too
    When we tax wages we will have less employment.
    When we tax sales we will have less commercial activity.
    Taxing interest returns more will result in less capital access.
    But should we tax site values more we will find that we have the same amount of land in the city; funny how that works.
    the “money monopolist” just sits back enjoys services too.
    The money man deploys his savings and credit to fund entrepreneurial activity. The landowner qua landowner provides no economical function, other than rent collector. Other areas like postwar Taiwan, Japan, Hong Kong, and Singapore have demonstrated that land can be developed without low and/or fixed land value tax.
    your house will decline 30% in value
    You state that like’s it’s a bad thing.
    LRMiM:
    However, as Fronzi (and steve) allude to, removing the condition of low taxes would likely decrease rental supply over time
    Sure, that’s where the split-tax would help though. Tax buildings less. Tax land more. This means improving one’s fixed capital would not raise your taxes on the property. It will also drive density up to the zoned limit over time.

  41. I believe that the building on 6th and Harrison (?) with the furniture stuck to its exterior is a prime example of this.
    Ah, the Defenestration Building. I could not possibly agree more. But it’s not just empty buildings in SOMA. My old flat near Pacific and Jones has an empty 2-unit building next door. I bet that if the owner had to pay real taxes, there wouldn’t have been an empty 2-flat building in Nob Hill for the past six years (and counting).
    [Editor’s Note: Closer to home: “Eminent Domain For Affordable Housing On Sixth Street?” and “And Now Back To The Hugo Hotel (And Eminent Domain On Sixth).”]

  42. troy, because a tax is efficient in the abstract doesn’t mean it should exist — or, in your case, be increased substantially.
    perhaps you should channel your passion toward a VAT instead? or a 100% inheritance tax? or maybe we can institute complete asset forfeiture on conviction of a felony. hey, I kind of like this last one.
    when we tax death, we have less ____
    when we tax crime, we have less ____
    or, try this one:
    when we tax more of anything, the private sector has less ____ for everyhing
    if you said money, as in money for wages, consumer goods, lending, commercial activity, … you are correct.

  43. Can’t comment on the Phil Ting but I’d support legislation to slowly repeal the prop 13 sham. If only to equilibrilize the burdens rather than use it balance the budget.

  44. the private sector has less
    landowners embedding themselves in the “private sector” was the greatest theft, sorry, “wealth transfer”, in history. cf. the Lembis for how they, as a rule, operate in our economy: Landowners qua landowners do not create wealth — the land was there a million years ago — but only entitle themselves to take wealth from the actual productive inhabitants of this city.
    T’was ever so — to prove a legal title to land one must trace it back to the man who stole it. (David Lloyd George)

  45. DudDub,
    My understanding is that Prop 13 bases tax on value of home at time of purchase and also limits maximum tax increase based on that assessed value (i.e. value at time of purchase). In WA, taxation is based on assessed value which is updated annually or bi-annually but is limited to no more than 1% of assessed value plus levies limited by several other mechanisms. This is different from CA.
    From King County web site:
    “Legal Limitations on Property Taxes
    There are four restrictions or limits that affect how high property taxes can go. Each is described next.
    The 1% constitutional limit: The primary limitation on property taxes was established by the 55th amendment to the Washington State Constitution in 1972. Article 7, Section 2 of the Constitution and RCW 84.52.050 limit the total regular property tax levy to a maximum of $10.00 per $1,000 of the market value of property. Excluded from this $10 limit are levies for ports and public utility districts.
    Statutory maximum rates for districts: RCW 84.52.043 establishes maximum levy rates for the various types of taxing districts (the state, counties, cities and towns, fire districts, and the like). In addition, this statute establishes a maximum aggregate rate of $5.90 per $1,000 of assessed value for counties, cities, fire districts, library districts and certain other junior taxing districts. The state levy for support of common schools is not subject to the $5.90 limit, although it is subject to the constitutional $10 limit.
    The 101% limit: In 1971, Chapter 84.55 RCW established a limitation on the increase in regular property taxes for taxing districts. The current limitation each year for most districts is 101% of their highest lawful levy since 1985, plus an additional amount to allow for new construction within the district.The 101% limit applies to the total amount of property tax for a taxing district, not to individual properties.
    With majority voter approval, districts may raise the 101% limit in order to exercise more levy authority under statutory and constitutional limits.
    Excess levies: Most districts can submit propositions for additional property tax levies to a vote of the people. Local school districts have no regular levy authority (although they are allocated funds from the statewide school levy) so they receive a substantial portion of their funding from voter-approved excess levies. Excess levies must be authorized by a 60% majority of the voters and such levies are not subject to any of the limitations described above.
    The Assessor uses the taxing district budget request, the total assessed value of the taxing district and the limitations to set the levy rate . Rates are expressed in dollars per every thousand dollars of assessed value.”

