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View Diary: California: Back in the black with progressive governance (134 comments)

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    •  agreed (33+ / 0-)

      Prop 13 is really the big problem there.

      What's more, you can protect homeowners from tax raises while raising taxes on commercial real estate. There's no reason one has to go with the other. The only reason they were bundled together in the first place was so Prop 13 could win enough middle class support to pass.

      "In America, the law is king." --Thomas Paine

      by limpidglass on Sun Jan 13, 2013 at 04:08:55 PM PST

      [ Parent ]

      •  I would suggest the people who brought us Prop 13 (28+ / 0-)

        didn't care about senior citizens being taxed out of their homes, but cynically used that fear to push through corporate immunity to property reassessment.

        Yes, I said immunity.  By using shell corps and multiple partners, corporations can avoid property reassessment on sale.  It's fairly routine.  For example, the Gallo company bought thousands of acres of vineyards from another wine corp and it wasn't reassessed by having a group of a dozen family members as partners.  Thus the 50% ownership change rule wasn't triggered, even though the original owners sold 100% of their property.

        The term for decoupling commercial from residential property on Prop 13 is split roll.  Right now residential property taxes are the majority paid, it used to be 50/50 with commercial.

        •  yes, because it also applied (5+ / 0-)
          Recommended by:
          Capt Crunch, KenBee, Leap Year, IM, chickeee

          to commercial properties - that's the main reason. Otherwise it did work to keep seniors in homes - it used to be impossible. I knew these schoolteachers in LA who had to move from their neighborhoods, had owned their houses like forty years and could not keep up with taxes. Which is why prop 13 passed so handily.  

          Home change ownership more frequently and rich people with lawyers are better at working angles.

          I am proud of my state.  They started collecting sales tax from businesses that made purchases on line before they were able to get sales tax on all internet purchases.  They're looking for money and their work was rewarded when the state passed a tax increase.  

          But businesses are the ones that made the most profit from Prop 13, for sure.  

          "oh no, not four more years of hope and change?" Karl Christian Rove

          by anna shane on Sun Jan 13, 2013 at 05:43:48 PM PST

          [ Parent ]

          •  Being forced to sell your home because you owe tax (2+ / 0-)
            Recommended by:
            KenBee, Leap Year

            is unconscionable. With coastal California's high home valuations property taxes, even with Prop 13, are already high. My property taxes are more than my mother's mortgage on her house in AZ.

            "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

            by Shane Hensinger on Sun Jan 13, 2013 at 05:49:55 PM PST

            [ Parent ]

            •  I don't think it's fair to compare (0+ / 0-)

              your coastal house tax rate to your mother's mortgage in... Arizona.
              California coastal house prices are astronomical - compare that to hosing costs in Arizona. That's just not comparing apples to apples.
              Plus anna was making a case for the Split Roll approach which would leave the approach to residential housing taxes unchanged.

            •  That's because you bought too recently (2+ / 0-)
              Recommended by:
              anna shane, madhaus

              If you were working on a 1977 tax valuation, your beach house might have taxes as low as $1k a year.

              I pay about 10x what my neighbor does, and his property is much larger.

              Fry, don't be a hero! It's not covered by our health plan!

              by elfling on Mon Jan 14, 2013 at 08:29:39 AM PST

              [ Parent ]

            •  That's actually a silly comparison (0+ / 0-)

              Look at the property tax rates, not the totals.  Property tax in California starts at 1% but then all these little agencies start adding in various pieces on top of the 1%.  If you live in Southern California, most of the newer homes have those horrendous Mello-Roos taxes which aren't even deductable, and they're high.  They're basically the builder passing on the cost of facilities (schools, utilities, etc) to the owners as a forced bond payment.

              Here in Silicon Valley you rarely find Mello-Roos taxes on homes, because we're mostly built out.  Lots and lots of old crap.  Expensive old crap.

              Now go to some places in New York and New Jersey if you want to see high property taxes.  It's not the total, it's the percentage of the home sale price that makes property taxes "expensive."

      •  prop 13 doesn't protect homeowners as a class (5+ / 0-)
        Recommended by:
        Leap Year, stagemom, IM, elfling, bryduck

        it just protects some homeowners while passing the price onto other homeowners.

        •  Those "some" include my 93 year old mother (7+ / 0-)

          My parents bought their house in 1952 for $20K, when the suburb they live in was a distant outpost iof San Francisco -- the street in front of the newly consttructed high school was unpaved.  My father was a teacher, my mother a "homemaker", as they were called in those days.  My father died in 1962.  My mother,who did take a job, still lives there.  It is a very modest house which just happens to be in an area that is now high-priced.   It would probably sell for $400K.  When it sells, tax it at that value.  But for now, my mother's social security income could not make the property tax payments on that value.   Where should she go?  She is not realizing $400K -- it is her home, the place she has lived for 60-some years, and because of Prop 13 she is still able to live there.   She, and most of the individual property owners who are able to stay in their homes, will soon be dead.  Then you won't have to lament their passing the price onto poor little you.

