7 ms·

Property taxes in California are among the lowest in the nation.

by danhak 6y ago

bluedevil2k 6y ago
And the income tax is by far the highest, currently at 13.3% compared to 2nd place Hawaii’s 11%. Sales tax averages to 8.5%, good for 9th highest in the country.
- danhak 6y ago
  > And the income tax is by far the highest, currently at 13.3% If you’re earning over $1,000,000 per year, yes. SF median income is below 100K.
  - blisterpeanuts 6y ago
    SF also charges a city income tax of 1.5% (flat rate).
    - dmode 6y ago
      SF has no income tax. This is incorrect
      - brandur 6y ago
        Your parent's comment is out of date, but what you said isn't a fair representation either. The 1.5% tax they're talking was the 1.5% payroll tax that SF had in place until 2012 [1]. Payroll tax isn't quite the same as an income tax because the onus isn't on the employee to figure it out like state and federal, but it still did cost most businesses in SF an extra 1.5% on every employee's salary to be there. Prop E shifted most of this to a gross receipts tax instead (although there's still a 0.38% payroll expense tax in place [2]). Again, the numbers your parent is talking about are out of date, but the spirit of it is right in that it does just fundamentally cost a company quite a bit more to have an employee in SF. --- [1] https://sftreasurer.org/business/taxes-fees/gross-receipts-tax-gr https://sftreasurer.org/business/taxes-fees/gross-receipts-t... [2] https://sftreasurer.org/business/taxes-fees/payroll-expense-tax-py https://sftreasurer.org/business/taxes-fees/payroll-expense-...
- mindslight 6y ago
  At $160k the marginal income tax rate in California is 33.3%, whereas the marginal income tax rate in Nevada or Washington is still 24%. As your income goes up, this ratio goes down. Focusing on the comparatively small state portions of income tax is a red herring, given that money going to the state at least has a better chance of paying for services you value.
jurassic 6y ago
Property taxes are not that relevant for the masses who can't afford to buy property.
- danhak 6y ago
  But...that’s who this article is discussing: homeowners who are listing their properties for sale in higher numbers.
- x87678r 6y ago
  It is because a big chunk of your rent goes to property taxes. Where I am property taxes are $1k a month for a $3k/mo apartment.
  - jeffbee 6y ago
    Property tax is not an input to setting the market rate of rental housing, though. Changing the tax does not change the rent. Ask yourself if your rent would decrease if they decreased the taxes. Rent is a simple supply/demand system.
    - bluedevil2k 6y ago
      Totally false. Changing the tax rate will definitely change the rent. A property tax increase will increase the floor that tenants (edit: meant landlords) would be willing to rent their places out across the entire city as they look to protect their profit margins. You don't think that a landlord will see a property tax increase and think "oh well, I guess I'm going to make less money from now on". Rent is definitely not a simple supply/demand situation as there are many hands in on the equation (taxes, rent control, zoning).
      - jeffbee 6y ago
        Nope, you're wrong. Your argument rests on the idea that landlords (I assume you meant landlords where you said "tenants") have the ability to raise prices. If they did, they would have already raised them. Landlords who are not subject to rent controls charge whatever the market will bear, and no less. Therefore property tax has no bearing on rent.
unpolloloco 6y ago
On a percentage basis. 1% of $1m is still way more than 4% of $150k
- TheOtherHobbes 6y ago
  That's a difference of $10k vs $6k - which is way less than the percentage difference in the relative value of the homes.
- brandur 6y ago
  It's also worth calling out that when people make claims about lowest in the nation, they're almost certainly calculating that based off average price paid across all homes in the state. Thanks to Prop 13, many homeowners do pay quite tiny property taxes. But this turns out to be extremely nefarious because along with removing a fair tax base and liquidity from the market, it also means that the disproportionate burden for paying California property tax is placed on new home buyers, who are often younger people/young families. New entrants are often paying incredible levels of property tax (as it's a percentage of the already highly inflated prices), and because they're disproportionately more likely to be working, they're also the ones paying state and federal tax, along with the miscellaneous municipal taxes which can also be quite high in cities like San Francisco. Meanwhile, legacy owners make off like bandits. I looked up the property I rent in once, owned by a large real estate holder that's decades old, and it was assessed at a few hundred thousand — for a 5 unit building in central SF. I don't know what the actual value would be, but it'd be closer to a ballpark of $3 to $6M. A differential of ~20x, and this isn't uncommon. It's this framework that gets you to "lowest in the nation". I tend to think about it as _both_ the highest and the lowest in the nation, largely determined based on when your family moved here.
vondur 6y ago
Yeah, but if your property is worth a lot, it still can be expensive.
novok 6y ago
Only if you've owned a house for decades. If you bought recently, then your property taxes can effectively be %1.5 with all the extras they add to bills.

