4 ms·

What are the other costs associated with it? It costs the same to provide a building with electricity, water, sewage, etc, whether the building is privately wo

What are the other costs associated with it? It costs the same to provide a building with electricity, water, sewage, etc, whether the building is privately worth $10,000 or $10,000,000. Also, isn't that exactly the point of Prop 13? If I bought a house for $500k, and it's worth $5 million tomorrow, I'm liable for the tax increase whether or not the increase is affordable. I thought the point was to allow homeowners the luxury of limiting the insane tax increases to the points of sale, when value was realized.

throwaway2048 8y ago
It absolutely does not cost the same, more expensive real estate means you have to pay people significantly more on average to do jobs (nobody is interested in working jobs that cant make rent), it also means more expensive land purchases and easements for public works projects. Taxes arent meerly defered until sale, they are allowed to rise to market value after the sale is complete, but the government never gets those years of back taxes they would have gotten otherwise.
closeparen 8y ago
You can't pay the 1978 cost of living to a new teacher in 2018. Most things the government buys are vastly more expensive because the workers involved have to live somewhere without the benefit of grandfather status.
- exclusiv 8y ago
  Valid point for sure. But also points out the flaws of property taxes. Teachers and other vital services should come from consumption taxes or other means. Owning a home and having it become more unattractive over time while you have paper gains is crazy. Esp. when paper losses don't go the other way.
  - dragonwriter 8y ago
    > Valid point for sure. But also points out the flaws of property taxes. You fail to make an argument for this. > Teachers and other vital services should come from consumption taxes or other means. In practice on CA, they are. This doesn't make things better than when they were done by property taxes. > Owning a home and having it become more unattractive over time while you have paper gains is crazy. It's a strong incentive for transactions which promote efficiency in the sense of property being in the hands of those who will derive most utility from it. I'm not sure that's crazy, though, especially in the case of non-residential property. > Esp. when paper losses don't go the other way. Without Prop 13, paper gains and losses are symmetric with regard to tax effect; with Prop 13 they become asymmetric, as declines in fair market value are immediately and fully reflected while increases are limited.
    - exclusiv 8y ago
      > It's a strong incentive for transactions which promote efficiency in the sense of property being in the hands of those who will derive most utility from it. Strongly disagree here. In CA many people built their houses themselves after the war and don't want to move as an example. You can't argue who would get more utility out of it as a blanket statement. Maybe willing to pay more to live there but not utility. Property taxes almost never go down. They are not symmetric in practice. It's pulling teeth to get a reassessment in your favor. Regarding the core issue of property taxes for vital services - one of the flaws is that areas with lower home values have worse services. Nothing will ever change if property taxes is the primary fundraiser for local services. The other flaw is in practice - budgets don't need to change drastically from year to year but they do. And that's pushed onto homeowners. And what if it needs to change for a valid reason but home values have plummeted? Well that's why they give you problems trying to reassess on a downturn.
- Lazare 8y ago
  That's a totally legit theory. Maybe Prop 13 is so crippling California's ability to raise taxes that they can't raise amounts similar to what other states can raise, and so literally can't afford to provide the services that other state's can raise. Let's check: https://www.taxpolicycenter.org/statistics/state-and-local-tax-revenue-percentage-personal-income https://www.taxpolicycenter.org/statistics/state-and-local-t... Nope! State and local taxes averaged around 10.08% of personal income in 2015 across the US, and California was sitting at 10.72%, comfortably above the average and at the 15th highest, comfortably above the median. And if we adjust for cost of living versus wages, California is only midrange: http://time.com/money/5177566/average-income-every-state-real-value/ http://time.com/money/5177566/average-income-every-state-rea... So yes, it costs more to live in California, but wages are higher, and then the state takes an unusually high slice of those wages. > You can't pay the 1978 cost of living to a new teacher in 2018. Good thing that the California state and local governments are flush with cash then. (Or would be, absent mismanagement...)
  - throwaway2048 8y ago
    the discussion is about local governments, mixing in the state level tax numbers is pretty misleading.
    - Lazare 8y ago
      The state as a whole has the ability to raise perfectly reasonable amounts of cash, and is currently doing so. So... 1) If it's not being distributed between the levels in an efficient or fair manner, that seems like a pretty simple fix. There are already mechanisms for intergovernmental transfers from state to city governments; does California need to increase their transfers a bit? 2) California is already a pretty high-tax state. Shifting the burden from income taxes (that flow largely to the state) to property taxes (that flow to cities) might be good, but will simply uncapping the ability of cities to raise money do this? In short, I think it's a mistake to conflate concerns about "how much tax can California raise" with "is the money flowing to the right level". Keep in mind, for the US as a whole, the largest source of revenue for local governments (over 1/3) is intergovernmental transfers, overwhelmingly (88%) from state government (https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-local-governments https://www.taxpolicycenter.org/briefing-book/what-are-sourc...). There is no expectation that cities can fund their operations purely from property taxes, and this isn't how cities work in the US in any state. All cities rely on transfers from the state government, and the California state government is raising a lot of cash. If it's failing to transfer it to cities the way it should (which remains to be demonstrated!), this has nothing to do with Prop 13.
blackflame7000 8y ago
The hotels in Las Vegas would beg to differ.
dragonwriter 8y ago
> What are the other costs associated with it? Anything that has a non-remote labor component, since the people doing work in a region have to pay the local cost of living, including housing costs. > Also, isn't that exactly the point of Prop 13? Yes, crippling local government this way is exactly the point of Prop 13.