  46. The tax system in California has encouraged me to declare myself a Nevada resident even though I live in San Francisco. I can do this because I live off my investments and don’t own a car. Effectively, I am sponging off those who pay high California income taxes as well as the recent house-buyers who paid inflated prices and now have to pay taxes on these inflated prices.
    I expect to see many wealthy and productive people imitate me in fleeing California in the years to come. The investor types may simple declare Nevada residency like me (they may have problems with this if they own an automobile). Businesses, on the other hand, will probably move mostly to Texas. And guess what? The Texas tax structure is almost the mirror image of that of California. No income tax but very high property taxes.
    It may take decades for the fools here in California to understand that, if they must have taxes (and only a few extremists think differently), property taxes are among the fairest and otherwise best taxes to have.
    As for myself, I love San Francisco and plan to spend the rest of my life here watching the place go down in flames.

  47. Interesting how these arguments for repealing Prop 13 always increase in their rhetoric during budget shortfalls. That should tell you all you need to know — the issue is government spending, not taxation.
    The original intent of Prop 13 was to prevent the government’s inability to manage their finances from causing unfir and dramatic increases of property taxes. This is a good thing.
    Unfortunately, there is no way to legislate common sense and proper budgeting to state and local governments. To everyone whining about the unfairness of Prop 13 — repealing it will not help you at all. You will still pay higher taxes, but each year you will be wondering whether the state is going to tax YOU out of YOUR home when your income doesn’t advance relative to the dollars the state needs to close their budget gap.

  48. JohnK – it will absolutely help me if prop 13 were repealed – we’d have rational incentives and a rational tax structure in place. I may not pay any less, but quality of life would certainly improve, as you’d slowly see productive land used rather than left to rot until the owner could sell during a huge boom.
    Government spending is a separate issue, in my mind. I don’t like the poor incentive structure in place because of prop 13, not anything regarding the tax burden or government spending. If you don’t want the overall tax burden to increase, let’s drop and limit income taxes while putting into place something that makes sense for property taxes (the best and fairest tax that there is).

  49. LMRIM…
    I am not illiterate. I am from a part of the country where granny does not get good deals like this….
    Granny would have sold and downsized along time ago. And, since all the grannies would have sold and downsized along time ago, home prices would not be as high (supply vs demand).
    Your landlord OWNS a home…he has lots of equity. You are a renter (albeit, smart in this climate)…you don’t own–you don’t have equity in the home…
    Wouldn’t it be nice to have an affordable home in Tiburon because of all the grannies selling? then, you could collect equity…

  50. The problem with Prop 13 is only partly about the taxes paid on property. THAT problem could be solved with something similar to how taxes are assessed in Vancouver. BC.
    If you are an investor, you pay the entire, assessed amount.
    If it is your primary residence, you pay 2/3 of the tax.
    If you are elderly or disabled, you pay 1/3 of the tax.
    Simple and fair.
    The REAL problem with prop 13 is the 2/3 voting requirement to raise any taxes. This allows a small group of rapid republicans to hold the state hostage every year. Of course, California spends too much, but people always want more and more services but are unwilling to pay for them.

  51. Just zero the property tax. It’s the only way to end this.
    Too many people are in the Ponzi Scheme.
    California, (as noted above) derives such little tax from real estate anyway, other taxes can be raised.

  52. Phil Ting’s proposal is to allow reassessment of commercial properties. This is common sense– most homes eventually turn over and are reassessed, but corporations can live forever. There is no public gain in giving the current tax advantage to corporations

  53. To be fair, if Prop 13 is statewide, then rent control also needs to be statewide. And if children can inherit their parents’ tax basis, then children can also inherit their parents’ rent control basis.
    Let’s punish everybody equally.

  54. Or on the other hand Mossy, make rent control illegal statewide, and 86 Prop 13 while we’re at it. Then as earlier posters have indicated, watch all the homes free up and some sense of affordability return to the market.
    Maybe a few measures might be needed to help “granny”, but frankly, most of that generation is sitting on pensions, investments, and mega-appreciated real estate, not to mention social security (from which they quickly withdraw more than they ever paid in). Those aren’t the folks that need help.
    Some of these transfers of wealth to the elderly made political sense when the elderly were part of the ‘greatest generation’ that made big sacrifices to society in their youth. Now that the boomers are starting to occupy that space these generational transfers of wealth don’t make as much political sense. Keep a few safety nets, but otherwise, to everything turn, turn, turn…
    Given the economic pit the state is descending into, things might just get bad enough that voters would actually consider making changes that otherwise would be politically impossible. Prop 13 is #1 on the list.

