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I think it would need more ridiculous for your poor neighbor to be forced to move out just because a bunch of rich people paid a whole lot for neighboring house

I think it would need more ridiculous for your poor neighbor to be forced to move out just because a bunch of rich people paid a whole lot for neighboring houses and inflated the property values. Prop 13 at least gives you some comfort that the same thing will not happen to you—there is less uncertainty in your future with regard to your expenses (assuming your property tax is the 2nd largest bill after your mortgage).

jedberg 7y ago
This is a red herring by the anti-tax zealots. Somehow in the 49 states without prop 13 this doesn’t happen. Worst case, the retiree can downsize their home and cash out their equity, freeing what is most likely an oversized property for a younger family, or they can take out a home equity line to pay the taxes. And luckily because of the rising property values it would be really easy to get that equity line since the LTV would be really low!
- masonic 7y ago
  cash out their equity ... which means they pay income taxes on the unindexed gain (not adjusted for inflation). When you combine that tax hit with the cost of a replacement property, and it being taxed at the full current rate, it's not worth it. Those voters who voted No on Prop 5[0], which would have made tax basis portable statewide, have nobody else to blame for the low property turnover among long held real property. [0] https://ballotpedia.org/California_Proposition_5,_Property_Tax_Transfer_Initiative_(2018) https://ballotpedia.org/California_Proposition_5,_Property_T...
JMTQp8lwXL 7y ago
If everyone's home value doubles overnight, the costs of schools, fire departments, and other local expenses funded by property taxes don't also double. They might rise with inflation (as do all goods and services), but not more.
- mertd 7y ago
  Where will the teachers and firefighters live if the cost of housing doubles but their pay only grows commensurate to inflation?

jedberg 7y ago

This is a red herring by the anti-tax zealots. Somehow in the 49 states without prop 13 this doesn’t happen. Worst case, the retiree can downsize their home and cash out their equity, freeing what is most likely an oversized property for a younger family, or they can take out a home equity line to pay the taxes. And luckily because of the rising property values it would be really easy to get that equity line since the LTV would be really low!

masonic 7y ago
cash out their equity ... which means they pay income taxes on the unindexed gain (not adjusted for inflation). When you combine that tax hit with the cost of a replacement property, and it being taxed at the full current rate, it's not worth it. Those voters who voted No on Prop 5[0], which would have made tax basis portable statewide, have nobody else to blame for the low property turnover among long held real property. [0] https://ballotpedia.org/California_Proposition_5,_Property_Tax_Transfer_Initiative_(2018) https://ballotpedia.org/California_Proposition_5,_Property_T...

JMTQp8lwXL 7y ago

If everyone's home value doubles overnight, the costs of schools, fire departments, and other local expenses funded by property taxes don't also double. They might rise with inflation (as do all goods and services), but not more.

mertd 7y ago
Where will the teachers and firefighters live if the cost of housing doubles but their pay only grows commensurate to inflation?