4 ms·

It's like they want a new aristocracy. Which I suppose is the truth; people with the wealth and power would be happy with that.

Kalium 8y ago
I genuinely don't think that was the idea. Prop 13 was passed in an era when property values were increasingly rapidly and California was a fairly conservative place. The idea was also promoted by Howard Jarvis in an effort to choke state revenues and keep the state government small (oops). Of course, it quickly became the new normal. Now getting rid of it is the third rail of California politics.
- burfog 8y ago
  You touch upon a fundamental problem with the tax calculation. There is no reason for the city budget to increase by x% just because the supposed home values (could be a bubble) happen to increase by x%. It's not as if the other costs of running a government increased by x%. (in the long term there is a smaller increase due to salaries, but the city budget isn't normally spent buying up land) So a real estate bubble hits, home owners are hurt, and the government gets used to what they think is the new normal. The government takes on wasteful obligations, hiring lots of people and failing to push back on pension demands. Once the bubble pops, the city budget is in deep trouble. Something must be cut. It isn't easy to lay off employees and cut back the pensions, so the city increases the tax rate. Repeat that again with a new bubble, again and again, and the rates only go up. It's a ratchet effect, with rates going up but never down. Voters chose a simplistic way to put a stop to this problem. Something was needed, but the chosen solution is pretty bad. The fact that people can't trade houses without seeing rate increases means that people commute too far, clogging up the roads. Newcomers also get hit, with cities imposing huge impact fees and generally discouraging housing because the housing doesn't pay for itself due to Prop 13. What was really needed was a restriction on the total city budget. Instead of setting a tax rate and then calculating the budget, we could set the budget and then calculate the tax rate. Applying the restriction to the total city budget serves the necessary purpose of putting a stop to out-of-control spending.
  - skybrian 8y ago
    I'm unconvinced that most cities are all that generous, with one glaring exception: pensions. Even when they are generous, for current spending (money raised and spent in the same year) it doesn't seem like a long-term problem, because they can cut back later. There's even a sense in which spare capacity in good times makes it easier to find low-priority items to cut back on. If everything is already high-priority, what do you do? But where the cost is locked in, far in the future, and variable, city governments are clearly not good at planning ahead. I'm in favor of generous retirement benefits, but using a 401k-like plan where all costs to the city are up front. Most newer businesses moved to that long ago.
    - StudentStuff 8y ago
      Defined benefit plans like pensions aren't generous, its merely the workers negotiating with the employer to put money aside pre-tax from their pay and invest it. This all goes sideways when these funds are mismanaged & underfunded, which organizations have an incentive to do as it can be a nice way to juice profits immediately. Wage theft is shameful in any color, and what has happened to American Pensions is stealing earned wages from workers retirement.
      - lamarpye 8y ago
        I don't under how government pensions are stolen. If the funds are mismanaged, the taxpayer is responsible for making up the difference.
  - peter303 8y ago
    Colorado limits the total increase in tax revenue to the sum of the population increase and inflation increase. This typically 4% a year. Property taxes are the assessed value scaled to this total. Its possible for the tax to decrease even if the assessed value increases, if the increase is less than the average increase. This model of taxation doesnt take into account that government gradually provides more new services, like more healthcare etc.
  - megaremote 8y ago
- opportune 8y ago
  I think getting rid of it won’t be that hard. For corporations, just slowly increase property taxes to what they should be over 10 years. For families, let each couple only own one grandfathered property each, and when they pass away, bring the property taxes up to where they should be. That way you don’t actually price any people out of the homes they currently own (which is the whole emotional issue that nominally created prop 13 in the first place)
  - Kalium 8y ago
    It's a good idea. I believe there's actually a prop on the next ballot to roll back prop 13 on corporate offices. For my own part, I've found that people are also emotionally attached to the idea of being able to raise their own children in the family home. Anecdotally, people often have trouble with the idea that the retired teacher next door in their house is a multi-millionaire, leading to some people refusing to regard residences as meaningful property.
    - crankylinuxuser 8y ago
      Why would non-people people get a benefit, but real flesh people not?
      - Kalium 8y ago
        I'm afraid I don't understand your question. Can you clarify? I'm going to assume it's a reference to my comment about corporate offices and Prop 13. The measure I referred to is one that will end Prop 13 protections on corporate offices. As a result, real flesh people will continue to benefit from Prop 13 and non-people people will not.
        crankylinuxuser 8y ago
        Ah, I misunderstood then. I thought the benefit would go to the companies, while the individual people would still suffer. That's how it normally goes in this country, so you can probably understand why I was confused.

