7 ms·

Counterpoint: Why should your property taxes go up just because the market around you skyrockets, when this is completely outside of your control? The bay area

Counterpoint: Why should your property taxes go up just because the market around you skyrockets, when this is completely outside of your control? The bay area is a prime example of this.

deleted 6y ago
[deleted]
SamReidHughes 6y ago
Because everybody else's does. If ownership transfer didn't reset the rates, it would be a slightly different story. Edit: In that, it'd still be something that makes an economist cringe, and it'd still be "unfair" but in fewer ways.
twblalock 6y ago
Maybe the solution is to stop making property tax the main way that cities are funded. Among other things, this method of taxation tightly couples school funding to local home values. Areas with expensive homes have the best schools. (And areas with cheap homes have bad schools, which is not really what you want if you are trying to do something about inter-generational poverty.) This is self-reinforcing because now parents compete with each other to buy homes that are located in the best school districts, which drives up prices even more. When home values drop, such as they did in 2008, property tax revenue drops too (Prop 13 is not a one-way ratchet, you can get re-appraised and lower your taxes, and 2008-2009 was a pretty convenient time to do that). It doesn't seem like a good idea to base city revenue on something that is so undependable, especially something that is so often treated as a speculative investment. What I would rather do is come up with a system where a simple tax is paid per parcel, perhaps a flat tax or one based on the size of the parcel, and which is not based on the market value of the parcel. The rest of city funding can be covered by income tax -- unlike the current system, at least that has a chance of being progressive. No old people will be priced out of their homes by tax increases, and school funding would be distributed somewhat more evenly because not all high earners live in the most expensive areas. And if you are worried about an influx of high earners flooding into your area and driving up the prices, a local income tax would certainly discourage them.
- bradlys 6y ago
  > It doesn't seem like a good idea to base city revenue on something that is so undependable, especially something that is so often treated as a speculative investment. Isn't property tax a pretty reliable source of income?? I thought the income tax was an unreliable source of income because people can't always be relied on to generate income... but they do tend to pay their property tax.
- babesh 6y ago
  This comment is wrong on a fundamental basis. Richer areas get less state funding than poorer school districts. These districts have to scramble to just narrow the gap rather than have more funding. The richer areas have higher scoring schools because wealth correlates with school scores probably due to a combination of natural ability and a more conducive parental and community environment (all multiplicative and compounding over time]. A change in taxes does not affect this one iota. There are already flat rates paid per parcel in many cities. There are age over 55 exemptions for certain parcel taxes to raise money for schools. An income tax per parcel does not scale. How do you tax rentals? Who pays the tax for rentals? What if you want to own multiple homes? What if you are buying a house for your parents to live in?
  - twblalock 6y ago
    > An income tax per parcel does not scale. How do you tax rentals? Who pays the tax? What if you want to own multiple homes? I was not proposing an income tax per parcel, I was proposing a flat tax per parcel and also an income tax on everyone who lives in the city. Parcel taxes should be paid by the owner of the parcel. Income taxes should be paid by the earner of the income. It's not hard to deal with.
    - babesh 6y ago
      There are already flat taxes per parcel. So you are taxing an owner of a rental on their total income rather than the income they earn on the property?
creato 6y ago
Property taxes going up would be a negative feedback on property values. Perhaps part of why property values are so absurdly high is because there is little incentive to sell, which would add more supply to the market
- twblalock 6y ago
  There is actually a negative incentive to sell, because your property taxes will almost certainly go up if you buy another home. It's gotten to the point that we have ballot amendments carving out exceptions for senior citizens, so they can take their old property tax rates with them when they buy new homes, but only if they move between certain counties that have a reciprocity agreement, blah blah blah. Clearly not the kind of policy a sane system would result in. If you've owned a home in California for more than about 20 years, and you aren't in one of the senior citizen categories that is exempt from tax increases, it just doesn't make sense to sell your home unless you leave the state.
  - arrosenberg 6y ago
    > It's gotten to the point that we have ballot amendments carving out exceptions for senior citizens, so they can take their old property tax rates with them when they buy new homes, but only if they move between certain counties that have a reciprocity agreement, blah blah blah. Clearly not the kind of policy a sane system would result in. And there is another ballot prop on this years' ballot (prop 19) being pushed by the Realtors' Assc. to expand the '86 law to include all properties within the state, rather than just county, and to cover up to 3 moves instead of 1.
    - babesh 6y ago
      That’s a scam like most of the other propositions. Most of this year’s propositions are poison laced candy. They offer you one thing and take away something far more valuable. Go read the whole proposition. They supposedly let you do it 3 times. That is the candy. Too bad many counties already let you do it once. So you haven’t gained much if anything. The poison is transfer to children resets the property tax for anything over a million. Now read each proposition and find the candy and then find the poison.
