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Millions of Californians are millionaires on paper because they bought their house 30 years ago and held onto it. Millions of them are also retired or on SS an

Millions of Californians are millionaires on paper because they bought their house 30 years ago and held onto it. Millions of them are also retired or on SS and if they had to pay market value property taxes they would be not be able to. Take a huge profit and leave, for where? You've lived somewhere most of your life and should be kicked to Stockton? For some reason I hear Tom Selleck's voice talking about reverse mortgages. There's a winner for public policy.

caturopath 6y ago
They would have options like 1. Move 2. Take out a loan 3. Take in a boarder 4. Refuse to pay and know they will not be evicted for their lien (this could be codified statewide if this were the real problem) I don't know why anyone would think that poorer, less-established people should be paying for these millionaires to stay there.
- zepto 6y ago
  > I don't know why anyone would think that poorer, less-established people should be paying for these millionaires to stay there. I don’t know why anyone would think that they are.
- hindsightbias 6y ago
  The median valuation in Stockton would be $350K. Your poorer 1/3rd millionaires will be screwed also. Which is pretty much everyone in CA who has owned for 10 years. I guess they can all move to trailer parks in the Mojave and make way for the real millionaires.
- souprock 6y ago
  My "millionaire" grandma in the middle of San Francisco would literally die from those options. She is fragile due to age. Her house is familiar to her. Familiarity reduces stress, confusion, and accidents. She is close to family. She will die soon enough. You can wait. Better yet, you can do what she did many decades ago. Get a house built on undesirable land, then be part of a community that makes the value go up. The home you now covet is only valuable because of people like her. Nothing stops you from doing likewise. Pick some crummy land out in Mississippi or West Virginia and create a community.
  - gkop 6y ago
    Had it not been for the distortion of prop 13, your grandma would have been incentivized to move long ago. We can roll-back prop 13 going forward for properties purchased some buffer of time after the new law goes into effect, without harming your grandma.
    - zepto 6y ago
      Why force her out? Why don’t you go somewhere where prices are cheaper and make a nice community there?
      - gkop 6y ago
        I didn't say force. I said incentivize. Society benefits from incentivizing her to move, so that more humans can occupy the space she is currently occupying, which will improve regional productivity, reduce highway and transit overcrowding, reduce greenhouse gas emissions, all sorts of good stuff. If her property taxes aren't artificially constrained by prop 13, she'll see her taxes go up over time, and decide how much she values staying in the house and paying the increasing taxes, versus retiring sooner or investing her resources in other areas of her life. The market at work. Also, ideally we wouldn't simply remove prop 13, but replace it with a better, progressive-not-regressive tax code, eg. allowing homeowners of limited means to defer portions of their property taxes until the sale of their property. This would make it easy for grandma to stay put, and be vastly more fair and healthy for society than the status quo. > Why don’t you go somewhere where prices are cheaper and make a nice community there? Would you rephrase this in a kinder way please?
        zepto 6y ago
        > I didn't say force. I said incentivize. Incentivize usually means offering something to someone to make something attractive. That is not what you are proposing. You are proposing to take away her money by force until she can’t afford to live there. > If her property taxes aren't artificially constrained by prop 13 Taxes that rise based on a tax inspector estimating the value of an unsold property are at least as artificial as taxing based on transactions. There is nothing ‘natural’ about property taxes. It’s a system constructed and imposed by the local government. > she'll see her taxes go up over time Yes, through no fault of her own, if and only if other people continue to drive up prices. > and decide how much she values staying in the house and paying the increasing taxes Agreed. If other people drive up the price, they’ll be able to force her out of her home. > Society benefits from incentivizing her to move, so that more humans can occupy the space she is currently occupying, which will improve regional productivity, reduce highway and transit overcrowding, reduce greenhouse gas emissions, all sorts of good stuff. A kinder way would be - why force grandma to move, when not doing so would bring all of these benefits to areas which need them more, and frankly, have better incentives in the form of currently lower costs?
