8 ms·

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 tax

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.
- mehrdadn 6y ago
  Ah, duh! I'm so dumb. If only the rest of us were smart enough to think of these simple and fair solutions ourselves :)
- HideousKojima 6y ago
  Or abolish property taxes and fund cities with consumption taxes or some other tax
  - avmich 6y ago
    A more generic tax would be a wealth tax. Don't tax real estate at all; instead, tax net worth. However, if all you have is a house in an area with rapid price growth, this change won't save you.
    - pc86 6y ago
      Presumably it would "save" you because your end tax would still be lower (as people whose multi-million dollar homes comprise only a fraction of their wealth would subsidize you). It's a bad idea for a bunch of other reason, though.
      - avmich 6y ago
        The "not saving" part is because if your house appreciates in taxable value - no matter, house tax or whole person worth tax - you have to pay more, and if all you have is the house itself (plus something which generated enough value to pay tax when house was cheaper) then your expense grows without your income. Even if you would comparatively pay less tax than your neighbor.
  - yonran 6y ago
    Property taxes are a consumption tax on the property that you occupy. Even better, the land portion of the property tax can also be considered a Pigovian tax because it is a tax on the natural resources that you are depriving others of occupying.
  - dredmorbius 6y ago
    Land tax is among, if not the most equitable tax there is.
leetcrew 6y ago
fortunately there is a financial instrument for exactly this situation: the reverse mortgage. it's kind of absurd to treat the quintupling in value of one's home as some sort of hardship.
- mehrdadn 6y ago
  Unfortunately even the intro on Wikipedia explains some problems with reverse mortgages. Not to mention that it's kind of a lot to force, idk, 80-year-olds to take out reverse mortgages just so they can keep living in homes they've already paid for and own. Though I guess it's not surprising if people half their age don't care about their burden.
  - leetcrew 6y ago
    maybe I'm being insensitive, but it sounds like a problem I would absolutely love to have.
ladberg 6y ago
Then you can just sell your house and buy another one in a less expensive area and make insane profits. The people who support prop 13 are literally lottery winners who are complaining about paying taxes on their winnings. If you don't want to move then you can get a reverse mortgage and still profit, you just won't get to pass the house to your children. Still, you'll make way more from the property value increases than anything you would have paid in taxes and can pass those gains on to your children.
- majormajor 6y ago
  "Congrats, you have won the lottery, now you have to move somewhere way cheaper - probably because it doesn't have many of the features that drew you here in the first place!" "All because a bunch of people with more money than you are now willing to pay a bunch of money for your neighbors' places." I think laws and policy should exactly be focused on protecting those who have less from the impact of those who have more. Not because they're morally superior or anything, but just to try to keep things balanced because the people with the money already enjoy so many other advantages. Moving is hugely disruptive to people's life, so the ability to plan expenses - both for property tax and in terms of rent control - has a lot of non-financial appeal as a policy. "Make people move when folks with more cash want to come in" is at best a somewhat heartless position, and at worse a major driver of homelessness.
  - cheriot 6y ago
    > "All because a bunch of people with more money than you are now willing to pay a bunch of money for your neighbors' places." You're missing the part where city policy creates the housing shortage. It's the city that approves zoning for a huge number of offices and then refuses to allow more homes. The homeowners reaping these massive rewards are who vote in favor of the housing shortage. There's easy ways to deal with the down sides of increasing property values. Delay the payment to sale or even tax the value from some number of years ago. > Moving is hugely disruptive to people's life The housing shortages in CA are doing this to renters and anyone else that's forced to move. Older couple that can't handle stairs, growing family, etc. Prop 13 is a horrible way to address any of these problems.
refurb 6y ago
What’s really unfair is someone whose home goes from $100k to $2M, for a total capital gain of $1.9M gets a 90% discount on their property taxes. The people with the greatest ability to pay are the ones getting the biggest tax break.
- mehrdadn 6y ago
  Yes, as I mentioned, there are indeed two sides to the argument.
- jjav 6y ago
  > The people with the greatest ability to pay are the ones getting the biggest tax break. They don't necessarily have any ability to pay, which is the scenario that brought prop13 to life in the first place (low-income grandma kicked to the street by taxes). Someone of modest income who bought a modest 100K house years ago isn't cash-flow rich today just because the paper value of their house went up. They are probably retired living on a small social security check and don't have much any ability to pay, let alone the "greatest ability". It's fine to have different views on how society should handle this tricky scenario, but let's be intellectually honest with the core facts.
  - lambdaops 6y ago
    There are property tax postponement programs in California for that person and honestly, they should be downsizing: https://sco.ca.gov/ardtax_prop_tax_postponement.html https://sco.ca.gov/ardtax_prop_tax_postponement.html Also, I think low-income grandma was and always has been a useful narrative piece. Howard Jarvis, the author of prop13, was literally a lobbyist for apartments and businesses. Please watch The First Angry Man when you get a chance: https://www.kcet.org/shows/the-first-angry-man/episodes/the-first-angry-man https://www.kcet.org/shows/the-first-angry-man/episodes/the-...
    - jjav 6y ago
      > they should be downsizing Often the house isn't much to downsize from. If they bought a modest house for 100K back then, it's probably not big. I bought my current house in my 20s. It is tiny because it was all I could afford back then. I always expected to move up, but it hasn't happened. So I've made my life on this street, these parks and forests. I could afford to move up now but it's a nice area and it has become home. I'm not ready to retire but when I do, there's no point in downsizing, it's already tiny. Also don't underestimate the pain of moving for an older person. I often wish my >90yr mother would move closer to here but at that age she is terrified having to change any of her regular doctors and neighbors. The grandma may be an "useful narrative piece" and it was, but it is also very real. These are the people who benefit the most from being able to stay in their home to the end. It is very cruel to force an older person to move from their comfort zone. Of course, corporations taking advantage of prop13 is a travesty. It should be for individuals in their own home only.
roenxi 6y ago
Taxes are pretty miserable. A person would be able to afford something. Then taxes happen. Now they can't. There isn't a solution that is fair, the major activity in the debate over California housing seems to be people turning themselves in knots to find solutions where long time residents enjoy a high-demand city without paying for its upkeep. The goal is for long time residents to reap rewards without doing anything - there is no fair way to do that. It drives inequality too. Rich people tend to own lots of land for long periods of time. > ...the rest of the city forces you to "enjoy" higher taxes you never demanded [...] or wanted... I do not hesitate in pointing out this part of your post applies to most taxpayers. I personally disagree with most of what my tax money is spent on, and distrust the people who spend it. That is why it is taxed from me. We should go with https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism - it is fairest over the long term. Moving homes is not so terrible that it has to be prevented at all costs.
- oceanghost 6y ago
  Is there a correlation though between city expenses and property values for large moves in property value? Just because property values double doesn't mean the cost of pothole repair doubles?
  - roenxi 6y ago
    Pretty much must be, because the city is spending the money on something. If the city isn't using the money on something essential, they could reduce taxes. Might be a struggle to get tax reductions past the voting public. But I think a bit of political elbow grease could get it done.
    - oceanghost 6y ago
      So the City should reduce total taxes by increasing property taxes? That's semantics at best.
deepakhj 6y ago
why does it apply to 2nd or 3rd homes? It’s an easy policy challenge. Let the person carry the tax until a sale. Or they can carry it until death. It should not pass to kids and the tax assessment is taken at the final sale.