  55. Do the verbose posters realize that nobody reads more than the first couple sentences? There has got to be a charachter limit imposed as it gives me a headache just to scroll past some of them.
    Make a point, try to back it up in a couple sentences, otherwise you are just arguing with the other blowhards. You know who you are.
    That being said, Prop 13 has outlived it’s use. Get rid of it.

  56. There are those of us (yes, under 40 even) that think Twitter is beyond lame. The notion that people don’t read past the first couple of sentences is ridiculous. Just take another ritalin, and keep reading.

  57. Jimmy C – sorry, one of the primary reasons that I read Socketsite is for the intelligent comments. If I want two sentence meaningless sound bites, I’ll read comments on Sfgate.

  58. Mikey – Unfortunately, it seems it’s those damned Democrats who are the people who “always want more and more services but are unwilling to pay for them”. If they’d only stop being Democrat and become Rapid Republican then there would not be such a demand for the services 🙂

  59. I tweet, but don’t apologize for long posts here. Actually, the posts are not so long — even a single page is quite short if your goal is to have an intelligent discussion about a topic. But, admittedly, public discourse has shrunk dramatically since the times when people would travel for days on horseback to listen to a four hour presidential debate. I’d recommend that the posters here of the Jimmy C persuasion to read some of the early inaugural addresses — Jefferson’s second inaugural, in particular. He clearly outlined what he will do, how he will pay for it, and the longer-term challenges the country faces. It was clear, thoughtful, and most of all — well reasoned. The same type of discussions filled letters to the editor in newspapers — read The Federalist Papers, and blog forums are the modern equivalent of letters to the editor in newspapers. Note that the original letters to the editor were anonymous, because it aided in free discussion.
    There is a reason why you don’t hear this type of discourse, and it is closely related to the atavistic, personalized comments that fill these boards. Most people prefer to shout “I like it” or “I hate it” and I guess arrive at the truth via a poll. For those people, long comments are just something to scroll over, since they have the same weight in the poll. Maybe zingers or very colorful comments have more weight, and then you add up the zingers and multiply by 2.
    Nothing wrong with scrolling — I scroll a lot, too, and don’t complain about it.

  60. How about a simple poem?
    I paid to much and still pay too much,
    and for for all that I pay I sure don’t get much.

  61. one of the articles on closedtheloop.com had a great story about howard j and who funded the prop 13 campaign. it was commercial property owners! they knew it would push the majority of the tax burden from their pocket to ours. we are so stupid!

  62. I don’t know why everybody’s worried about the price of their property dropping because of a Prop 13 repeal when property values are plummeting anyway. And aren’t these things tax write-offs?
    Am I wrong in thinking that when you sell a property or get reassessed, you have to pay all the unpaid back taxes? Maybe if some of the delinquents had to pay in order to get a lower assessment, we’d get some money in.
    I don’t know why everybody’s so worried about the disabled and prop 13 either. Nobody cares about cutting health care for us cripples. It’s not like most disabled folks can afford to own property anyway; our average income is below the Federal poverty line.
    And what with there being life-long waiting lists for accessible assisted housing in San Francisco, and the new rent laws against evicting cripples which mean nobody wants to rent to us, I’m wondering about accessible cardboard box housing myself. There’s next to no rent-controlled accessible housing anyway, since the ADA building codes went into effect after rent control.

  63. The unfairness with Prop 13 lies with the fact that people in identical properties pay wildly different rates of tax. Yes, they knew that when they bought, but several years down the line circumstances can change and it becomes grossly unjust and, as others point out, such a large distortion of the free market that it puts property prices out of whack and diminishes labor mobility. Any economist knows that this hinders wealth creation in the State and any citizen should know that a tax which is unjust and hinders wealth creation should be altered.
    However, it was introduced because people were being priced out of their homes by rampant RE appreciation. There is a solution. Alter the tax so that the amount of tax taken overall on RE is limited, rather than the amount taken from an individual. If the overall tax take were not allowed to increase by more than, say, the rate of inflation or the growth rate of the California economy, then people are reasonably protected.
    What are the consequences? Neighbors will pay the same tax for the same services. People who live in houses that are too big / too small / too expensive / in the wrong location will be able to move without losing a tax benefit. The State will not be able to jack up the rate with no regard to the ability to pay.