roenxi 6y ago
Because the money is being used to pay for local services that "you" are enjoying. Someone has to pay the taxes. It is difficult to see a good argument that having been a landholder for a long time gives some sort of moral right to be supported by others.
- mehrdadn 6y ago
  It's not exactly hard to imagine what problems occur here. You spend a huge chunk of your life saving to buy a home, and you plan it so that you can pay the taxes on it when you retire, then the rest of the city forces you to "enjoy" higher taxes you never demanded, predicted, or wanted, based on an income stream that you no longer have to pay it with, suddenly driving you out of the home/neighborhood/town you worked your entire life to finally afford. In many senses it's hardly "fair". I don't know what the answer is here; I see it as a tough policy challenge. There might very well not be a solution that's "fair" to everyone. If you think there's an easy "moral" solution and you can't think of decent arguments for both sides, I feel like you're only kidding yourself.
  - pc86 6y ago
    Then you move. That's how it works; if you can't afford the property taxes, you can't afford to live there.
    - seiferteric 6y ago
      The image of 90 year old widows being forced out of their home was how prop 13 was passed so...
      - Gibbon1 6y ago
        Lot of other states have laws that either cap or defer property taxes for retired people. Not much reason California couldn't do the same.
      - ak217 6y ago
        Prop 13 would be fine if it only applied to retirees over the social security retirement age, and did not pass down the basis to their children.
bradlys 6y ago
I'd agree to some extent if it only extended to your verifiable primary residence. Sadly, it pretty much pertains to every property... regardless of who owns it and how much they use it.
refurb 6y ago
The home owner is benefiting from increased home value and is still enjoying the services offered by the city, so why wouldn't they pay more?
CyberDildonics 6y ago
If everyone owed a percentage of the same total, they wouldn't have to go up.
georgeecollins 6y ago
1) One of the reasons why prices skyrocket is because people who would feel the pinch of the rising prices and probably move, don't. 2) Nobody has the right to own an asset for pennies on the dollar indefinitely. Because property tax rates are heritable and transferable geographically (once you reach a certain age and only in certain counties) you are creating a tax advantaged class of people in California.
- Enginerrrd 6y ago
  >2) Nobody has the right to own an asset for pennies on the dollar indefinitely That's a ridiculus assertion. When I buy something, having paid income tax and the government gets paid the taxes on the sale, why should I have to permenantly rent that item from the government? If that logic applied to you car and computer and clothes, and prized heirlooms from your family, I think you'd object. Thats a fundamental assault on freedom and property rights. Taking it to the extreme, it means ONLY the very wealthy could ever own things like land and that is just a fundamentally unamerican idea.
  - arrosenberg 6y ago
    > That's a ridiculus assertion. When I buy something, having paid income tax and the government gets paid the taxes on the sale, why should I have to permenantly rent that item from the government? Upkeep != Rent. The government uses that money to pay for the roads and services, mainly police and fire (you know, the people who protect your property).
    - Enginerrrd 6y ago
      So tell me then, what happens if you don't pay the "upkeep" fees?
  - rrdharan 6y ago
    There are actually a number of people who draw the distinction between possessions and land exactly that way. I.e. the argument would be that land ownership should never be allowed. It’s not an immediately farcical concept from first principles.
yonran 6y ago
> Why should your property taxes go up just because the market around you skyrockets, when this is completely outside of your control? The fallacy of the argument for tax breaks to homeowners is that the problem of rising prices is entirely orthogonal to homeownership. Renters face the exact same challenge of affording to live in an increasingly popular place, except without the cushion of an appreciating asset and without any tax relief under Proposition 13. If renters and homeowners face the exact same problem, then clearly subsidies to property owners is not the solution. The finances of homeownership should be decomposed into two parts: 1) the rental cost of the property, and 2) what fraction of the rent goes to the government in property taxation. The remedy for rising rents is obvious: more construction of housing and rental subsidies to the poor. This is how to address the underlying problem for homeowners and especially for renters. Temporary rent controls and tax caps can also be helpful to provide relief for people who were caught off guard by the rapid changes. Note that the solution should help all those who are affected by the problem, not only the ones who own more assets. When property values are rising, this is not an excuse to enact regressive tax breaks for property owners; that just makes inequality worse without solving the underlying problem of lack of housing, which then becomes worse for renters and future homeowners. Property taxation is the most progressive form of taxation available to local governments, and if anything tax rates should be increased when there is a property value boom in order to reduce the incentive to speculate on land prices and to raise money to solve the problems associated with inequality such as homelessness. Basically, when I bought a house in San Francisco, I paid a windfall of a few hundred thousand dollars to the previous owner, who took that money out to a different county. It would have been better for the city to collect that money and use it to incentivize housing construction and subsidize the poor in the city, rather than to let it be lottery winnings to the person who left.

