5 ms·

I'm not convinced that Prop 13 is the best or only solution to the "we don't want to kick senior citizens out of their communities" issue. Prop 13 only helps yo

I'm not convinced that Prop 13 is the best or only solution to the "we don't want to kick senior citizens out of their communities" issue. Prop 13 only helps you if your property has appreciated in value anyway. So by definition, all of its beneficiaries are sitting on assets that have appreciated, sometimes enormously. Currently, Prop 13 caps property taxes as a percent of the last sale price. What if instead we allowed property taxes to increase with home value, but deferred collection of the incremental tax increase until the sale of the home? The back taxes owed could even be capped as a percent of appreciation. Given that the property's price has by definition increased, even after paying the back taxes the seller still gets much of their money back, the government comes out whole, we don't force old people to sell prematurely and the tax burden is shared more equitably between old and new owners.

jzwinck 9y ago
If your home becomes much more valuable in 2018 to 2028 but then falls sharply in 2029 to 2034 and you become ill in 2035, who will pay the high tax then due? What you propose is basically an additional mortgage via the state. This means more leverage for home owners and increased risk for the state. When a broad downturn comes, the state will be shoved briskly toward bankruptcy.
- ScottBurson 9y ago
  There are various ways to set this up. What I would propose for California would have these properties: () The annual tax bill would be capped according to the Prop. 13 formula (annual increase limited to 2%). The difference between the tax bill and the tax due gets added to the lien balance. () The tax bill would increase at that rate even if the property value drops, until the lien balance is paid off. With these rules in place, it's actually pretty hard for the lien balance to get very large compared to the amount by which the property has appreciated. It would take a catastrophically sudden and severe drop in property values for that to happen.
  - chillydawg 9y ago
    Why cap it? Removing caps allows the market to properly price property with regard to taxes and will give the market stability. Caps are a distortion and will hurt some and benefit others.
    - ScottBurson 9y ago
      The modification to Prop. 13 that I am proposing will already be an extremely hard sell to California voters. Outright repeal is just not realistic.
mjn 9y ago
In my opinion, Texas gets this right (as a left-winger who's lived in Texas for a number of years, I don't get to say this that frequently). If you're over 65, you can defer property taxes on the home you occupy as long as you continue to own and occupy the home. They aren't even just frozen, you can simply not pay the taxes at all. This means you can't lose your home due to inability to pay property taxes. But you don't get to play both sides and get a property-tax reduction while also passing on a big capital-gains windfall to your heirs. The taxes are deferred, and when the home is either sold, or transferred to heirs upon your death, the deferred taxes are assessed against the capital gains and/or the estate. (If the estate ends up being worth less than the deferred taxes, the state eats the difference, but deferred taxes are recovered from whatever value it does have.)
- kcorbitt 9y ago
  Cool, sounds very similar to what I was thinking! Glad to find out that someone has implemented it. > as a left-winger who's lived in Texas for a number of years, I don't get to say this that frequently Governance would be so much more productive if we were all willing to get behind ideas that have been proven to work, even if the "other side" thought of them first. Like you've done here. :)
  - rxhernandez 9y ago
    Preferably there wouldn't be these sides at all. Just a bunch of different people that support different things. I know how naive that all sounds. I'm just worried that these two sides are going to tear this nation apart in very disastrous ways.
- nbadg 9y ago
  That's actually really neat. If anyone else was interested in reading the details, here's the relevant statute: http://www.statutes.legis.state.tx.us/StatutesByDate.aspx?code=TX&level=SE&value=33.06&date=6/26/2014 http://www.statutes.legis.state.tx.us/StatutesByDate.aspx?co...
- RhysU 9y ago
  What happens to someone who lets the taxes build up but needs to sell (medical bills, say)? This screams of unintended consequences where the state taxes a windfall from someone forced to sell.
whyenot 9y ago
You already have to pay capital gains tax when you sell. Adding on to the state's cut at sale with even more taxes would be exceedingly unpopular.
- kcanini 9y ago
  The first quarter million (half million for couples) dollars of profits are exempt from capital gains tax.
dv_dt 9y ago
I think this has the problem of trapping people into houses on declining property values. You've got some elements to mitigate that somewhat, but prop 13 really seems like a cleaner simpler way to do the accounting because there is no hysteresis effects. Anything else, and you really provide a disincentive for many people to sell just for the added headache.
- erikpukinskis 9y ago
  How would people get trapped? If the property value is declining they can just get it reappraised and pay an even lower tax rate than what they were expecting when they bought it. From a tax perspective that should be a windfall for them.
icantdrive55 9y ago
"The government comes out whole" 1. I'm getting so tired of sticking up for prop 13. 2. Politicians took such advantage of that ever increasing piggy bank. So many narcisstic uses of that money. I saw it as a kid, and I knew something was very off. The adults were beyond pissed. 3. If this prop 13 blame projection takes hold; this generation will understand why my father, and Howard Jarvis were Mad as Hell. 4. Repelling prop 13 will not magically built new housing units. There will be a spike, and then flatten out. Then politicians will do what they do best; have money for their pet projects. I honestly wonder if people need to live through a terrible situation in order to feel the effects? And looking for an easy prop to repeal to correct a complex situation is not the right path, but I feel some of you will never get it until you experience it first hand?