  64. There is another solution.
    Simply cap the amount of tax that a person must pay yearly while keeping the taxable rate on that property.
    The unpaid tax would simply accrue, and be due when the house is sold. Granny gets to stay in her house, and the state will get its money when she passes on.
    For instance (simplified math), granny bought a house for $100k. Her house is now worth $1M. Her tax rate would be 1% of $1M ($10,000/year), but she’d only have to pay 1% of $100,000 ($1,000/year). The unpaid $9,000/year would accrue until she dies/house is sold. then it would act like a lien on the house and taxes would be due from sale of house using the profits from the house. the banks would understand this and obviously would not let her borrow “equity” that is really money owed the state.
    there is no reason why the tax basis should be heritable, nor why corporations can keep a property within a corporate shell structure in perpetuity. those should be axed.

  65. Apparently there isn’t an economist in the house, nor anyone who understand taxes.
    – For those who say if the prop tax is too heavy “just sell” your home and reap huge gains… don’t forget the tax on that gain! And that will leave the seller with less capital to buy another property. And what about if property then drops in value? Should that person then buy back in? Come, taxes should not be that volatile.
    – What many of you are asking for is a mark-to-market on property values. If home prices truly are volatile, imagine paying 2005’s rate and then seeing prices get cut in half. That “wealth” that was taxed was never realized, which means you just overpaid taxes.
    And there apparently aren’t any pragmatists here either.
    – If we eliminate P13, NO ONE’S taxes will drop. THIS IS KEY. Taxes will simply RISE on those who supposedly underpay today. And you know what that means… even more spending. So all of you who feel so penalized by P13 should face this fact… it will NOT help YOU to repeal it. It will only PUNISH others. Big difference.
    Now, if the government could ensure that no one’s taxes would rise because of it, and that the supposed subsidizers of today would benefit, then I’m in. But that’s fantasy land, people.

  66. White Whale, a good chunk of profits from a sale is tax exempt. I sold at the peak two years ago and started renting at just the right time and made several hundred thousand tax free.

  67. White Whale, you need to think a few steps further.
    1. A repeal of Prop 13 would reduce property taxes for many (recent) buyers by forcing sales by some legacy owners, thereby increasing market supply and bringing the market down — thus reducing the assessed value of recently purchased homes (and thereby reducing the annual tax dues on said properties).
    2. As has been pointed out, other states do not have this ridiculous rule. So this repeated canard about how Armageddon will result from the absence of this idiosynchratic subsidy is just that — a canard.

  68. Shza,
    While economically you are probably right, as the artificial value created by Prop 13 would unwind and values would go down and thus taxes would go down; politically, in this environment, I believe white whale is correct with one adjustment — No taxes would go down, without a fight or appeal. simply too big a budget deficit.
    Prop 13 is an inequitable sham, pure and simple, despite the twisting and turning the Dubocers of the world attempt to put on it.
    (though I do agree with Dubocer, that it is a problem on the spending side — that is irrelevant)

  69. Geo, I would think the decreases in tax revenue from recent buyers would be almost negligible compared to the increases in revenue that would come from marking to market the family heirlooms. I.e., I can’t imagine the aggregate effect would be anything other than a huge revenue boon for the state, despite the fact that some folks’ taxes would go down.
    Additionally, people are already having their boom-purchased homes reassessed down and getting a tax decrease out of it. There was a post on this here last week. Not politically impossible.
    Personally, I don’t think the problem is on the spending side. As a result of Prop 13 among other things, CA public schools have become basically unusable — they aren’t even teaching SCIENCE (let alone music & arts) in public elementary schools now. It’s not like we have lavish public services here (or maybe we do in other, less-important areas about which I’m ignorant).

  70. This is all nice speculation, but how many properties have not been sold in 10 years , how about 20 years? Are these numbers significant?
    One part of prop 13 needs to be addressed: the 2/3 vote needed for revenue increase v. 1/2+1 to spend .
    The only way to get it past the voters is to give an exclusion for A primary residence.
    Also, everyone advocating the repeal of prop 13 (especially those that say it is unfair), you do pay (your fair share of) use tax on all your Amazon purchase of course.