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.
mehrdadn 6y ago
Ah, duh! I'm so dumb. If only the rest of us were smart enough to think of these simple and fair solutions ourselves :)
HideousKojima 6y ago
Or abolish property taxes and fund cities with consumption taxes or some other tax
- avmich 6y ago
  A more generic tax would be a wealth tax. Don't tax real estate at all; instead, tax net worth. However, if all you have is a house in an area with rapid price growth, this change won't save you.
  - pc86 6y ago
    Presumably it would "save" you because your end tax would still be lower (as people whose multi-million dollar homes comprise only a fraction of their wealth would subsidize you). It's a bad idea for a bunch of other reason, though.
    - avmich 6y ago
      The "not saving" part is because if your house appreciates in taxable value - no matter, house tax or whole person worth tax - you have to pay more, and if all you have is the house itself (plus something which generated enough value to pay tax when house was cheaper) then your expense grows without your income. Even if you would comparatively pay less tax than your neighbor.
- yonran 6y ago
  Property taxes are a consumption tax on the property that you occupy. Even better, the land portion of the property tax can also be considered a Pigovian tax because it is a tax on the natural resources that you are depriving others of occupying.
- dredmorbius 6y ago
  Land tax is among, if not the most equitable tax there is.

leetcrew 6y ago

fortunately there is a financial instrument for exactly this situation: the reverse mortgage. it's kind of absurd to treat the quintupling in value of one's home as some sort of hardship.

mehrdadn 6y ago
Unfortunately even the intro on Wikipedia explains some problems with reverse mortgages. Not to mention that it's kind of a lot to force, idk, 80-year-olds to take out reverse mortgages just so they can keep living in homes they've already paid for and own. Though I guess it's not surprising if people half their age don't care about their burden.
- leetcrew 6y ago
  maybe I'm being insensitive, but it sounds like a problem I would absolutely love to have.

ladberg 6y ago

Then you can just sell your house and buy another one in a less expensive area and make insane profits. The people who support prop 13 are literally lottery winners who are complaining about paying taxes on their winnings. If you don't want to move then you can get a reverse mortgage and still profit, you just won't get to pass the house to your children. Still, you'll make way more from the property value increases than anything you would have paid in taxes and can pass those gains on to your children.