Property taxes in California are among the lowest in the nation.

by danhak 6y ago

Property taxes in California are among the lowest in the nation.

And the income tax is by far the highest, currently at 13.3% compared to 2nd place Hawaii’s 11%. Sales tax averages to 8.5%, good for 9th highest in the country.

danhak 6y ago
> And the income tax is by far the highest, currently at 13.3% If you’re earning over $1,000,000 per year, yes. SF median income is below 100K.
- blisterpeanuts 6y ago
  SF also charges a city income tax of 1.5% (flat rate).
  - dmode 6y ago
    SF has no income tax. This is incorrect
    - brandur 6y ago
      Your parent's comment is out of date, but what you said isn't a fair representation either. The 1.5% tax they're talking was the 1.5% payroll tax that SF had in place until 2012 [1]. Payroll tax isn't quite the same as an income tax because the onus isn't on the employee to figure it out like state and federal, but it still did cost most businesses in SF an extra 1.5% on every employee's salary to be there. Prop E shifted most of this to a gross receipts tax instead (although there's still a 0.38% payroll expense tax in place [2]). Again, the numbers your parent is talking about are out of date, but the spirit of it is right in that it does just fundamentally cost a company quite a bit more to have an employee in SF. --- [1] https://sftreasurer.org/business/taxes-fees/gross-receipts-tax-gr https://sftreasurer.org/business/taxes-fees/gross-receipts-t... [2] https://sftreasurer.org/business/taxes-fees/payroll-expense-tax-py https://sftreasurer.org/business/taxes-fees/payroll-expense-...
mindslight 6y ago
At $160k the marginal income tax rate in California is 33.3%, whereas the marginal income tax rate in Nevada or Washington is still 24%. As your income goes up, this ratio goes down. Focusing on the comparatively small state portions of income tax is a red herring, given that money going to the state at least has a better chance of paying for services you value.

jurassic 6y ago

Property taxes are not that relevant for the masses who can't afford to buy property.

danhak 6y ago
But...that’s who this article is discussing: homeowners who are listing their properties for sale in higher numbers.
x87678r 6y ago
It is because a big chunk of your rent goes to property taxes. Where I am property taxes are $1k a month for a $3k/mo apartment.
- jeffbee 6y ago
  Property tax is not an input to setting the market rate of rental housing, though. Changing the tax does not change the rent. Ask yourself if your rent would decrease if they decreased the taxes. Rent is a simple supply/demand system.
  - bluedevil2k 6y ago
    Totally false. Changing the tax rate will definitely change the rent. A property tax increase will increase the floor that tenants (edit: meant landlords) would be willing to rent their places out across the entire city as they look to protect their profit margins. You don't think that a landlord will see a property tax increase and think "oh well, I guess I'm going to make less money from now on". Rent is definitely not a simple supply/demand situation as there are many hands in on the equation (taxes, rent control, zoning).
    - jeffbee 6y ago
      Nope, you're wrong. Your argument rests on the idea that landlords (I assume you meant landlords where you said "tenants") have the ability to raise prices. If they did, they would have already raised them. Landlords who are not subject to rent controls charge whatever the market will bear, and no less. Therefore property tax has no bearing on rent.

unpolloloco 6y ago

On a percentage basis. 1% of $1m is still way more than 4% of $150k

TheOtherHobbes 6y ago
That's a difference of $10k vs $6k - which is way less than the percentage difference in the relative value of the homes.
brandur 6y ago
It's also worth calling out that when people make claims about lowest in the nation, they're almost certainly calculating that based off average price paid across all homes in the state. Thanks to Prop 13, many homeowners do pay quite tiny property taxes. But this turns out to be extremely nefarious because along with removing a fair tax base and liquidity from the market, it also means that the disproportionate burden for paying California property tax is placed on new home buyers, who are often younger people/young families. New entrants are often paying incredible levels of property tax (as it's a percentage of the already highly inflated prices), and because they're disproportionately more likely to be working, they're also the ones paying state and federal tax, along with the miscellaneous municipal taxes which can also be quite high in cities like San Francisco. Meanwhile, legacy owners make off like bandits. I looked up the property I rent in once, owned by a large real estate holder that's decades old, and it was assessed at a few hundred thousand — for a 5 unit building in central SF. I don't know what the actual value would be, but it'd be closer to a ballpark of $3 to $6M. A differential of ~20x, and this isn't uncommon. It's this framework that gets you to "lowest in the nation". I tend to think about it as _both_ the highest and the lowest in the nation, largely determined based on when your family moved here.

vondur 6y ago

Yeah, but if your property is worth a lot, it still can be expensive.

novok 6y ago

Only if you've owned a house for decades. If you bought recently, then your property taxes can effectively be %1.5 with all the extras they add to bills.