9 ms·

The (presumably) unintended consequences of Prop 13 are numerous, and with the passage of time, are increasing. For example, the supply of houses is suppressed

by ghouse 6y ago

The (presumably) unintended consequences of Prop 13 are numerous, and with the passage of time, are increasing. For example, the supply of houses is suppressed because selling ones house and purchasing a new one comes with an increased tax bill. Need to move for a job? Want a smaller house after the kids have moved out? That comes with a tax penalty.

Domenic_S 6y ago
Not always. > Propositions 60/90 amended section 2 of Article XIIIA of the California Constitution to allow a person who is over age 55 to sell his or her principal place of residence and transfer its base year value to a replacement dwelling of equal or lesser value that is purchased or newly constructed within two years of the sale. These propositions are implemented by Revenue and Taxation Code section 69.5. https://www.boe.ca.gov/proptaxes/prop60-90_55over.htm https://www.boe.ca.gov/proptaxes/prop60-90_55over.htm
jmspring 6y ago
At the time, it was needed, and I think there is an aspect of the caps that is also needed given how much the state desires to tax pretty much everything it can. The business ownership of property aspect of Prop 13 should be addressed. I'd be fine with Prop 13 going by the wayside if there was a way to reign in taxes in CA across the board - won't happen.
ghouse 6y ago
And the suppressed supply leads to further price increase. And that feedback loop only further increases the tax penalty for moving. On top of that, when you die, if your children inherit the property, they keep the Prop 13 tax basis (and then the federal government increases the investment basis to the fair market value at the time of death). Best of both worlds! (but horrible public policy)
- njarboe 6y ago
  Prop 13 is slowly recreating a feudal land-holding aristocracy in California. In feudal Europe the aristocracy did not pay taxes on land in exchange for fighting and providing other knights in times of war(a bit of simplification). Other land holders had to pay tax on land. Give California a few more generations or a period of high inflation/hyper-inflation and the situation in California will be similar without the fight for the King occasionally obligation.
foobiekr 6y ago
This particular issue would be solved by extending the tax portability offered by proposition 60 and 90 to those under 55. I'm not saying I like prop 13 or props 60 or 90, but the problem you're noting has already been _partially_ addressed.
- njarboe 6y ago
  You can only keep your previous property tax assessment level if you buy another property that is worth less than the one you sell and you buy in the same county (a few counties join together in this rule). If you want to move from a small house to a more expensive condo, you don't keep your lower tax assessment. If you want to move from your expensive condo in the city to similarly priced ranch in the foothills, you don't keep your lower tax assessment. Prop 13 causes so many problems, but it has been around for so long and has been so important to so many peoples plans that I don't see any reasonable path to repealing it. I think eliminating property tax and state income tax and replacing it with a land value tax would be something to try. Unfortunately, there is no where that has such a tax system and trying to implement it first in such a large and complex economy as California is probably not a good idea.
llsf 6y ago
Prop 13 has lots of consequences, but the issue with housing supply in California is mostly due to zoning. We could build way more by relaxing zoning code, we do not need to repeal the almighty prop 13. It is like the argument I read yesterday in SF Chronicle, saying that to end death by overdose in the City, we need to first end poverty and racism... Sure, it would help, but we still can do better without fighting the near impossible issue first, we can build more even with prop 13. If some people want to stay in their old (cheap property tax) unit, fine. It should not prevent newcomers to move in newly built homes. "Need to move for a job? Want a smaller house after the kids have moved out? That comes with a tax penalty."... not a tax penalty, it is a reset, just like it should be if there would be no prop 13. BTW, if your kids moved out, prop 13 allows you to move if you reached 55yo without any tax impact. So, you could get a smaller house. If you need to move for a job, unless you had your current property for a long time (e.g. >5years), the property tax should be similar... unless maybe you are moving from the country side, to a coastal place, but those are different markets at the first place. Not saying that prop 13 is good, but it is going to be very difficult to repeal (especially with the amendments they added over the years, it anchored it in the culture/business of the state) and in the meantime we need to build way more in California now! We need to review the zoning now and allow way more new constructions of everything (affordable, luxury, anything is good at this point...). It is the only way to lower the cost across California. Build way more than what has been done so far.