jzwinck 9y ago

If your home becomes much more valuable in 2018 to 2028 but then falls sharply in 2029 to 2034 and you become ill in 2035, who will pay the high tax then due? What you propose is basically an additional mortgage via the state. This means more leverage for home owners and increased risk for the state. When a broad downturn comes, the state will be shoved briskly toward bankruptcy.

ScottBurson 9y ago
There are various ways to set this up. What I would propose for California would have these properties: () The annual tax bill would be capped according to the Prop. 13 formula (annual increase limited to 2%). The difference between the tax bill and the tax due gets added to the lien balance. () The tax bill would increase at that rate even if the property value drops, until the lien balance is paid off. With these rules in place, it's actually pretty hard for the lien balance to get very large compared to the amount by which the property has appreciated. It would take a catastrophically sudden and severe drop in property values for that to happen.
- chillydawg 9y ago
  Why cap it? Removing caps allows the market to properly price property with regard to taxes and will give the market stability. Caps are a distortion and will hurt some and benefit others.
  - ScottBurson 9y ago
    The modification to Prop. 13 that I am proposing will already be an extremely hard sell to California voters. Outright repeal is just not realistic.

mjn 9y ago

In my opinion, Texas gets this right (as a left-winger who's lived in Texas for a number of years, I don't get to say this that frequently). If you're over 65, you can defer property taxes on the home you occupy as long as you continue to own and occupy the home. They aren't even just frozen, you can simply not pay the taxes at all. This means you can't lose your home due to inability to pay property taxes. But you don't get to play both sides and get a property-tax reduction while also passing on a big capital-gains windfall to your heirs. The taxes are deferred, and when the home is either sold, or transferred to heirs upon your death, the deferred taxes are assessed against the capital gains and/or the estate. (If the estate ends up being worth less than the deferred taxes, the state eats the difference, but deferred taxes are recovered from whatever value it does have.)

kcorbitt 9y ago
Cool, sounds very similar to what I was thinking! Glad to find out that someone has implemented it. > as a left-winger who's lived in Texas for a number of years, I don't get to say this that frequently Governance would be so much more productive if we were all willing to get behind ideas that have been proven to work, even if the "other side" thought of them first. Like you've done here. :)
- rxhernandez 9y ago
  Preferably there wouldn't be these sides at all. Just a bunch of different people that support different things. I know how naive that all sounds. I'm just worried that these two sides are going to tear this nation apart in very disastrous ways.
nbadg 9y ago
That's actually really neat. If anyone else was interested in reading the details, here's the relevant statute: http://www.statutes.legis.state.tx.us/StatutesByDate.aspx?code=TX&level=SE&value=33.06&date=6/26/2014 http://www.statutes.legis.state.tx.us/StatutesByDate.aspx?co...
RhysU 9y ago
What happens to someone who lets the taxes build up but needs to sell (medical bills, say)? This screams of unintended consequences where the state taxes a windfall from someone forced to sell.

whyenot 9y ago

You already have to pay capital gains tax when you sell. Adding on to the state's cut at sale with even more taxes would be exceedingly unpopular.

kcanini 9y ago
The first quarter million (half million for couples) dollars of profits are exempt from capital gains tax.

dv_dt 9y ago

I think this has the problem of trapping people into houses on declining property values. You've got some elements to mitigate that somewhat, but prop 13 really seems like a cleaner simpler way to do the accounting because there is no hysteresis effects. Anything else, and you really provide a disincentive for many people to sell just for the added headache.

erikpukinskis 9y ago
How would people get trapped? If the property value is declining they can just get it reappraised and pay an even lower tax rate than what they were expecting when they bought it. From a tax perspective that should be a windfall for them.

icantdrive55 9y ago

"The government comes out whole" 1. I'm getting so tired of sticking up for prop 13. 2. Politicians took such advantage of that ever increasing piggy bank. So many narcisstic uses of that money. I saw it as a kid, and I knew something was very off. The adults were beyond pissed. 3. If this prop 13 blame projection takes hold; this generation will understand why my father, and Howard Jarvis were Mad as Hell. 4. Repelling prop 13 will not magically built new housing units. There will be a spike, and then flatten out. Then politicians will do what they do best; have money for their pet projects. I honestly wonder if people need to live through a terrible situation in order to feel the effects? And looking for an easy prop to repeal to correct a complex situation is not the right path, but I feel some of you will never get it until you experience it first hand?