  71. White Whale: “Taxes will simply RISE on those who supposedly underpay today. And you know what that means… even more spending. So all of you who feel so penalized by P13 should face this fact… it will NOT help YOU to repeal it. It will only PUNISH others. Big difference.”
    Wrong. Even assuming you are correct that the only change would be an increase in the free-riders’ taxes, this *WOULD* help those who are paying their fair share in property taxes. Namely, such people would necessarily see some indirect benefit from the state’s collection of additional revenue.
    Billy: “Also, everyone advocating the repeal of prop 13 (especially those that say it is unfair), you do pay (your fair share of) use tax on all your Amazon purchase of course.”
    That is a red herring. Not paying the Amazon taxes is breaking the law. If one chooses not to pay, they do so at their own risk. But the key is that the law does require payment. The problem with Prop 13 is that the law does not require payment, thus rendering it unfair.

  72. My father-in-law owns three properties on the Peninsula, the most recent purchase date being 1979. Absent Prop. 13, the rental income he receives from them would not come close to covering his expenses.
    I believe his total annual tax bill for ALL THREE houses (3 3BR houses with 5000 sq. ft.+ lots) is less than what we pay for a 2BR / 800 sq. ft. house purchased in late 2003.
    How’s that for fairness! What a crock!!
    Personally, I’m glad that the state is bankrupt –we contribute far, far more than the average citizen to the state coffers (upper 5-figures in state taxes alone via sales, income and property taxes) and if Sacramento can’t make do with that, then they can suck it. Seriously.
    Although our elected representatives would probably get off on that, too.

  73. Seems like a lot of comments against prop 13, and some comments against those comments. However, for the few proponents of Prop 13 out there – I’ve yet to hear any economically rational defense of this legalized extortion scheme. One that’s based on efficient allocation of public resources rather than myopic selfishness. Can anyone offer evidence of how prop 13 has helped California as a whole?
    Odd that we are the only state with this large of a property tax distortion in place, and of all the states suffering from economic fallout, we’re probably in the worst shape. Coincidence?

  74. Extortion? Who is threating who with what?
    ***
    I don’t think there are many (any?) good arguments to defend Prop 13, but it won’t get repealed because very few people believe their taxes would go down if it were repealed. So you aren’t going to have enough support to get it repealed at the ballot box.

  75. And of course part of the problem is that we’ve institutionalized a straw man. If we can’t have intelligent dialogue on compromising over which gov’t expenses are truly necessary at what cost, why expect better governance just because we’ve taken a wack at the income stream? We can devise any number of interesting alternatives for “fairer” tax structures, but until people decide they are willing to volunteer their OWN oxen for the slaughter little will fundamentally change. Shared sacrifice is hard because it requires we trust people we don’t know (or even dislike).
    The “gov’t” is merely our agent of compromise, and it fails because we fail. I would struggle if my property taxes rose significantly, and actually budgeted for a house based upon the existence of Prop 13. Nevertheless, I would vote to repeal it, knowing I could sacrifice and take in a housemate in order to stay afloat.

  76. i think we’ve beat this dead horse enough. prop 13 is toast. it’s just a matter of time.
    for this economic crisis, i think we need to examine the revenue short fall in % year over year and then just demand that every line item by cost center in the budget reduce expenses by that same %.
    don’t give them a choice.
    spend the rest of 09/10 rewriting our constitution via congress.

  77. Go for it — start a campaign to introduce a ballot initiative to change the rules for passing a budget to be a 50% margin instead of 2/3rds. That’ll be popular.
    While we’re at it, eliminate prop. 13 for commercial properties. That’ll go over great too! Let’s put them all on the ballot … where do I sign the petition?
    The truth is that none of those things will happen in this cycle because no one is personally feeling any pain due to the ‘crisis.’ People still have to personally feel the pain before they’re motivated to lift a finger.

  78. james, my take is a bit different. yes we’ve beat a dead horse, but, absent a constitutional convention, prop 13 is here to stay. from the ’08 Field Poll:
    Statewide more than twice as many voters (57%) report that they would vote in favor of Prop. 13 if it were up for a vote again today as would vote against it (23%).
    hmmm, given that the 23% number has to move to 66% to change it, I don’t think the prop is worried.
    another tidbit from the same poll:
    A proposal to gradually raise the property taxes of longtime property owners, so the amount they pay is more in line with the amount paid by recent buyers of similarly valued property, is opposed two and one-half to one (66% to 27%).
    and this shocker:
    There is strong resistance to the idea of changing the Prop. 13 provision requiring a two-thirds vote of the state legislature to increase taxes, with about seven in ten opposed.
    now, the idea that started this thread, change commercial prop taxes has a bit more support, but only if it means lowering residential prop taxes. Californians feel overtaxed, and cite property taxes more than income taxes when asked which taxes are too high.
    details: http://www.field.com/fieldpollonline/subscribers/COI-08-June-Prop-13-Tax-Matters.pdf

  79. anon, you are correct. I apologize for the confusion. prop 13 can be ammend / repealed via majority vote using our ever-excellent proposition process.

