As mentioned in the article, the proposal is to keep the property tax protection in Prop 13 for residences.
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The real fun happens when they only sell an interest in the property. It didn’t change hands so no reassessment. Then do it again, until the original owner hold NO interest and the new owner hold 100 percent… And it all happened silently and never triggered re-assessment.
There are a number of buildings in San Francisco, along the embarcadero that were semi-famous for this scam.
And none of those protections go away. The measure repeals NO residential protections.
Someone mentioned audit of insurance records to determine avoidance of tax… By what surveillance method do you propose identifying those records?
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At least one of the proposals I’ve seen (and I’m not sure it’s the final text for the initiative on the ballot) was very careful about protecting residential caps. There were exemptions carved out for corporate property taxes where a significant portion of the corporate property was residential (e.g., incorporated apartment complexes or retirement communities). According to the projections I read, if California were to match national averages for commercial real estate taxes, it would mean an additional $13B in tax revenue a year. Now, these numbers may be off, but it got my attention. That’s starting to look like real money! Maybe we can start paving the streets again, or having textbooks in schools.
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Meh. Property taxes are poor ways to raise revenue. I’d much prefer if my city/locality had the ability to pass income taxes. You could just add a box to the state income tax. “Put your modified adjusted gross income on line 85. Find your locality on table X and enter it on line 86. Multiply line 85 by line 86 and enter it on line 87.”
I live in the Bay Area and pay a shit ton of property tax.
I think I understand the meanings of all the words that are typed there, but I’m failing to put them together into a coherent thought.
But maybe I’m just drunk.
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Property taxes are spiking in the places with all the cool kids, alright.
Even the not-so-beautiful-or-the-leisure-class people who own their homes are getting slammed with big hikes.
(notably, the writer for Forbes complains about how “anti-free-enterprise” Austin is, and I beg to differ–Austin just has actual standards, is all)
In Austin (as opposed to housing in Texas’ Rio Grande Valley), property taxes are escalating with no relief in sight:
https://theaustinbulldog.org/jam-packed-hearings-for-protesting-property-values/
And yeah, property tax monies and the services they pay for are connected, I get that.
The tax rate is based on how much you paid for your house, not when it was built or when it was sold. There’s nothing at all “unfair and arbitrary” about taxes based on purchase price. That’s how most things are taxed. Pretty standard really.
What WAS “completely unfair and arbitrary” was basing taxes on some speculator-fantasy estimate of what your home MIGHT sell for if you sold it now.
California’s retail housing market is a constant boom-bust cycle. Assessments always went up during booms, but never came down during busts without substantial bureaucratic battles.
What I can sell my house for is irrelevant. My house isn’t an investment, it’s a home. A nice house in a good neighborhood. When its theoretical market price tripled during the Great Mortgage Craziness, its value never changed. Still a nice house in a decent neighborhood. If I’d sold it, it would have cost just as much to buy a different house, since ALL the nice houses in decent nabes had also tripled in price.
So, to me, it’s worth “one nice house.” Same as it always has been. Why should my taxes triple on the whims of speculators?
Perhaps more to the point, my new neighbor paid double what I did, so, sure enough, he also pays double the taxes.
But bear in mind, I’ve been paying those taxes for twenty years, and, in the early years, in pre-inflated dollars, too. At least some of the increased value of my ‘hood over that time is the result not only of my tax dollars, but of my involvement in the local beautification group and residents’ association, local civic boards, and municipal political activism.
He also paid a lot more for his car. Does that mean I should owe retroactive higher taxes on my twenty-year-old clunker?
If you can afford a million-dollar home, you can afford the million-dollar home’s taxes. Don’t expect current homeowners to finance lux services for flippers and redeveloped McMansions.
That said, yeah, the current prop-13-for-immortal-businesses situation is completely untenable and should be eliminated with extreme prejudice. So this “split roll” bill may be an improvement.
(The “2/3-majority for special taxes” needs to die, too, since there are about 30% of the voters who will vote against ANY tax increase, so getting even badly-needed and entirely reasonable adjustments is prohibitively difficult. “Rule By 1/3 Minority” is inherently undemocratic.)
But calling taxes proportional to the purchase price “completely unfair and arbitrary” is just whining.
