4 ms·

Perhaps it's something to do with how California has lower property taxes (partially due to Prop. 13) and higher income taxes-- but those income taxes go to Sac

Perhaps it's something to do with how California has lower property taxes (partially due to Prop. 13) and higher income taxes-- but those income taxes go to Sacramento, not to municipalities. In other parts of the country, municipal treasuries grow as volume and prices of residential units grow.

option 7y ago
California does not have low property taxes. Tax = rate * assessed_value. assessed_value is huge if you purchased during last 7 years and goes up 2% every year
- almost_usual 7y ago
  Purchased in the last 7 years is pretty recent. Most home owners bought 15+ years ago. If you're buying within the last decade you're probably paying a transplant premium.
  - mktmkr 7y ago
    From 1985 to 2008 the median tenure of a family in a home was 6 years. This figure only started going up in recent years, due to housing crisis. Americans have traditionally expected to move house 8-9 times in their adult life. It is certainly not true that "most" people have tenure of 15 years or more. That is the 90th percentile tenure.
    - wahern 7y ago
      AFAICT those are the national figures from a National Association of Realtors (NAR) report. I can't find figures for California. EDIT: The closest I could find was an ambiguous stat in a CNN article, https://money.cnn.com/2017/04/27/real_estate/home-prices-sellers-market/index.html https://money.cnn.com/2017/04/27/real_estate/home-prices-sel..., which cites an average of a little over 4 years (2000-20007) that might be for San Jose. However, there's wording that suggests such figures are computed from the tenure of sellers, not across all homeowners, in which case the statistic seem useless (imagine one guy selling every two years and nobody else--that would be a 2-year tenture average but in fact nobody but him is moving). Would nice if the NAR report was freely available.
seanmcdirmid 7y ago
California does feedback some income tax revenue to localities (mostly to schools).
canuelaborate 7y ago
Can you elaborate on what you mean by "those income taxes go to Scaramento"? I mean the state has to coordinate the money it collects, but doesn't it use that money for state-wide projects like roads, dams, and other infrastructure? I live in Los Angeles and pay CA income tax. I'm perfectly fine with the state using some of that money outside of Los Angeles. I often travel outside of Los Angeles, so I'm getting use out of whatever they make with it (assuming it's not just put into politicians' pockets). What is Sacramento doing with the income tax revenue that you don't like?
- i_am_proteus 7y ago
  The difference between paying $9000 to Sacramento and $1000 to LA or paying $5000 to Sacramento and $5000 to LA. In the latter system, the local government gets direct control over the spending, as opposed to needing to lobby the state government for funds for road improvements, schools, etc. For instance, in California, the majority of K-12 funding comes from Sacramento. In most of the rest of the country, the majority of K-12 funding comes from local, largely property, taxes-- exceptions being low-performing schools targeted for improvement with state funds.
- inferiorhuman 7y ago
  Can you elaborate on what you mean by "those income taxes go to Scaramento"? I mean the state has to coordinate the money it collects, but doesn't it use that money for state-wide projects like roads, dams, and other infrastructure? I live in Los Angeles and pay CA income tax. I'm perfectly fine with the state using some of that money outside of Los Angeles. I often travel outside of Los Angeles, so I'm getting use out of whatever they make with it (assuming it's not just put into politicians' pockets). What is Sacramento doing with the income tax revenue that you don't like? The big issue is that cities and counties don't typically collect taxes in California. There are a few statewide organizations (Franchise Tax Board, Board of Equalization) that do instead. There are also tight limits on sales tax (cities can levy up to ~2% beyond the base rate for specific things). Essentially what happens is that the state collects taxes and doles the monies out to cities and counties at their discretion.
wahern 7y ago
From what I've read municipalities dislike residential because of the increased costs, not because of the poor tax revenue. Both commercial and residential can bring it windfall revenues at today's market prices, and Prop 13 applies to commercial property, anyhow. Residential simply has higher infrastructure costs--schools, heavier water & sewage usage, etc. Plus office complexes don't enrage NIMBYs the way residential projects do. Dense office space equates with rich commuters; dense residential space equates with young and poor people. So commercial pencils out better fiscally, and politically there's less pushback.
- dredmorbius 7y ago
  Retail generates sales tax. Residential doesn't.
Gibbon1 7y ago
California's property tax rate is too low to cover the services that residents use. That's the rotten pistachio right there.