          •  Non-homeowners view equity (0+ / 0-)

            as some magic pot of gold which can be dipped into in a moment's notice. They think if your home is worth $500,000 that means you're rich - that you can just write a check against your home's value. They just don't get it.

            "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

            by Shane Hensinger on Sun Jan 13, 2013 at 07:32:01 PM PST

            [ Parent ]

            •  Kinda. You can certainly borrow from (0+ / 0-)

              your equity, so you can actually "write a check against your home's value" . . .

              "Lone catch of the moon, the roots of the sigh of an idea there will be the outcome may be why?"--from a spam diary entitled "The Vast World."

              by bryduck on Mon Jan 14, 2013 at 08:57:21 AM PST

              [ Parent ]

              •  Equity is not liquid (0+ / 0-)

                And banks have rules on how much can be tapped and when. Loan devaluation, credit score etc... all play a role. It's not at all simple nor is it a good idea to rely on that in the first place. Look at what happened during the financial crisis - lots of people lost their homes because the value dropped so quickly and they had "borrowed" against the equity - which became nonexistent.

                I'm of the mind that if you want to tap into the equity in your home you consider selling it and buying a new place which is cheaper - then pocket the difference. You can also refinance and use the additional equity as a cash out, but you never refinance more - always less. I don't have a home equity line of credit nor would I advise anyone else to get one.

                "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

                by Shane Hensinger on Mon Jan 14, 2013 at 02:32:31 PM PST

                [ Parent ]

          •  I am of mixed feelings (0+ / 0-)

            I am not a fan of property taxes precisely for the reason you express: the property rises in value due to no action by the homeowner, and the tax has no relationship to disposable cash actually available to pay it. When people lose their jobs, for example, they still have to pay that property tax bill, and it can be a big bite. Having people move solely because the property tax increases lowers stability in neighborhoods.

            And, as much as the inequality burns, at least you know what you're getting into when you buy a new house.

            However, corporations have an unconscionable advantage: they don't die. So you create a corporation solely for the purpose of owning a piece of land, and they you sell the corporation, and the property is not reassessed. Disneyland will never be reassessed... even though Walt Disney Corp is not owned by the same people who owned in in 1977.

            This creates some pernicious situations, too. An old supermarket is taxed at its 1977 valuation. A new company starting up buys land for a supermarket and has to pay taxes based on a valuation that is probably 10 to 20 times higher, even though they use the same services and sit on land of similar value.

            Fry, don't be a hero! It's not covered by our health plan!

            by elfling on Mon Jan 14, 2013 at 08:42:35 AM PST

            [ Parent ]

          •  By the way, future grandmothers (0+ / 0-)

            are in houses that are median $500,000 valuation, meaning that they are paying $5k + a year now and will be facing bills that your parents can't cover in retirement. It's also likely that they won't benefit from a large appreciation in home values as your parents did.

            So we are going to have to fix this, if our goal is to keep grandmothers from having to sell due to property taxes, because when the current working generation retires, they will typically be seeing property taxes well in excess of $500 a month, and with little or no equity to draw out to cover it.

            Fry, don't be a hero! It's not covered by our health plan!

            by elfling on Mon Jan 14, 2013 at 09:14:49 AM PST

            [ Parent ]

    •  Prop 13 will never be repealed (3+ / 0-)

      We will never go back to the days of 60-70% annual increases in property taxes - never.

      "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

      by Shane Hensinger on Sun Jan 13, 2013 at 04:25:11 PM PST

      [ Parent ]

      •  The two are not mutually exclusive (19+ / 0-)

        There are better ways to deal with the issue then allowing corporations and rentals to avoid paying fair taxes.

        We were not ahead of our time, we led the way to our time.

        by i understand on Sun Jan 13, 2013 at 04:29:55 PM PST

        [ Parent ]

        •  I agree with split roll (5+ / 0-)

          I don't agree with lifting restrictions on residential property taxes. In the mid 1970s average annual property tax increases were between 60-70% and in some cases as much as 200%. Prop 13 passed because people were furious - and rightly so. That is totally unsustainable.

          "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

          by Shane Hensinger on Sun Jan 13, 2013 at 04:35:36 PM PST

          [ Parent ]

          •  real estate also soared during that time (5+ / 0-)
            Recommended by:
            Capt Crunch, KJG52, spritegeezer, stagemom, IM

            but noone thought it was unfair that people of certain generational cohorts got to cash in on that sudden unearned wealth. spare me the crocodile tears about the mythical old ladies taxed out of their homes, when noone gives a damn then or now about people who lose their homes for any other economic reason.

            •  Well there's that perspective (0+ / 0-)

              Which sounds like a sure-fire winner when telling people they need to agree to double or triple their property taxes.