by ghouse 6y ago

Domenic_S 6y ago

Not always. > Propositions 60/90 amended section 2 of Article XIIIA of the California Constitution to allow a person who is over age 55 to sell his or her principal place of residence and transfer its base year value to a replacement dwelling of equal or lesser value that is purchased or newly constructed within two years of the sale. These propositions are implemented by Revenue and Taxation Code section 69.5. https://www.boe.ca.gov/proptaxes/prop60-90_55over.htm https://www.boe.ca.gov/proptaxes/prop60-90_55over.htm

jmspring 6y ago

At the time, it was needed, and I think there is an aspect of the caps that is also needed given how much the state desires to tax pretty much everything it can. The business ownership of property aspect of Prop 13 should be addressed. I'd be fine with Prop 13 going by the wayside if there was a way to reign in taxes in CA across the board - won't happen.

ghouse 6y ago

And the suppressed supply leads to further price increase. And that feedback loop only further increases the tax penalty for moving. On top of that, when you die, if your children inherit the property, they keep the Prop 13 tax basis (and then the federal government increases the investment basis to the fair market value at the time of death). Best of both worlds! (but horrible public policy)

njarboe 6y ago
Prop 13 is slowly recreating a feudal land-holding aristocracy in California. In feudal Europe the aristocracy did not pay taxes on land in exchange for fighting and providing other knights in times of war(a bit of simplification). Other land holders had to pay tax on land. Give California a few more generations or a period of high inflation/hyper-inflation and the situation in California will be similar without the fight for the King occasionally obligation.

foobiekr 6y ago

This particular issue would be solved by extending the tax portability offered by proposition 60 and 90 to those under 55. I'm not saying I like prop 13 or props 60 or 90, but the problem you're noting has already been _partially_ addressed.

njarboe 6y ago
You can only keep your previous property tax assessment level if you buy another property that is worth less than the one you sell and you buy in the same county (a few counties join together in this rule). If you want to move from a small house to a more expensive condo, you don't keep your lower tax assessment. If you want to move from your expensive condo in the city to similarly priced ranch in the foothills, you don't keep your lower tax assessment. Prop 13 causes so many problems, but it has been around for so long and has been so important to so many peoples plans that I don't see any reasonable path to repealing it. I think eliminating property tax and state income tax and replacing it with a land value tax would be something to try. Unfortunately, there is no where that has such a tax system and trying to implement it first in such a large and complex economy as California is probably not a good idea.

llsf 6y ago

Prop 13 has lots of consequences, but the issue with housing supply in California is mostly due to zoning. We could build way more by relaxing zoning code, we do not need to repeal the almighty prop 13. It is like the argument I read yesterday in SF Chronicle, saying that to end death by overdose in the City, we need to first end poverty and racism... Sure, it would help, but we still can do better without fighting the near impossible issue first, we can build more even with prop 13. If some people want to stay in their old (cheap property tax) unit, fine. It should not prevent newcomers to move in newly built homes. "Need to move for a job? Want a smaller house after the kids have moved out? That comes with a tax penalty."... not a tax penalty, it is a reset, just like it should be if there would be no prop 13. BTW, if your kids moved out, prop 13 allows you to move if you reached 55yo without any tax impact. So, you could get a smaller house. If you need to move for a job, unless you had your current property for a long time (e.g. >5years), the property tax should be similar... unless maybe you are moving from the country side, to a coastal place, but those are different markets at the first place. Not saying that prop 13 is good, but it is going to be very difficult to repeal (especially with the amendments they added over the years, it anchored it in the culture/business of the state) and in the meantime we need to build way more in California now! We need to review the zoning now and allow way more new constructions of everything (affordable, luxury, anything is good at this point...). It is the only way to lower the cost across California. Build way more than what has been done so far.