- kuang_eleven 6y ago
  #4 is essentially my favorite solution to Prop 13 (although I would accept just about anything that would get rid of it). Basically, for residential properties, keep the existing Prop 13 tax increase logic, but apply the difference in taxes between the Prop 13 rate and the real rate as a lien against the property, to be paid when it changes hands. That preserves the (utterly unfounded) objection of "throwing out grandma on the street", while still recouping unpaid tax. There are some complexities with the lien happening for a very long time, like that happens when the lien matches the property value, but as long the lien is strictly called in, they should be minor.
pbuzbee 6y ago
In the case of HCOL places like the Bay Area, yes, perhaps they should move somewhere cheaper. The money they would make from selling their house gives them a lot of options. As it is today, young families are the ones buying in far out places like Tracy, Stockton, etc., and they still might pay higher property taxes than a retiree in the heart of the Bay Area. It seems backwards to me to have an incentive structure that keeps the labor force farther from work than retirees.
- zepto 6y ago
  > It seems backwards to me to have an incentive structure that keeps the labor force farther from work than retirees. That is a problem that we don’t have to solve by destroying communities through eviction. We can build workplaces where property is affordable, and those communities can develop into attractive places to live, and their property prices will rise too. It seems like a weird non-goal to try to create a society where there are only a few places where there is work and amenities. The natural response to one place becoming too expensive is to invest in making more places where people can live and work.
  - pbuzbee 6y ago
    I wouldn't call it "destroying communities through eviction", but I do agree that cramming everyone into the same small set of places is its own harmful issue and should be reconsidered as well.
    - zepto 6y ago
      High property prices are just a signal that investment is better spent elsewhere. Trying to tax people out of homes because someone else wants them just means underinvestment in other communities.
  - yongjik 6y ago
    Cupertino school district is planning to close some schools[1] because there aren't enough kids - fewer and fewer young parents can afford to live in this area. There are multiple ways to destroy a community. Apparently, one way is to artificially cap tax on long-time residents until only old people are left. [1] https://www.mercurynews.com/2020/09/14/cupertino-district-planning-to-close-schools-because-of-enrollment-decline/ https://www.mercurynews.com/2020/09/14/cupertino-district-pl...
deleted 6y ago
[deleted]
mamon 6y ago
Do you think it is fair for a person who owns $2M worth house to still receive benefits paid from taxpayers money? Because my take on this is: you're millionaire so you can take care of yourself, no public money for you. Also, no, they wouldn't have to move to Stockton, they wouldn't have to leave their home town. Sell your house for $2M, buy two condos, for $1M million each, move into one of them, rent out the other, and you're set for life, and you will still have your original $2M to pass to your grandchildren after you die. Or you can invest your $2M in ETF, and live in the rented condo, cashing $100k of capital gains profits every year. For someone with $2M (or 1.5M, or even 1M) net worth possibilities are endless and living off of taxpayers money shouldn't be one of them.
- zepto 6y ago
  > Do you think it is fair for a person who owns $2M worth house to still receive benefits paid from taxpayers money? Does this apply to all people who have $2M regardless of whether it’s invested in a house? > For someone with $2M (or 1.5M, or even 1M) net worth possibilities are endless and living off of taxpayers money shouldn't be one of them. It isn’t one of them.
refurb 6y ago
This is a solved issue in other states. Not sure why CA struggles so much. Just allow a homeowner to defer taxes until sale or death. When the house is eventually sold the city can get back their $800,000 in back taxes, with interest. That’s what my Canadian province does.
- zepto 6y ago
  People might be more amenable to solutions like that if the government provided healthcare and other such services.
  - refurb 6y ago
    They do this in other US states as well. TX is a good example. And the govt already provides healthcare for retirees. It’s called Medicare. And how can the govt afford to provide healthcare and such when people sitting on assets with million dollar appreciation don’t pay any tax on it?
imtringued 6y ago
>Take a huge profit and leave, for where? Is supposed to be some joke? You know, if people knew they were going to get knocked out by property taxes they would have a strong incentive to prevent that from happening by simply building enough housing for themselves.