  80. Interesting conundrum.
    I wonder if so many people hadn’t bought homes in the last 5 years that were out of line with their income if they would feel that property taxes were too high.

  81. I’ve been wondering something about this for a while: if property tax paid is a credit against income taxes, then would not repeal of Prop 13 (and resulting higher property taxes) shift tax revenue into Sacramento and away from Washington D.C. ? That seems like a good thing ! My total tax payments might actually not go up, because I would pay less income tax while paying more property tax. I would prefer to send more of my tax money to Sacramento and less to Washington. Am I wrong here ?

  82. Besides the AMT point, state taxes paid are a deduction, not a credit. So, even if your federal income taxes go down, they will go down only as a fraction of the extra paid in property tax. So it can be a victory, just not a complete victory.

  83. Is there really anyone who can afford SF RE (at prices from the last 5-10 years anyway) who does not make enough money to get hit hard with the AMT (and thus lose any potential property tax deduction)?

  84. There is a great benefit to being able to predict your property taxes, even though I don’t think that outweighs the fairness argument.
    Prop 13 would make a lot more sense if property taxes rose with the rate of inflation. Expecting The State to survive on less and less real dollars is just insane. But a lot of California’s propositions are poorly thought out, not just Prop 13 and it is the voters who have mostly put the state in the mess it is in today.
    Three Strikes and You’re Out is the biggest culprit, if you adjust for the increased spending on prisons, California overall government spending has been constant on a real per capita basis. The Law and Order voters teamed up with the Prison Guard Union have bankrupted the State.

  85. California has therapists for prisoners, they are state employees and we pay for them. We have young single mothers on programs trying to educate them on how to get it together, and we pay for that. The educators have therapists for the children. Child protective services makes sure the children are kept in a good home and they are provided for. The state has programs to make sure there is appropriate health care so it’s OK that there is no father. The baby-daddies probably are or will be the future patients of the prison therapists. The young single mothers don’t learn nothing about keeping their legs crossed. OK, not a total jerk here, but at least cut the therapists. There is no incentive whatesoever to stop the cycle even though we truly can’t afford it. The legislators say it is unconciounable to cut these programs.
    The homeowner who is losing value on their asset is being asked to sacrifice more so that everyone else who screws up their life will be OK.
    Changing prop 13 is not going to change our financial situation. We suffer from something much deeper. Where do we get our free therapist?

  86. Shza, the AMT disappears at higher income levels, over about $500,000 AGI. It only smacks upper-middle-class schlumps.

  87. Prop 13 would make a lot more sense if property taxes rose with the rate of inflation. Expecting The State to survive on less and less real dollars is just insane.
    NVJ, revenue from property tax has increased must faster than inflation every year since prop 13 passed (well, I suspect, until now).
    In 1978-78, property tax receipts were $5.04B (or $15.8B in inflation adjusted dollars). For 2007-08, collections were $47.21.(CA, BOE). That’s an increase of more than 3x inflation! (and faster than all other CA taxes)
    Some other stats for 07-08 found while poking around the CA BOE site:
    Sales tax: $44.3B ($6B in 78-79)
    Fuel/alcohol taxes: $7.9B
    Personal income tax: $52B ($13B in 78-79)
    Perhaps those railing against massive spending increases have a point?

  88. NJ, leaving aside the fairness argument, if tax receipts increase at 3x! the rate of inflation, how can that tax be blamed for a budget crisis?
    as I think I said above, I wish CA had never passed prop 13, but it did and now higher property taxes for everyone (because that is what will happen if we change it) doesn’t seem like the answer. a reform of the ballot initiative process and a massive reduction in prison spending seem like better approaches.

  89. steve, you’re forgetting about increases in population. If you account for population and inflation, property tax receipts have clearly not kept up.

  90. anon – “If you account for population and inflation, property tax receipts have clearly not kept up.”
    Since you must have done that calculation why don’t you provide the numbers or a link to the numbers so we can see this “clearly”?