Kalium 8y ago

I genuinely don't think that was the idea. Prop 13 was passed in an era when property values were increasingly rapidly and California was a fairly conservative place. The idea was also promoted by Howard Jarvis in an effort to choke state revenues and keep the state government small (oops). Of course, it quickly became the new normal. Now getting rid of it is the third rail of California politics.

burfog 8y ago
You touch upon a fundamental problem with the tax calculation. There is no reason for the city budget to increase by x% just because the supposed home values (could be a bubble) happen to increase by x%. It's not as if the other costs of running a government increased by x%. (in the long term there is a smaller increase due to salaries, but the city budget isn't normally spent buying up land) So a real estate bubble hits, home owners are hurt, and the government gets used to what they think is the new normal. The government takes on wasteful obligations, hiring lots of people and failing to push back on pension demands. Once the bubble pops, the city budget is in deep trouble. Something must be cut. It isn't easy to lay off employees and cut back the pensions, so the city increases the tax rate. Repeat that again with a new bubble, again and again, and the rates only go up. It's a ratchet effect, with rates going up but never down. Voters chose a simplistic way to put a stop to this problem. Something was needed, but the chosen solution is pretty bad. The fact that people can't trade houses without seeing rate increases means that people commute too far, clogging up the roads. Newcomers also get hit, with cities imposing huge impact fees and generally discouraging housing because the housing doesn't pay for itself due to Prop 13. What was really needed was a restriction on the total city budget. Instead of setting a tax rate and then calculating the budget, we could set the budget and then calculate the tax rate. Applying the restriction to the total city budget serves the necessary purpose of putting a stop to out-of-control spending.
- skybrian 8y ago
  I'm unconvinced that most cities are all that generous, with one glaring exception: pensions. Even when they are generous, for current spending (money raised and spent in the same year) it doesn't seem like a long-term problem, because they can cut back later. There's even a sense in which spare capacity in good times makes it easier to find low-priority items to cut back on. If everything is already high-priority, what do you do? But where the cost is locked in, far in the future, and variable, city governments are clearly not good at planning ahead. I'm in favor of generous retirement benefits, but using a 401k-like plan where all costs to the city are up front. Most newer businesses moved to that long ago.
  - StudentStuff 8y ago
    Defined benefit plans like pensions aren't generous, its merely the workers negotiating with the employer to put money aside pre-tax from their pay and invest it. This all goes sideways when these funds are mismanaged & underfunded, which organizations have an incentive to do as it can be a nice way to juice profits immediately. Wage theft is shameful in any color, and what has happened to American Pensions is stealing earned wages from workers retirement.
    - lamarpye 8y ago
      I don't under how government pensions are stolen. If the funds are mismanaged, the taxpayer is responsible for making up the difference.
- peter303 8y ago
  Colorado limits the total increase in tax revenue to the sum of the population increase and inflation increase. This typically 4% a year. Property taxes are the assessed value scaled to this total. Its possible for the tax to decrease even if the assessed value increases, if the increase is less than the average increase. This model of taxation doesnt take into account that government gradually provides more new services, like more healthcare etc.
- megaremote 8y ago
opportune 8y ago
I think getting rid of it won’t be that hard. For corporations, just slowly increase property taxes to what they should be over 10 years. For families, let each couple only own one grandfathered property each, and when they pass away, bring the property taxes up to where they should be. That way you don’t actually price any people out of the homes they currently own (which is the whole emotional issue that nominally created prop 13 in the first place)
- Kalium 8y ago
  It's a good idea. I believe there's actually a prop on the next ballot to roll back prop 13 on corporate offices. For my own part, I've found that people are also emotionally attached to the idea of being able to raise their own children in the family home. Anecdotally, people often have trouble with the idea that the retired teacher next door in their house is a multi-millionaire, leading to some people refusing to regard residences as meaningful property.
  - crankylinuxuser 8y ago
    Why would non-people people get a benefit, but real flesh people not?
    - Kalium 8y ago
      I'm afraid I don't understand your question. Can you clarify? I'm going to assume it's a reference to my comment about corporate offices and Prop 13. The measure I referred to is one that will end Prop 13 protections on corporate offices. As a result, real flesh people will continue to benefit from Prop 13 and non-people people will not.
      - crankylinuxuser 8y ago
        Ah, I misunderstood then. I thought the benefit would go to the companies, while the individual people would still suffer. That's how it normally goes in this country, so you can probably understand why I was confused.