Counterpoint: Why should your property taxes go up just because the market around you skyrockets, when this is completely outside of your control? The bay area is a prime example of this.

deleted 6y ago

[deleted]

SamReidHughes 6y ago

Because everybody else's does. If ownership transfer didn't reset the rates, it would be a slightly different story. Edit: In that, it'd still be something that makes an economist cringe, and it'd still be "unfair" but in fewer ways.

twblalock 6y ago

Maybe the solution is to stop making property tax the main way that cities are funded. Among other things, this method of taxation tightly couples school funding to local home values. Areas with expensive homes have the best schools. (And areas with cheap homes have bad schools, which is not really what you want if you are trying to do something about inter-generational poverty.) This is self-reinforcing because now parents compete with each other to buy homes that are located in the best school districts, which drives up prices even more. When home values drop, such as they did in 2008, property tax revenue drops too (Prop 13 is not a one-way ratchet, you can get re-appraised and lower your taxes, and 2008-2009 was a pretty convenient time to do that). It doesn't seem like a good idea to base city revenue on something that is so undependable, especially something that is so often treated as a speculative investment. What I would rather do is come up with a system where a simple tax is paid per parcel, perhaps a flat tax or one based on the size of the parcel, and which is not based on the market value of the parcel. The rest of city funding can be covered by income tax -- unlike the current system, at least that has a chance of being progressive. No old people will be priced out of their homes by tax increases, and school funding would be distributed somewhat more evenly because not all high earners live in the most expensive areas. And if you are worried about an influx of high earners flooding into your area and driving up the prices, a local income tax would certainly discourage them.

bradlys 6y ago
> It doesn't seem like a good idea to base city revenue on something that is so undependable, especially something that is so often treated as a speculative investment. Isn't property tax a pretty reliable source of income?? I thought the income tax was an unreliable source of income because people can't always be relied on to generate income... but they do tend to pay their property tax.
babesh 6y ago
This comment is wrong on a fundamental basis. Richer areas get less state funding than poorer school districts. These districts have to scramble to just narrow the gap rather than have more funding. The richer areas have higher scoring schools because wealth correlates with school scores probably due to a combination of natural ability and a more conducive parental and community environment (all multiplicative and compounding over time]. A change in taxes does not affect this one iota. There are already flat rates paid per parcel in many cities. There are age over 55 exemptions for certain parcel taxes to raise money for schools. An income tax per parcel does not scale. How do you tax rentals? Who pays the tax for rentals? What if you want to own multiple homes? What if you are buying a house for your parents to live in?
- twblalock 6y ago
  > An income tax per parcel does not scale. How do you tax rentals? Who pays the tax? What if you want to own multiple homes? I was not proposing an income tax per parcel, I was proposing a flat tax per parcel and also an income tax on everyone who lives in the city. Parcel taxes should be paid by the owner of the parcel. Income taxes should be paid by the earner of the income. It's not hard to deal with.
  - babesh 6y ago
    There are already flat taxes per parcel. So you are taxing an owner of a rental on their total income rather than the income they earn on the property?

creato 6y ago

Property taxes going up would be a negative feedback on property values. Perhaps part of why property values are so absurdly high is because there is little incentive to sell, which would add more supply to the market

twblalock 6y ago
There is actually a negative incentive to sell, because your property taxes will almost certainly go up if you buy another home. It's gotten to the point that we have ballot amendments carving out exceptions for senior citizens, so they can take their old property tax rates with them when they buy new homes, but only if they move between certain counties that have a reciprocity agreement, blah blah blah. Clearly not the kind of policy a sane system would result in. If you've owned a home in California for more than about 20 years, and you aren't in one of the senior citizen categories that is exempt from tax increases, it just doesn't make sense to sell your home unless you leave the state.
- arrosenberg 6y ago
  > It's gotten to the point that we have ballot amendments carving out exceptions for senior citizens, so they can take their old property tax rates with them when they buy new homes, but only if they move between certain counties that have a reciprocity agreement, blah blah blah. Clearly not the kind of policy a sane system would result in. And there is another ballot prop on this years' ballot (prop 19) being pushed by the Realtors' Assc. to expand the '86 law to include all properties within the state, rather than just county, and to cover up to 3 moves instead of 1.
  - babesh 6y ago
    That’s a scam like most of the other propositions. Most of this year’s propositions are poison laced candy. They offer you one thing and take away something far more valuable. Go read the whole proposition. They supposedly let you do it 3 times. That is the candy. Too bad many counties already let you do it once. So you haven’t gained much if anything. The poison is transfer to children resets the property tax for anything over a million. Now read each proposition and find the candy and then find the poison.

