4 ms·

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 fundi

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?
    - babesh 6y ago
      What if a corporation owns the property? If you do this, I would transfer the property to a corporation and then rent it back to myself for a $1 a year. The corporation would have only $1 of income per year. This is so badly thought out.
      - deleted 6y ago
        [deleted]
    - twblalock 6y ago
      No, I'm proposing taxing city residents on their income regardless of whether they own or rent. If the owner of the parcel doesn't live in the city then he wouldn't pay a dime of income tax to the city -- he would pay the parcel tax to the city where the parcel is located, and he would pay income tax wherever he lives.
      - babesh 6y ago
        Time for the international buyers to buy housing en masse, rent it out, and not pay your income tax. The renters would be stuck paying the income tax and the international buyers would just pay the parcel tax. So renters would be stuck paying for rent and an additional income tax for renting. Hahahahaha.
toast0 6y ago
In California, cities are totally independent of school districts (except in that San Francisco is a combined county and city and its city counsil and mayor are also its county board of supervisors, and county boards and the state school board both supervise school districts). School district funding in most districts is property taxes supplimented with state funds to a specific level per student. There are a small number of school districts that have property tax revenues above that, but most don't. IIRC, in the sf bay area, Santa Clara, one of the Palo Alto districts, and maybe one or two others are not getting state funds, but I think Cupertino is on the state funding schedule, and is well regarded. Only the hardest hit counties like Fresno saw property tax decrease in the 2008 time frame. Although market values dropped, many properties were still below their capped assesment, and so their taxes would increase either by the yearly cap or because they were sold and triggered a fresh assessment. I don't know about other counties, but Santa Clara's assessor did assess down automatically; but the tax rolls still increased. So in that way, it's a lot more dependable than an income tax.
- deleted 6y ago
  [deleted]
lambdaops 6y ago
Wealth should definitely be taxed, especially land wealth. It's super easy to hide money in land wealth if you don't tax it. We need land to go to the highest best use for cities. Otherwise you end up with terrible strip malls, low density housing, and traffic everywhere. Whoops, I just described Santa Clara County. And LA.

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?
  - babesh 6y ago
    What if a corporation owns the property? If you do this, I would transfer the property to a corporation and then rent it back to myself for a $1 a year. The corporation would have only $1 of income per year. This is so badly thought out.
    - deleted 6y ago
      [deleted]
  - twblalock 6y ago
    No, I'm proposing taxing city residents on their income regardless of whether they own or rent. If the owner of the parcel doesn't live in the city then he wouldn't pay a dime of income tax to the city -- he would pay the parcel tax to the city where the parcel is located, and he would pay income tax wherever he lives.
    - babesh 6y ago
      Time for the international buyers to buy housing en masse, rent it out, and not pay your income tax. The renters would be stuck paying the income tax and the international buyers would just pay the parcel tax. So renters would be stuck paying for rent and an additional income tax for renting. Hahahahaha.

toast0 6y ago

In California, cities are totally independent of school districts (except in that San Francisco is a combined county and city and its city counsil and mayor are also its county board of supervisors, and county boards and the state school board both supervise school districts). School district funding in most districts is property taxes supplimented with state funds to a specific level per student. There are a small number of school districts that have property tax revenues above that, but most don't. IIRC, in the sf bay area, Santa Clara, one of the Palo Alto districts, and maybe one or two others are not getting state funds, but I think Cupertino is on the state funding schedule, and is well regarded. Only the hardest hit counties like Fresno saw property tax decrease in the 2008 time frame. Although market values dropped, many properties were still below their capped assesment, and so their taxes would increase either by the yearly cap or because they were sold and triggered a fresh assessment. I don't know about other counties, but Santa Clara's assessor did assess down automatically; but the tax rolls still increased. So in that way, it's a lot more dependable than an income tax.

deleted 6y ago
[deleted]

lambdaops 6y ago

Wealth should definitely be taxed, especially land wealth. It's super easy to hide money in land wealth if you don't tax it. We need land to go to the highest best use for cities. Otherwise you end up with terrible strip malls, low density housing, and traffic everywhere. Whoops, I just described Santa Clara County. And LA.