  91. poulation in 1978: 22,839,000
    population in 2008: 36,756,666
    per capita, inflation adj prop tax 1978: $691
    per capita, inflation adj prop tax 2008: $1284

  92. That’s an increase of more than 3x inflation! (and faster than all other CA taxes)
    anon, the inflation component has already been taken into account. Your argument suggest that the population has increased more than 3x in the last 30 years in order for there to be the gap you mention. I have’nt looked at the historical census of the state but I don’t believe that to be accurate, but I could be wrong.
    What has grown is the governments attempt to become a babysitter and enabling parent for the dysfunctional. The need is there, and I don’t disagree with some programs, but caring for our dysfunctional brothers and sisters has taken it’s toll, just like it does with any family, and it has bankrupted the state. We’ve got to get a handle on that for our own future’s sake.
    Prop. 13 was probably a draconian measure when it was implemented, but it has been incorporated into our system over the last 30 years, and it is statewide. It is rather myoptic to say that housing inventory will increase and prices will come down with the repeal of prop 13, that MAY happen in SF but that’s it, and it’s a big maybe since there is plenty of inventory right now in SOMA.
    How will the repeal of prop. 13 make for more affordable housing in Stockton or increase the inventory in all of the parts of the state where there are entire neighborhoods full of empty houses in foreclosure? And why would we make a change so that the impact only benefits one City and not address the statewide spending.
    The supply and demand for housing in this City is unique, low supply and high demand. Prop. 13 is not responsible for that market dynamic.
    However, the City and the BOS who continue to fight any real progress and dictate the supply may be more of a culprit.

  93. Partially since inflation in California has been much higher than the US as a whole (particularly because of prop 13 inflating real estate prices), California’s GDP has grown significantly faster than the rest of the US.
    But certainly, tax receipts should only increase at the rate of lower cost states, eh?
    Rolling eyes…

  94. steve: “NJ, leaving aside the fairness argument, if tax receipts increase at 3x! the rate of inflation, how can that tax be blamed for a budget crisis?”
    I’m not sure why you would leave aside the fairness argument, as that IMHO is the primary argument against Prop 13.
    Budget shortfalls are a red herring. Revenue and/or spending can be cut (independently of each other, I might add), with or without the existence of a fair property tax scheme.
    As it stands, we have property taxes locked in at below-inflation rates for long-time owners, while new owners have to keep up with the current cost of housing. In the long term, housing can be expected to track inflation, and in California we have seen housing even outpace inflation. Either way, Prop 13 is unfair and should be repealed.

  95. NJ, if you are arguing to cap total property tax receipts at the current level plus inflation and equalize them, sure, I’ll go along. But, we all know absent prop 13 property tax would be substantially higher for almost everyone — and only marginally lower for bubble buyers. I didn’t used to be sympathetic to starve the beast taxation policy, but the more I look at the rate of per capita spending growth in CA, the more in favor state tax freezes I become.

  96. I’m not sure why you would leave aside the fairness argument, as that IMHO is the primary argument against Prop 13.
    Well it seems there are many primay reasons. I thought about the fairness issue with numbers that pertain to me and not sure what the big deal is.
    If someone is paying $2,000 a year vs. $12,000 a year for a similarly valued home, about $1,200,000, the difference is $10,000. Still alot of money but not really that much compared to the value of the house. Since the median price of a home may be around $500K or so, not sure, it makes the difference alot smaller. I payed more than $12,000 in property taxes last year on my primary residence and I’m not really bothered that someone else pays less because they bought 10-20 years before I did. What bothers me is what the $12,000 goes towards, that is what I find truly unfair since I can’t marry my loved one, I don’t have kids to educate, and I don’t drive a car. Many of the receipients of government spending, people in the valleys, rural counties, and others expect these benefits but will vote against giving me the rights and benefits they enjoy, on the backs of the taxpayers no less.
    I’ve always been told life is not fair, and that prop 13 will never be repealed, for better or worse.

  97. LOL viewlover – 10k per year more is not that much money…only in bubbly SF
    Amazing though, 10k this year, 10k next, 10k the year after that, before you know it we’re talking about real money.
    LOLOLOLOLOLOLOLOL