roenxi 6y ago

Because the money is being used to pay for local services that "you" are enjoying. Someone has to pay the taxes. It is difficult to see a good argument that having been a landholder for a long time gives some sort of moral right to be supported by others.

mehrdadn 6y ago
It's not exactly hard to imagine what problems occur here. You spend a huge chunk of your life saving to buy a home, and you plan it so that you can pay the taxes on it when you retire, then the rest of the city forces you to "enjoy" higher taxes you never demanded, predicted, or wanted, based on an income stream that you no longer have to pay it with, suddenly driving you out of the home/neighborhood/town you worked your entire life to finally afford. In many senses it's hardly "fair". I don't know what the answer is here; I see it as a tough policy challenge. There might very well not be a solution that's "fair" to everyone. If you think there's an easy "moral" solution and you can't think of decent arguments for both sides, I feel like you're only kidding yourself.
- pc86 6y ago
  Then you move. That's how it works; if you can't afford the property taxes, you can't afford to live there.
  - seiferteric 6y ago
    The image of 90 year old widows being forced out of their home was how prop 13 was passed so...
    - Gibbon1 6y ago
      Lot of other states have laws that either cap or defer property taxes for retired people. Not much reason California couldn't do the same.
    - ak217 6y ago
      Prop 13 would be fine if it only applied to retirees over the social security retirement age, and did not pass down the basis to their children.

bradlys 6y ago

I'd agree to some extent if it only extended to your verifiable primary residence. Sadly, it pretty much pertains to every property... regardless of who owns it and how much they use it.

refurb 6y ago

The home owner is benefiting from increased home value and is still enjoying the services offered by the city, so why wouldn't they pay more?

CyberDildonics 6y ago

If everyone owed a percentage of the same total, they wouldn't have to go up.

georgeecollins 6y ago

1) One of the reasons why prices skyrocket is because people who would feel the pinch of the rising prices and probably move, don't. 2) Nobody has the right to own an asset for pennies on the dollar indefinitely. Because property tax rates are heritable and transferable geographically (once you reach a certain age and only in certain counties) you are creating a tax advantaged class of people in California.

Enginerrrd 6y ago
>2) Nobody has the right to own an asset for pennies on the dollar indefinitely That's a ridiculus assertion. When I buy something, having paid income tax and the government gets paid the taxes on the sale, why should I have to permenantly rent that item from the government? If that logic applied to you car and computer and clothes, and prized heirlooms from your family, I think you'd object. Thats a fundamental assault on freedom and property rights. Taking it to the extreme, it means ONLY the very wealthy could ever own things like land and that is just a fundamentally unamerican idea.
- arrosenberg 6y ago
  > That's a ridiculus assertion. When I buy something, having paid income tax and the government gets paid the taxes on the sale, why should I have to permenantly rent that item from the government? Upkeep != Rent. The government uses that money to pay for the roads and services, mainly police and fire (you know, the people who protect your property).
  - Enginerrrd 6y ago
    So tell me then, what happens if you don't pay the "upkeep" fees?
- rrdharan 6y ago
  There are actually a number of people who draw the distinction between possessions and land exactly that way. I.e. the argument would be that land ownership should never be allowed. It’s not an immediately farcical concept from first principles.

yonran 6y ago

> Why should your property taxes go up just because the market around you skyrockets, when this is completely outside of your control? The fallacy of the argument for tax breaks to homeowners is that the problem of rising prices is entirely orthogonal to homeownership. Renters face the exact same challenge of affording to live in an increasingly popular place, except without the cushion of an appreciating asset and without any tax relief under Proposition 13. If renters and homeowners face the exact same problem, then clearly subsidies to property owners is not the solution. The finances of homeownership should be decomposed into two parts: 1) the rental cost of the property, and 2) what fraction of the rent goes to the government in property taxation. The remedy for rising rents is obvious: more construction of housing and rental subsidies to the poor. This is how to address the underlying problem for homeowners and especially for renters. Temporary rent controls and tax caps can also be helpful to provide relief for people who were caught off guard by the rapid changes. Note that the solution should help all those who are affected by the problem, not only the ones who own more assets. When property values are rising, this is not an excuse to enact regressive tax breaks for property owners; that just makes inequality worse without solving the underlying problem of lack of housing, which then becomes worse for renters and future homeowners. Property taxation is the most progressive form of taxation available to local governments, and if anything tax rates should be increased when there is a property value boom in order to reduce the incentive to speculate on land prices and to raise money to solve the problems associated with inequality such as homelessness. Basically, when I bought a house in San Francisco, I paid a windfall of a few hundred thousand dollars to the previous owner, who took that money out to a different county. It would have been better for the city to collect that money and use it to incentivize housing construction and subsidize the poor in the city, rather than to let it be lottery winnings to the person who left.