11 ms·

And don’t forget prop 13, there’s negative incentive for property to change hands and develop.

by kfarr 9d ago

syspec 9d ago
Do you own your home? Here in Ca? You know that property tax is 1.4ish % and goes up by 2% a year, pretty much no matter what? On a 1.5M house, that's starting at 17K a year and each year it goes up 2%, so it compounds. That's 17k a year Just to stay in your own home. People who don't pay property taxes here in ca, act like prop 13 means zero property taxes
- dbmikus 9d ago
  That is close to the average rate of inflation, though. Doesn't seem unreasonable to me.
- codemac 9d ago
  They go up much more than 2% in literally every other state, California is the cheapest place to own property for >10 years. You can argue against property taxes entirely, but Prop 13 definitely means that families, businesses, and all property owners work very hard to never sell, never reassess, and never change their tax rate.
- stouset 9d ago
  While I think the goal of Prop 13 is laudable, a few reforms would cut some of the biggest downsides: it should be be for primary residences, where the named owner is the primary resident. This would eliminate the tax break for commercial property, prevent it from being abused for second homes, and avoid the property trust shenanigans that have allowed some properties to change hands without a reset in the taxes paid.
  - lokar 9d ago
    I’m not sure why people are downvoting (without commenting), but I agree. The main selling point of prop13 was a real problem: rapidly increasing values were driving up taxes so fast that long time residents (of modest means) were being forced out. I don’t think it’s entirely unreasonable to have some policy that attempts to protect people living in their primary residence from rapid tax increases they can’t afford.
    - MarkusQ 9d ago
      That makes it sound like the increase was due to some inexorable natural force. California's per capita budget is over twice Arizona's, and they're running a huge deficit on top of that. If taxes are too high, cut taxes. If that means you need to cut spending, cut spending. But don't play "hey, let's tax the other guy!" games and expect that to work.
      - Schiendelman 9d ago
        A lot of this also comes down to prohibiting growth. In Seattle, every time we build a new building, everyone else's property tax payments decrease. High growth years lead to lower bills. The same would work in California, they just don't build much of anything because they've made it nearly impossible to.
        fc417fc802 8d ago
        You're not wrong, but the irony of positioning Seattle as having good zoning policies is almost unbearable.
        Schiendelman 8d ago
        Oh, I'm with you. I think this needs to be overturned wholesale. Seattle is bad. Still better than California.
      - lokar 9d ago
        Prop13 was a big tax cut. The people behind it were minimal government conservative libertarians. And the state did slash spending in the years following. In particular funding for the university system was hit very hard.
        MarkusQ 9d ago
        They did not slash spending. At most the rate of increase slowed down for a year or so before continuing to rise at an even faster rate. https://dof.ca.gov/about-us/history/state-budgets/ https://dof.ca.gov/about-us/history/state-budgets/
- isubkhankulov 9d ago