              "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

              by Shane Hensinger on Sun Jan 13, 2013 at 06:09:00 PM PST

              [ Parent ]

              •  the state tripled my tuition (6+ / 0-)

                and gutted my school district's funding year after year so those people could not pay their fair share of the load, and none of them seemed to mind much. i guess some generational cohorts are more important than others.

                •  Causing others pain because you were caused (2+ / 0-)
                  Recommended by:
                  sombra, Bailey2001

                  pain is a very poor basis for public policy.

                  "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

                  by Shane Hensinger on Sun Jan 13, 2013 at 06:18:06 PM PST

                  [ Parent ]

                  •  causing the rich to pay their taxes (4+ / 0-)
                    Recommended by:
                    KJG52, Willa Rogers, IM, sukeyna

                    so that the poor and middle are not squeezed is a time-tested basis for sound public policy. we've tried reaganism and the howard jarvis asset bubble way, and it wrecked the state in painful, unequal and long-lasting ways. i'm done with that failed approach, and don't care much about your equity when it's hard for most people in this state to even pay the rent.

                    •  Homeowners are "rich?" (4+ / 0-)
                      Recommended by:
                      sombra, KenBee, Samulayo, limpidglass

                      To be squeezed to help people pay the rent?

                      I don't understand where you come up with this stuff.

                      "The two pioneering forces of modern sensibility are Jewish moral seriousness and homosexual aestheticism and irony." Susan Sontag

                      by Shane Hensinger on Sun Jan 13, 2013 at 06:28:33 PM PST

                      [ Parent ]

                    •  However, keep in mind that living in a house (2+ / 0-)
                      Recommended by:
                      bryduck, Shane Hensinger

                      that doubled in value because of the sale of a house down the street doesn't make you rich. This is especially true when the market is volatile and when there's no readily available source of less expensive housing nearby to transfer to.

                      It would be like saying someone is rich because their rent doubled. And that's how the dramatic rises made people feel, like renters.

                      Volatility in your bills as was seen in the 1970s is not a good thing. Prop 13 was passed for a reason. But I agree with you that it was not good governance, that it was designed not to help homeowners but to help apartment building landlords. To craft a better solution requires acknowledgement of the original problem that led voters to vote yes.

                      Fry, don't be a hero! It's not covered by our health plan!

                      by elfling on Mon Jan 14, 2013 at 08:54:10 AM PST

                      [ Parent ]

                      •  That's the thing. It's not/doesn't have to be (1+ / 0-)
                        Recommended by:
                        elfling

                        either Prop 13 or no Prop 13. There are an infinite number of laws that could take the place of Prop 13 and protect the 90-year-old grandmothers of above without bankrupting the rest of the state's interests. It shouldn't be "homeowners v. the world" as it is now.

                        "Lone catch of the moon, the roots of the sigh of an idea there will be the outcome may be why?"--from a spam diary entitled "The Vast World."

                        by bryduck on Mon Jan 14, 2013 at 09:03:49 AM PST

                        [ Parent ]

                        •  Absolutely. (1+ / 0-)
                          Recommended by:
                          bryduck

                          Fry, don't be a hero! It's not covered by our health plan!

                          by elfling on Mon Jan 14, 2013 at 09:04:28 AM PST

                          [ Parent ]

                        •  There's also the future 90 year olds to consider (2+ / 0-)
                          Recommended by:
                          bryduck, Shane Hensinger

                          It's likely I won't be able to stay in my house when I retire, because of the high property taxes I am paying now.

                          Fry, don't be a hero! It's not covered by our health plan!

                          by elfling on Mon Jan 14, 2013 at 09:05:41 AM PST

                          [ Parent ]

                          •  But that's not an abnormal (0+ / 0-)

                            situation; "retiring to Florida/New Mexico/wherever it's cheaper to live" used to be an acceptable end-of-working-life outcome. Only the rare few who made millions or had a large enough pension could afford to stay in the same house in which they lived during their working lives.

                            "Lone catch of the moon, the roots of the sigh of an idea there will be the outcome may be why?"--from a spam diary entitled "The Vast World."

                            by bryduck on Mon Jan 14, 2013 at 09:16:11 AM PST

                            [ Parent ]

            •  I think you weaken your argument (1+ / 0-)
              Recommended by:
              Shane Hensinger

              when you use the word "mythical" because there absolutely were people who were looking at huge tax increases and needing to move for that reason alone.

              The rest of your point is well taken.

              Fry, don't be a hero! It's not covered by our health plan!

              by elfling on Mon Jan 14, 2013 at 08:47:28 AM PST

              [ Parent ]

    •  Another problem with prop 13.... (9+ / 0-)

      is that a 2/3rds vote is needed in city and county prop elections if its aim is to raise revenue through taxes. In 2012, prop J in Los Angeles (a plan to extend sales tax to fund mass transit) won 66%+ of the vote but not 66.7%. Prop 13 is a travesty.

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