throwaway2048 8y ago

It absolutely does not cost the same, more expensive real estate means you have to pay people significantly more on average to do jobs (nobody is interested in working jobs that cant make rent), it also means more expensive land purchases and easements for public works projects. Taxes arent meerly defered until sale, they are allowed to rise to market value after the sale is complete, but the government never gets those years of back taxes they would have gotten otherwise.

closeparen 8y ago

You can't pay the 1978 cost of living to a new teacher in 2018. Most things the government buys are vastly more expensive because the workers involved have to live somewhere without the benefit of grandfather status.

exclusiv 8y ago
Valid point for sure. But also points out the flaws of property taxes. Teachers and other vital services should come from consumption taxes or other means. Owning a home and having it become more unattractive over time while you have paper gains is crazy. Esp. when paper losses don't go the other way.
- dragonwriter 8y ago
  > Valid point for sure. But also points out the flaws of property taxes. You fail to make an argument for this. > Teachers and other vital services should come from consumption taxes or other means. In practice on CA, they are. This doesn't make things better than when they were done by property taxes. > Owning a home and having it become more unattractive over time while you have paper gains is crazy. It's a strong incentive for transactions which promote efficiency in the sense of property being in the hands of those who will derive most utility from it. I'm not sure that's crazy, though, especially in the case of non-residential property. > Esp. when paper losses don't go the other way. Without Prop 13, paper gains and losses are symmetric with regard to tax effect; with Prop 13 they become asymmetric, as declines in fair market value are immediately and fully reflected while increases are limited.
  - exclusiv 8y ago
    > It's a strong incentive for transactions which promote efficiency in the sense of property being in the hands of those who will derive most utility from it. Strongly disagree here. In CA many people built their houses themselves after the war and don't want to move as an example. You can't argue who would get more utility out of it as a blanket statement. Maybe willing to pay more to live there but not utility. Property taxes almost never go down. They are not symmetric in practice. It's pulling teeth to get a reassessment in your favor. Regarding the core issue of property taxes for vital services - one of the flaws is that areas with lower home values have worse services. Nothing will ever change if property taxes is the primary fundraiser for local services. The other flaw is in practice - budgets don't need to change drastically from year to year but they do. And that's pushed onto homeowners. And what if it needs to change for a valid reason but home values have plummeted? Well that's why they give you problems trying to reassess on a downturn.
Lazare 8y ago
That's a totally legit theory. Maybe Prop 13 is so crippling California's ability to raise taxes that they can't raise amounts similar to what other states can raise, and so literally can't afford to provide the services that other state's can raise. Let's check: https://www.taxpolicycenter.org/statistics/state-and-local-tax-revenue-percentage-personal-income https://www.taxpolicycenter.org/statistics/state-and-local-t... Nope! State and local taxes averaged around 10.08% of personal income in 2015 across the US, and California was sitting at 10.72%, comfortably above the average and at the 15th highest, comfortably above the median. And if we adjust for cost of living versus wages, California is only midrange: http://time.com/money/5177566/average-income-every-state-real-value/ http://time.com/money/5177566/average-income-every-state-rea... So yes, it costs more to live in California, but wages are higher, and then the state takes an unusually high slice of those wages. > You can't pay the 1978 cost of living to a new teacher in 2018. Good thing that the California state and local governments are flush with cash then. (Or would be, absent mismanagement...)
- throwaway2048 8y ago
  the discussion is about local governments, mixing in the state level tax numbers is pretty misleading.
  - Lazare 8y ago
    The state as a whole has the ability to raise perfectly reasonable amounts of cash, and is currently doing so. So... 1) If it's not being distributed between the levels in an efficient or fair manner, that seems like a pretty simple fix. There are already mechanisms for intergovernmental transfers from state to city governments; does California need to increase their transfers a bit? 2) California is already a pretty high-tax state. Shifting the burden from income taxes (that flow largely to the state) to property taxes (that flow to cities) might be good, but will simply uncapping the ability of cities to raise money do this? In short, I think it's a mistake to conflate concerns about "how much tax can California raise" with "is the money flowing to the right level". Keep in mind, for the US as a whole, the largest source of revenue for local governments (over 1/3) is intergovernmental transfers, overwhelmingly (88%) from state government (https://www.taxpolicycenter.org/briefing-book/what-are-sources-revenue-local-governments https://www.taxpolicycenter.org/briefing-book/what-are-sourc...). There is no expectation that cities can fund their operations purely from property taxes, and this isn't how cities work in the US in any state. All cities rely on transfers from the state government, and the California state government is raising a lot of cash. If it's failing to transfer it to cities the way it should (which remains to be demonstrated!), this has nothing to do with Prop 13.

blackflame7000 8y ago

The hotels in Las Vegas would beg to differ.

dragonwriter 8y ago

> What are the other costs associated with it? Anything that has a non-remote labor component, since the people doing work in a region have to pay the local cost of living, including housing costs. > Also, isn't that exactly the point of Prop 13? Yes, crippling local government this way is exactly the point of Prop 13.