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Don't make all of your money from a property tax that does not increase as your costs to provide services increase. There are options besides property tax for

by skuhn 11y ago

Don't make all of your money from a property tax that does not increase as your costs to provide services increase. There are options besides property tax for raising tax revenue. City-level local income tax is the first thing that comes to mind.

Camillo 11y ago
So you want to increase the tax burden on productive economic activity to benefit people who are just capturing rent. That's a horrible idea.
- skuhn 11y ago
  I don't believe that's what I said. Cities in California have services they are obligated to provide -- police services, for instance. The cost of those services over time has increased proportional to salaries. However, the revenue gathered to pay for those services has only increased proportional to property values -- which are artificially trapped in the 1970's to a large extent. That is an untenable situation, and it is a large part of California's problem at a local level.
aidenn0 11y ago
Are you proposing abolishing property tax? Because nowhere in ubernostrom's post did he talk about city revenues, just about the perverse incentives to land-owners by Prop 13, and those will exist unless property tax is eliminated.
- skuhn 11y ago
  I didn't respond directly to ubernostrom, and my comment doesn't discuss whether prop 13 creates a perverse incentive for landowners in any respect (although: it does). I'm saying that if you tie your revenue stream (i.e. taxes) to something that is essentially fixed at 1970's levels, but you have to buy things with it in 2015 money, you are going to not have a good time. You can still keep property tax as part of your revenue stream, but these governments need to diversify. I would personally rather they diversified into income tax than some of the alternatives, such as red light cameras.
  - steven2012 11y ago
    Nothing is fixed to 1970s levels. Property taxes get reassessed when there's a sale on the property. How many properties in CA have not changed hands since 1970, ie more than 40 years? Probably none, since that's almost 2 generations of families.
    - skuhn 11y ago
      I think you might be surprised. There are a ton of exceptions to reassessment [1]. A notable one is that transfers from parent to child are typically excluded, meaning that you can indeed pass down low property taxes from generation to generation. Commercial property is also covered under the same rules, and there are ways to keep it from being reassessed [2][3]. Improvements to the property will trigger reassessment, if the changes pass a certain threshold. This incentivizes owners not to improve their property (particularly externally). Look around San Francisco, and you can see the effect this has had (along with other factors like rent control). Anecdotally, I've heard of people replacing one window a year because they didn't want to trigger a reassessment. That is just flat out absurd. There is a cottage industry dedicated to avoiding property tax reassessment, entirely because of prop 13. This isn't how it works elsewhere in the country. There are other, better solutions out there. However, it is virtually impossible to alter or repeal prop 13 because it was a ballot proposition -- it will outlive all of us. [1] https://www.boe.ca.gov/proptaxes/faqs/changeinownership.htm https://www.boe.ca.gov/proptaxes/faqs/changeinownership.htm [2] http://closetheloophole.com/history http://closetheloophole.com/history [3] http://www.sacbee.com/news/politics-government/capitol-alert/article23689426.html http://www.sacbee.com/news/politics-government/capitol-alert...
      - steven2012 11y ago
        Prop 13 is across California, not just San Francisco. You're saying that home sales in CA have been suppressed because of Prop 13? You would be wrong. There are about 6M housing units available in CA, and about 500k sales per year. That's an entire turnover of inventory in 12 years. Your anecdotal evidence is interesting but wrong.
eru 11y ago
Property taxes are awesome: they do not distort economic activity (if done right), and they are hard to evade (since you can't hide your land).
- skuhn 11y ago
  OK. So then I take it we can agree that they shouldn't be artificially capped for some people because they got here first.
  - eru 11y ago
    Definitely. Just make property taxes proportional to self-reported value of the property. (With the catch that you have to sell to any would-be buyer who offers to pay the reported value. Just to keep people honest.)

by skuhn 11y ago

Camillo 11y ago

So you want to increase the tax burden on productive economic activity to benefit people who are just capturing rent. That's a horrible idea.

skuhn 11y ago
I don't believe that's what I said. Cities in California have services they are obligated to provide -- police services, for instance. The cost of those services over time has increased proportional to salaries. However, the revenue gathered to pay for those services has only increased proportional to property values -- which are artificially trapped in the 1970's to a large extent. That is an untenable situation, and it is a large part of California's problem at a local level.

aidenn0 11y ago

Are you proposing abolishing property tax? Because nowhere in ubernostrom's post did he talk about city revenues, just about the perverse incentives to land-owners by Prop 13, and those will exist unless property tax is eliminated.

skuhn 11y ago
I didn't respond directly to ubernostrom, and my comment doesn't discuss whether prop 13 creates a perverse incentive for landowners in any respect (although: it does). I'm saying that if you tie your revenue stream (i.e. taxes) to something that is essentially fixed at 1970's levels, but you have to buy things with it in 2015 money, you are going to not have a good time. You can still keep property tax as part of your revenue stream, but these governments need to diversify. I would personally rather they diversified into income tax than some of the alternatives, such as red light cameras.
- steven2012 11y ago
  Nothing is fixed to 1970s levels. Property taxes get reassessed when there's a sale on the property. How many properties in CA have not changed hands since 1970, ie more than 40 years? Probably none, since that's almost 2 generations of families.
  - skuhn 11y ago
    I think you might be surprised. There are a ton of exceptions to reassessment [1]. A notable one is that transfers from parent to child are typically excluded, meaning that you can indeed pass down low property taxes from generation to generation. Commercial property is also covered under the same rules, and there are ways to keep it from being reassessed [2][3]. Improvements to the property will trigger reassessment, if the changes pass a certain threshold. This incentivizes owners not to improve their property (particularly externally). Look around San Francisco, and you can see the effect this has had (along with other factors like rent control). Anecdotally, I've heard of people replacing one window a year because they didn't want to trigger a reassessment. That is just flat out absurd. There is a cottage industry dedicated to avoiding property tax reassessment, entirely because of prop 13. This isn't how it works elsewhere in the country. There are other, better solutions out there. However, it is virtually impossible to alter or repeal prop 13 because it was a ballot proposition -- it will outlive all of us. [1] https://www.boe.ca.gov/proptaxes/faqs/changeinownership.htm https://www.boe.ca.gov/proptaxes/faqs/changeinownership.htm [2] http://closetheloophole.com/history http://closetheloophole.com/history [3] http://www.sacbee.com/news/politics-government/capitol-alert/article23689426.html http://www.sacbee.com/news/politics-government/capitol-alert...
    - steven2012 11y ago
      Prop 13 is across California, not just San Francisco. You're saying that home sales in CA have been suppressed because of Prop 13? You would be wrong. There are about 6M housing units available in CA, and about 500k sales per year. That's an entire turnover of inventory in 12 years. Your anecdotal evidence is interesting but wrong.

eru 11y ago

Property taxes are awesome: they do not distort economic activity (if done right), and they are hard to evade (since you can't hide your land).

skuhn 11y ago
OK. So then I take it we can agree that they shouldn't be artificially capped for some people because they got here first.
- eru 11y ago
  Definitely. Just make property taxes proportional to self-reported value of the property. (With the catch that you have to sell to any would-be buyer who offers to pay the reported value. Just to keep people honest.)