  Yes, your property tax is high ($17k) because of prop 13 - you are effectively subsidizing others who have sat on their residential and commercial property for 20-30+ years who are paying 25-50% of what you pay for any similar property in the same calendar year! Your property tax goes up by 2% of your , guessing (relatively recent?) purchase price, and theirs goes up 2% of a much smaller base due to prop 13. They have no incentive to move, downgrade. And they often use trusts to pass this tax base down to their kids. It’s feels like icky European feudalism. Again i’m emphasizing that this goes for both residential and commercial buildings.
  - cucumber3732842 9d ago
    > It’s feels like icky European feudalism. Pairs nicely with the permitting processes that basically boil down to "thou shalt pay the guild"
  - fatcatsbestcats 9d ago
    I agree with everything you’ve said, but one clarification: you don’t even need a trust to pass the tax break down to your kid when you die. Sure, a trust can streamline that process, but it’s not required. At least everyone lucky enough to inherit benefits, not just those whose parents had the foresight (and the means) to create a trust.
- jedberg 9d ago
  > Do you own your home? Here in Ca? Yes and yes. And I pay 10K less a year than my neighbor for the same value house. And I pay 10K more a year than my other neighbor. I get a huge advantage from Prop 13, but I still think it needs to get replaced with a much fairer system.
  - deleted 9d ago
    [deleted]
- tikhonj 9d ago
  I do own a house in California and I pay closer to $30k in property taxes. The previous owners of my house paid $7k. My neighbor—who has a bigger, more expensive house!—pays $9k. It's pretty clear that this kind of tax policy is going to totally mess up the housing market. It's not the only factor, but it's a big one.
- skywhopper 8d ago
  You realize government services that support that home cost money, right? You act like if you own your home that your living there doesn’t impose any costs on your neighbors.
bingohbangoh 9d ago
Do people really think that if we revoked Prop 13 that other taxes would go down with the new money from property taxes? Or do we think that property taxes would go up while other taxes stay put? This feels like the argument at play when people criticize Prop 13. Not saying it’s good but California hasn’t ever cut taxes meaningfully and I’m not convinced raising property taxes would solve anything. California would still be expensive to live in.
- groundzeros2015 9d ago
  It would increase liquidity in the housing market.
- jrmg 9d ago
  To keep tax revenue equal, property taxes for those who purchased recently would go down, and property taxes for those who’d purchased in the past would go up. The housing market would become more liquid because people would move out of homes if their values rose too much and they could no longer afford the taxes. This would be a shock initially, but over time it would just be seen as part of life like it is in other areas: mostly, empty nesters would downsize to a cheaper, smaller house with lower taxes. Gentrification might be more problematic though. In practice, probably some phased rebalancing would have to happen to avoid the sudden economic shock, but, politics notwithstanding, it’s not crazy to suggest it could be done and that the end state might be overall ‘better’ for most people. The end state would be how property taxes work almost everywhere else.
  - bingohbangoh 8d ago
    > To keep tax revenue equal, property taxes for those who purchased recently would go down, and property taxes for those who’d purchased in the past would go up. That's what I'm saying _won't_ happen. The high property taxes as-is will stay high and previously protected properties will have their taxes shoot up. That is my prediction and nothing about the state of California, or the US broadly, suggests otherwise to me.
- andrewmutz 9d ago