option 7y ago

California does not have low property taxes. Tax = rate * assessed_value. assessed_value is huge if you purchased during last 7 years and goes up 2% every year

almost_usual 7y ago
Purchased in the last 7 years is pretty recent. Most home owners bought 15+ years ago. If you're buying within the last decade you're probably paying a transplant premium.
- mktmkr 7y ago
  From 1985 to 2008 the median tenure of a family in a home was 6 years. This figure only started going up in recent years, due to housing crisis. Americans have traditionally expected to move house 8-9 times in their adult life. It is certainly not true that "most" people have tenure of 15 years or more. That is the 90th percentile tenure.
  - wahern 7y ago
    AFAICT those are the national figures from a National Association of Realtors (NAR) report. I can't find figures for California. EDIT: The closest I could find was an ambiguous stat in a CNN article, https://money.cnn.com/2017/04/27/real_estate/home-prices-sellers-market/index.html https://money.cnn.com/2017/04/27/real_estate/home-prices-sel..., which cites an average of a little over 4 years (2000-20007) that might be for San Jose. However, there's wording that suggests such figures are computed from the tenure of sellers, not across all homeowners, in which case the statistic seem useless (imagine one guy selling every two years and nobody else--that would be a 2-year tenture average but in fact nobody but him is moving). Would nice if the NAR report was freely available.

seanmcdirmid 7y ago

California does feedback some income tax revenue to localities (mostly to schools).

canuelaborate 7y ago

Can you elaborate on what you mean by "those income taxes go to Scaramento"? I mean the state has to coordinate the money it collects, but doesn't it use that money for state-wide projects like roads, dams, and other infrastructure? I live in Los Angeles and pay CA income tax. I'm perfectly fine with the state using some of that money outside of Los Angeles. I often travel outside of Los Angeles, so I'm getting use out of whatever they make with it (assuming it's not just put into politicians' pockets). What is Sacramento doing with the income tax revenue that you don't like?

i_am_proteus 7y ago
The difference between paying $9000 to Sacramento and $1000 to LA or paying $5000 to Sacramento and $5000 to LA. In the latter system, the local government gets direct control over the spending, as opposed to needing to lobby the state government for funds for road improvements, schools, etc. For instance, in California, the majority of K-12 funding comes from Sacramento. In most of the rest of the country, the majority of K-12 funding comes from local, largely property, taxes-- exceptions being low-performing schools targeted for improvement with state funds.
inferiorhuman 7y ago
Can you elaborate on what you mean by "those income taxes go to Scaramento"? I mean the state has to coordinate the money it collects, but doesn't it use that money for state-wide projects like roads, dams, and other infrastructure? I live in Los Angeles and pay CA income tax. I'm perfectly fine with the state using some of that money outside of Los Angeles. I often travel outside of Los Angeles, so I'm getting use out of whatever they make with it (assuming it's not just put into politicians' pockets). What is Sacramento doing with the income tax revenue that you don't like? The big issue is that cities and counties don't typically collect taxes in California. There are a few statewide organizations (Franchise Tax Board, Board of Equalization) that do instead. There are also tight limits on sales tax (cities can levy up to ~2% beyond the base rate for specific things). Essentially what happens is that the state collects taxes and doles the monies out to cities and counties at their discretion.

wahern 7y ago

From what I've read municipalities dislike residential because of the increased costs, not because of the poor tax revenue. Both commercial and residential can bring it windfall revenues at today's market prices, and Prop 13 applies to commercial property, anyhow. Residential simply has higher infrastructure costs--schools, heavier water & sewage usage, etc. Plus office complexes don't enrage NIMBYs the way residential projects do. Dense office space equates with rich commuters; dense residential space equates with young and poor people. So commercial pencils out better fiscally, and politically there's less pushback.

dredmorbius 7y ago
Retail generates sales tax. Residential doesn't.

Gibbon1 7y ago

California's property tax rate is too low to cover the services that residents use. That's the rotten pistachio right there.