  98. I understand many of the concerns about prop 13, but one really shouldn’t care imo about “fairness” arguments. Expecting governments to act “fairly” is foolish, a fairy tale for children – nothing more.
    I’m sort of surprised that with all these comments that no one has mentioned what I think is the biggest problem with the property tax aspect of propositions 13/8/58/60/90 (did I miss any propositions on this topic? – note, there is also a “prop 8” from 1978 on property tax in addition to the current more notorious one): the centralization of authority, and consequent diminution of local power. Power follows the money, and it all goes through Sacramento.
    This can be seen most clearly in the schools, which is by far the largest state expenditure. (Forget about “3 strikes”, “prison guards”, etc. – K-12 spending is half or more of overall state spending and budgets; so, if you are going to get spending uner control you’ve got to start with the dysfunctional schools.) For most districts, there is little local accountability and in the absence of local control of the pursestrings, little incentive to improve them.
    Out of something like 1100 school districts in CA, only a mere handful can support themselves with their own tax revenues. BTW, those are the places where you want to be for the most part if you are going to avail yourself of the free government cheese (the schools). For those who are interested (it’s very tough to track down the info), this excel spreadsheet lists those “good” districts. They are identified as “Basic Aid” districts, meaning the local population of those districts are productive enough to provide for the next generation out of their own funds, and don’t have to go cup in hand to their betters in Sacramento (not to say that they don’t still go begging, lol, for more crumbs wherever they can be hoovered):
    http://www.cde.ca.gov/fg/aa/pa/documents/advtax08.xls

  99. Rubbish. Are you saying San Marino schools, for example, are no good because they aren’t “Basic Aid”? Ok, suuure …

  100. anona, and year after year I’m taking it as a tax deduction. And it’s taxes, what are you gonna do, got to pay them. And the difference is less than the $10K because most houses are not $1,000,000 plus. I don’t know what the actual value of the average home in Ca, but I would guess around $300,000. SO the difference is $3,000 or less per year.
    The argument about the fairness is that others should also pay what I pay so that the state can also spend that.

  101. The argument about the fairness is that others should also pay what I pay so that the state can also spend that.
    Others might think that, but that’s not what I want at all. I like the idea of dropping the rate to .8 or .6 on all properties so that we all pay the same rate but total receipts stay neutral.

  102. I like the idea, too, of dropping the property tax rate and assessing everything on the basis of market value. Sure, there are issues with trying to figure out what “market value” should be, but it is much better than the current system, which is a distortive ponzi scheme.
    Actually, the rate could be 0% – that’d be ok as well as far as I’m concerned, although I do think property taxes are better than income taxes in the overall scheme of things, so would rather see lower income tax rates and higher property and sales taxes (and perhaps a “wealth” tax, although there are going to be huge problems trying to administer such a tax).
    I’m all for limiting the amount of revenue that the state can extort out of people – government is ravenous and will throw away every dollar it gets and be rightback looking for more – and a fixed percentage (whether 0%, .6%, the current 1%) of some measure of “market value” seems to me a better way to go. From one of the comments above, it seems like Wshington State might have a more sensible system along these lines.

  103. LMRiM: “I understand many of the concerns about prop 13, but one really shouldn’t care imo about “fairness” arguments. Expecting governments to act “fairly” is foolish, a fairy tale for children – nothing more.”
    I can’t say I agree with that. Fortunately, neither did Rosa Parks.
    This is America, not Iran. While our laws will likely never be completely “fair,” fairness is something that we should always strive for, and unfair laws are something that should be fought against.
    Prop 8 (the current one) is also unfair. Should gays who want to marry sit back and tell themselves that laws just aren’t fair? No, they (and the rest of us who support them) should do what we can to repeal the hideous law.
    Apathy or complacency only makes things worse.

  104. NJ,
    Prop 8 (the current one) is also unfair. Should gays who want to marry sit back and tell themselves that laws just aren’t fair? No, they (and the rest of us who support them) should do what we can to repeal the hideous law.
    Well, it’s OT but since you brought it up I’ll give you my take.
    To my mind, the test of any law involving social issues should always be whether it increases personal liberty, not whether it “solves” some supposed problem. Government should not be the source of rights, which are innate. Rather than creating rights, government should be restrained from interfering with rights.
    Thus, the “No on 8” supporters are not coherent imo (and I’ve had two of the “volunteers” who are collecting signatures to reintroduce a variation of prop 8 – an “anti-prop 8” I guess – recently visit our house and I had a useful discussion with them about it).
    The proper approach on prop 8 imo is to understand that government should not recognize heterosexual marriage – it should be left to non-governmental institutions (church, societal mores, etc.). Regular marriage predates the nation state, and derives no legitimacy from government’s recognition of it, only tax and legal benefits and detriments that distort the decision whether or not to get married. I say get rid of all governmental recognition of marriage, and let society figure it out without government sticking its nose in.
    The “No on 8” supporters have ceded the argument – they are looking for government to legitimize homosexual marriage, and therefore impose that view on the larger society through force of government compulsion. They are looking to government to create a right, which cedes the point that the right does not exist. Very anti-liberty imo. Just because government recognizes heterosexual marriage doesn’t mean it should recognize homosexual marriage. Two wrongs don’t make a right 🙂

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