majormajor 6y ago
"Congrats, you have won the lottery, now you have to move somewhere way cheaper - probably because it doesn't have many of the features that drew you here in the first place!" "All because a bunch of people with more money than you are now willing to pay a bunch of money for your neighbors' places." I think laws and policy should exactly be focused on protecting those who have less from the impact of those who have more. Not because they're morally superior or anything, but just to try to keep things balanced because the people with the money already enjoy so many other advantages. Moving is hugely disruptive to people's life, so the ability to plan expenses - both for property tax and in terms of rent control - has a lot of non-financial appeal as a policy. "Make people move when folks with more cash want to come in" is at best a somewhat heartless position, and at worse a major driver of homelessness.
- cheriot 6y ago
  > "All because a bunch of people with more money than you are now willing to pay a bunch of money for your neighbors' places." You're missing the part where city policy creates the housing shortage. It's the city that approves zoning for a huge number of offices and then refuses to allow more homes. The homeowners reaping these massive rewards are who vote in favor of the housing shortage. There's easy ways to deal with the down sides of increasing property values. Delay the payment to sale or even tax the value from some number of years ago. > Moving is hugely disruptive to people's life The housing shortages in CA are doing this to renters and anyone else that's forced to move. Older couple that can't handle stairs, growing family, etc. Prop 13 is a horrible way to address any of these problems.

refurb 6y ago

What’s really unfair is someone whose home goes from $100k to $2M, for a total capital gain of $1.9M gets a 90% discount on their property taxes. The people with the greatest ability to pay are the ones getting the biggest tax break.

mehrdadn 6y ago
Yes, as I mentioned, there are indeed two sides to the argument.
jjav 6y ago
> The people with the greatest ability to pay are the ones getting the biggest tax break. They don't necessarily have any ability to pay, which is the scenario that brought prop13 to life in the first place (low-income grandma kicked to the street by taxes). Someone of modest income who bought a modest 100K house years ago isn't cash-flow rich today just because the paper value of their house went up. They are probably retired living on a small social security check and don't have much any ability to pay, let alone the "greatest ability". It's fine to have different views on how society should handle this tricky scenario, but let's be intellectually honest with the core facts.
- lambdaops 6y ago
  There are property tax postponement programs in California for that person and honestly, they should be downsizing: https://sco.ca.gov/ardtax_prop_tax_postponement.html https://sco.ca.gov/ardtax_prop_tax_postponement.html Also, I think low-income grandma was and always has been a useful narrative piece. Howard Jarvis, the author of prop13, was literally a lobbyist for apartments and businesses. Please watch The First Angry Man when you get a chance: https://www.kcet.org/shows/the-first-angry-man/episodes/the-first-angry-man https://www.kcet.org/shows/the-first-angry-man/episodes/the-...
  - jjav 6y ago
    > they should be downsizing Often the house isn't much to downsize from. If they bought a modest house for 100K back then, it's probably not big. I bought my current house in my 20s. It is tiny because it was all I could afford back then. I always expected to move up, but it hasn't happened. So I've made my life on this street, these parks and forests. I could afford to move up now but it's a nice area and it has become home. I'm not ready to retire but when I do, there's no point in downsizing, it's already tiny. Also don't underestimate the pain of moving for an older person. I often wish my >90yr mother would move closer to here but at that age she is terrified having to change any of her regular doctors and neighbors. The grandma may be an "useful narrative piece" and it was, but it is also very real. These are the people who benefit the most from being able to stay in their home to the end. It is very cruel to force an older person to move from their comfort zone. Of course, corporations taking advantage of prop13 is a travesty. It should be for individuals in their own home only.

roenxi 6y ago

Taxes are pretty miserable. A person would be able to afford something. Then taxes happen. Now they can't. There isn't a solution that is fair, the major activity in the debate over California housing seems to be people turning themselves in knots to find solutions where long time residents enjoy a high-demand city without paying for its upkeep. The goal is for long time residents to reap rewards without doing anything - there is no fair way to do that. It drives inequality too. Rich people tend to own lots of land for long periods of time. > ...the rest of the city forces you to "enjoy" higher taxes you never demanded [...] or wanted... I do not hesitate in pointing out this part of your post applies to most taxpayers. I personally disagree with most of what my tax money is spent on, and distrust the people who spend it. That is why it is taxed from me. We should go with https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism - it is fairest over the long term. Moving homes is not so terrible that it has to be prevented at all costs.

oceanghost 6y ago
Is there a correlation though between city expenses and property values for large moves in property value? Just because property values double doesn't mean the cost of pothole repair doubles?
- roenxi 6y ago
  Pretty much must be, because the city is spending the money on something. If the city isn't using the money on something essential, they could reduce taxes. Might be a struggle to get tax reductions past the voting public. But I think a bit of political elbow grease could get it done.
  - oceanghost 6y ago
    So the City should reduce total taxes by increasing property taxes? That's semantics at best.

deepakhj 6y ago

why does it apply to 2nd or 3rd homes? It’s an easy policy challenge. Let the person carry the tax until a sale. Or they can carry it until death. It should not pass to kids and the tax assessment is taken at the final sale.