And don’t forget prop 13, there’s negative incentive for property to change hands and develop.

by kfarr 9d ago

And don’t forget prop 13, there’s negative incentive for property to change hands and develop.

Do you own your home? Here in Ca? You know that property tax is 1.4ish % and goes up by 2% a year, pretty much no matter what? On a 1.5M house, that's starting at 17K a year and each year it goes up 2%, so it compounds. That's 17k a year Just to stay in your own home. People who don't pay property taxes here in ca, act like prop 13 means zero property taxes

dbmikus 9d ago
That is close to the average rate of inflation, though. Doesn't seem unreasonable to me.
codemac 9d ago
They go up much more than 2% in literally every other state, California is the cheapest place to own property for >10 years. You can argue against property taxes entirely, but Prop 13 definitely means that families, businesses, and all property owners work very hard to never sell, never reassess, and never change their tax rate.
stouset 9d ago
While I think the goal of Prop 13 is laudable, a few reforms would cut some of the biggest downsides: it should be be for primary residences, where the named owner is the primary resident. This would eliminate the tax break for commercial property, prevent it from being abused for second homes, and avoid the property trust shenanigans that have allowed some properties to change hands without a reset in the taxes paid.
- lokar 9d ago
  I’m not sure why people are downvoting (without commenting), but I agree. The main selling point of prop13 was a real problem: rapidly increasing values were driving up taxes so fast that long time residents (of modest means) were being forced out. I don’t think it’s entirely unreasonable to have some policy that attempts to protect people living in their primary residence from rapid tax increases they can’t afford.
  - MarkusQ 9d ago
    That makes it sound like the increase was due to some inexorable natural force. California's per capita budget is over twice Arizona's, and they're running a huge deficit on top of that. If taxes are too high, cut taxes. If that means you need to cut spending, cut spending. But don't play "hey, let's tax the other guy!" games and expect that to work.
    - Schiendelman 9d ago
      A lot of this also comes down to prohibiting growth. In Seattle, every time we build a new building, everyone else's property tax payments decrease. High growth years lead to lower bills. The same would work in California, they just don't build much of anything because they've made it nearly impossible to.
      - fc417fc802 8d ago
        You're not wrong, but the irony of positioning Seattle as having good zoning policies is almost unbearable.
        Schiendelman 8d ago
        Oh, I'm with you. I think this needs to be overturned wholesale. Seattle is bad. Still better than California.
    - lokar 9d ago
      Prop13 was a big tax cut. The people behind it were minimal government conservative libertarians. And the state did slash spending in the years following. In particular funding for the university system was hit very hard.
      - MarkusQ 9d ago
        They did not slash spending. At most the rate of increase slowed down for a year or so before continuing to rise at an even faster rate. https://dof.ca.gov/about-us/history/state-budgets/ https://dof.ca.gov/about-us/history/state-budgets/
isubkhankulov 9d ago
Yes, your property tax is high ($17k) because of prop 13 - you are effectively subsidizing others who have sat on their residential and commercial property for 20-30+ years who are paying 25-50% of what you pay for any similar property in the same calendar year! Your property tax goes up by 2% of your , guessing (relatively recent?) purchase price, and theirs goes up 2% of a much smaller base due to prop 13. They have no incentive to move, downgrade. And they often use trusts to pass this tax base down to their kids. It’s feels like icky European feudalism. Again i’m emphasizing that this goes for both residential and commercial buildings.
- cucumber3732842 9d ago
  > It’s feels like icky European feudalism. Pairs nicely with the permitting processes that basically boil down to "thou shalt pay the guild"
- fatcatsbestcats 9d ago
  I agree with everything you’ve said, but one clarification: you don’t even need a trust to pass the tax break down to your kid when you die. Sure, a trust can streamline that process, but it’s not required. At least everyone lucky enough to inherit benefits, not just those whose parents had the foresight (and the means) to create a trust.
jedberg 9d ago
> Do you own your home? Here in Ca? Yes and yes. And I pay 10K less a year than my neighbor for the same value house. And I pay 10K more a year than my other neighbor. I get a huge advantage from Prop 13, but I still think it needs to get replaced with a much fairer system.
- deleted 9d ago
  [deleted]
tikhonj 9d ago
I do own a house in California and I pay closer to $30k in property taxes. The previous owners of my house paid $7k. My neighbor—who has a bigger, more expensive house!—pays $9k. It's pretty clear that this kind of tax policy is going to totally mess up the housing market. It's not the only factor, but it's a big one.
skywhopper 8d ago
You realize government services that support that home cost money, right? You act like if you own your home that your living there doesn’t impose any costs on your neighbors.

bingohbangoh 9d ago

Do people really think that if we revoked Prop 13 that other taxes would go down with the new money from property taxes? Or do we think that property taxes would go up while other taxes stay put? This feels like the argument at play when people criticize Prop 13. Not saying it’s good but California hasn’t ever cut taxes meaningfully and I’m not convinced raising property taxes would solve anything. California would still be expensive to live in.

groundzeros2015 9d ago
It would increase liquidity in the housing market.
jrmg 9d ago
To keep tax revenue equal, property taxes for those who purchased recently would go down, and property taxes for those who’d purchased in the past would go up. The housing market would become more liquid because people would move out of homes if their values rose too much and they could no longer afford the taxes. This would be a shock initially, but over time it would just be seen as part of life like it is in other areas: mostly, empty nesters would downsize to a cheaper, smaller house with lower taxes. Gentrification might be more problematic though. In practice, probably some phased rebalancing would have to happen to avoid the sudden economic shock, but, politics notwithstanding, it’s not crazy to suggest it could be done and that the end state might be overall ‘better’ for most people. The end state would be how property taxes work almost everywhere else.
- bingohbangoh 8d ago
  > To keep tax revenue equal, property taxes for those who purchased recently would go down, and property taxes for those who’d purchased in the past would go up. That's what I'm saying _won't_ happen. The high property taxes as-is will stay high and previously protected properties will have their taxes shoot up. That is my prediction and nothing about the state of California, or the US broadly, suggests otherwise to me.
andrewmutz 9d ago