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.
Multiple good things would happen without prop 13:
People would move more instead of being locked in to a low effective property tax.
The tax burden would be much fairer: instead of the police and schools being funded by newcomers, everyone would be contributing their fair share to fund the city, instead of the longest tenure residents mooching off the rest of us.
Unproductive use of land would be discouraged. If a tract became highly desirable, it would be expensive to let it sit in an unproductive form
Cities could raise taxes as high as their residents wanted them to be, instead of being limited by the opinions of non-residents. Some people want to have better funded police and schools, and local government would actually be allowed to deliver that. Citizens who didnt want to live in expensive cities could vote with their feet to cheaper towns.
"People would move more instead of being locked in to a low effective property tax." - this just means that older and retired people would get kicked out of stable living situations, driven by property tax assessments which are often driven by real estate market boom/bust cycles. And housing prices would be just as high as with prop 13.
The bad part about prop 13, is that it never should have applied to anything other than primary residences of people. Having it apply to rental & commercial properties is what warps the market.
Cities should be cutting their police budgets - most small towns have nearly 50% of the budgets tied up in police. All while there has been a multi-decade decrease in crime.
I've never heard anybody say anything like that when criticizing prop 13. It usually has more to do with housing prices and the fact that 2 people with the same home value should pay the same in property taxes. If you wanted to create a hereditary landed gentry, it would be hard to come up with a better policy to achieve that than prop 13.
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.
Prop 13 massively distorts the real estate market and creates some strong incentives for home owners. Those distortions and incentives would go away regardless of whether abolishing Prop 13 led to a net increase or decrease in total taxes.
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.
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.
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.
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.
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.
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.
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.
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.
Multiple good things would happen without prop 13:
People would move more instead of being locked in to a low effective property tax.
The tax burden would be much fairer: instead of the police and schools being funded by newcomers, everyone would be contributing their fair share to fund the city, instead of the longest tenure residents mooching off the rest of us.
Unproductive use of land would be discouraged. If a tract became highly desirable, it would be expensive to let it sit in an unproductive form
Cities could raise taxes as high as their residents wanted them to be, instead of being limited by the opinions of non-residents. Some people want to have better funded police and schools, and local government would actually be allowed to deliver that. Citizens who didnt want to live in expensive cities could vote with their feet to cheaper towns.
"People would move more instead of being locked in to a low effective property tax." - this just means that older and retired people would get kicked out of stable living situations, driven by property tax assessments which are often driven by real estate market boom/bust cycles. And housing prices would be just as high as with prop 13.
The bad part about prop 13, is that it never should have applied to anything other than primary residences of people. Having it apply to rental & commercial properties is what warps the market.
Cities should be cutting their police budgets - most small towns have nearly 50% of the budgets tied up in police. All while there has been a multi-decade decrease in crime.
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Under Proposition 19, some people can still move without penalty, as long as they're over age 55, and move to a new property located in California.
https://www.ocassessor.gov/tax-saving-programs/savings-senio...
I've never heard anybody say anything like that when criticizing prop 13. It usually has more to do with housing prices and the fact that 2 people with the same home value should pay the same in property taxes. If you wanted to create a hereditary landed gentry, it would be hard to come up with a better policy to achieve that than prop 13.
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.
Prop 13 massively distorts the real estate market and creates some strong incentives for home owners. Those distortions and incentives would go away regardless of whether abolishing Prop 13 led to a net increase or decrease in total taxes.
It would increase liquidity in the housing market.
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
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.
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.
> It’s feels like icky European feudalism.
Pairs nicely with the permitting processes that basically boil down to "thou shalt pay the guild"
> 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.
That is close to the average rate of inflation, though. Doesn't seem unreasonable to me.
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.
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.
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.
13 replies →
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.
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.