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In my town, where property values have gone up as quickly and steeply as in California, one consequence of tax following assessments is that older homeowners on fixed incomes are often forced to sell or take out a reverse mortgage because they can no longer cover the taxes on a house they bought for $30k but is now valued at $1.5 million.
I don’t think that Prop 13 was the right answer to this, as it created its own problems, not only the city income one mentioned by @doctorow but even problems for that fixed-income homeowner I mentioned, who might have been willing to sell their 3br and move into a condo except that the latter would come with much higher property taxes. However, just as Prop 13 had unintended consequences, so will any changes to it, and the state needs to tread carefully.
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Auditing of insurers sounds like the normal way that is supposed to work in the first anticorruption manners. Libertarians got schooled by BTC and are back to liberals and regular scofflaws (you call shotgun you gotta carry it; My cows like the library so I pasture 'em there; this orchid fertilizer is made from aged, watered-down Edward Jones people, they like it better the orchids anyhow.)
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I would be for this law unless they include rentals.
We own a 3-unit rental that was my wife’s first house, which she bought in 1994. We rarely raise rents on tenants - usually only bumping them when they move out and someone new moves in. We keep the place nice. We allow dogs, since we know how hard it is to find dog-friendly rentals where we live.
Having to pay yearly market-rate property taxes would require us to raise rents as much as legally possible every year, not take dogs (due to excessive wear and tear that we end up paying for), and not adding new amenities - and even that might not be enough.
Including rentals would have the opposite effect you desire. All the “mom-and-pop” rentals would get sold to corporations who could afford the taxes, running regular people with 1 or 2 rentals out of business.
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You are a rare example. Around here the private landlords are just as rapacious as the corporations. I live in California, there was a rent control proposal on the ballot, the Corporate landlords spent hundreds of millions to defeat it. If what you speculate on Corporate behavior were true I don’t think they would’ve done that. The issue failed.
A good time to revive the work of the Prophet of San Francisco and remind folks how much of Ca’s existing ag/hydro infrastructure was funded with a single tax. See pg 38 of http://www.masongaffney.org/publications/K1Neo-classical_Stratagem.CV.pdf
Property taxes in Wa are assessed on current valuation, not purchase price. They lag actual sale prices, especially in a hot market. But everyone’s taxes go up, year on year, at a stately 1% (plus local levies for schools, libraries, transport, etc).
So, yes, older folks can be priced out but that means they are sitting on property that has appreciated massively over what they paid for it. In Seattle, one could easily see a 2x or 3x or more increase in the assessed value/sale price over the past 20-30 years. Hard to feel bad for someone who has seen their nut grow from $200k to $800k or more.
We’re in Oakland. Maybe we’re rare. We’d just rather have good tenants who stay for a long time than crank up the rent every chance we get and have constant turnover.
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It’s not a “nut.”
As I said, it’s not an investment. It’s a home.
If my 200K house is now (estimated) to be worth 800K, that doesn’t put a dime in my pocket. My home will only turn into 800K if I sell it. And I don’t want to sell it.
But even if I did, I’d then need a different home, and, since all the homes of equal quality and location are ALSO now 800K, I still don’t make anything off “the growth of my nut” (AND now I’m out moving expenses, as well).
(And please don’t anyone start on “pull value out of your house with a HELOC.” That’s not income, it’s borrowed money. With my credit rating I can already borrow WAYYYY more money than I can afford to pay back, and without putting my house on the line. I don’t need to be able to borrow more.)
The fact that the property I’m “sitting on” has appreciated is largely irrelevant unless I no longer need a place to sit.
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I agree with you but who are we against so many? My neighbors resist and reject anything that threatens the value of that wealth store that you and I call shelter. So new housing that doesn’t look like their 2000 sq ft rambler on an unavailable 6000 sq ft lot is anathema. Meanwhile they complain about property taxes even as they refuse to allow others to buy in and pay a share.
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I wish your thoughtfulness were the norm.
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Strangely as it sounds, for a lot of people a house they live in isn’t an investment they happen to live in, but a home. A place they may want to stay in as long as they can, to be free of the dangers of getting evicted by a landlord. To have a place to stay even if they lose their jobs.
As long as they don’t sell, any gain is unrealized and thus no gain. You can tax sales and inheritance.