caturopath 6y ago

They would have options like 1. Move 2. Take out a loan 3. Take in a boarder 4. Refuse to pay and know they will not be evicted for their lien (this could be codified statewide if this were the real problem) I don't know why anyone would think that poorer, less-established people should be paying for these millionaires to stay there.

zepto 6y ago
> I don't know why anyone would think that poorer, less-established people should be paying for these millionaires to stay there. I don’t know why anyone would think that they are.
hindsightbias 6y ago
The median valuation in Stockton would be $350K. Your poorer 1/3rd millionaires will be screwed also. Which is pretty much everyone in CA who has owned for 10 years. I guess they can all move to trailer parks in the Mojave and make way for the real millionaires.
souprock 6y ago
My "millionaire" grandma in the middle of San Francisco would literally die from those options. She is fragile due to age. Her house is familiar to her. Familiarity reduces stress, confusion, and accidents. She is close to family. She will die soon enough. You can wait. Better yet, you can do what she did many decades ago. Get a house built on undesirable land, then be part of a community that makes the value go up. The home you now covet is only valuable because of people like her. Nothing stops you from doing likewise. Pick some crummy land out in Mississippi or West Virginia and create a community.
- gkop 6y ago
  Had it not been for the distortion of prop 13, your grandma would have been incentivized to move long ago. We can roll-back prop 13 going forward for properties purchased some buffer of time after the new law goes into effect, without harming your grandma.
  - zepto 6y ago
    Why force her out? Why don’t you go somewhere where prices are cheaper and make a nice community there?
    - gkop 6y ago
      I didn't say force. I said incentivize. Society benefits from incentivizing her to move, so that more humans can occupy the space she is currently occupying, which will improve regional productivity, reduce highway and transit overcrowding, reduce greenhouse gas emissions, all sorts of good stuff. If her property taxes aren't artificially constrained by prop 13, she'll see her taxes go up over time, and decide how much she values staying in the house and paying the increasing taxes, versus retiring sooner or investing her resources in other areas of her life. The market at work. Also, ideally we wouldn't simply remove prop 13, but replace it with a better, progressive-not-regressive tax code, eg. allowing homeowners of limited means to defer portions of their property taxes until the sale of their property. This would make it easy for grandma to stay put, and be vastly more fair and healthy for society than the status quo. > Why don’t you go somewhere where prices are cheaper and make a nice community there? Would you rephrase this in a kinder way please?
      - zepto 6y ago
        > I didn't say force. I said incentivize. Incentivize usually means offering something to someone to make something attractive. That is not what you are proposing. You are proposing to take away her money by force until she can’t afford to live there. > If her property taxes aren't artificially constrained by prop 13 Taxes that rise based on a tax inspector estimating the value of an unsold property are at least as artificial as taxing based on transactions. There is nothing ‘natural’ about property taxes. It’s a system constructed and imposed by the local government. > she'll see her taxes go up over time Yes, through no fault of her own, if and only if other people continue to drive up prices. > and decide how much she values staying in the house and paying the increasing taxes Agreed. If other people drive up the price, they’ll be able to force her out of her home. > Society benefits from incentivizing her to move, so that more humans can occupy the space she is currently occupying, which will improve regional productivity, reduce highway and transit overcrowding, reduce greenhouse gas emissions, all sorts of good stuff. A kinder way would be - why force grandma to move, when not doing so would bring all of these benefits to areas which need them more, and frankly, have better incentives in the form of currently lower costs?
kuang_eleven 6y ago
#4 is essentially my favorite solution to Prop 13 (although I would accept just about anything that would get rid of it). Basically, for residential properties, keep the existing Prop 13 tax increase logic, but apply the difference in taxes between the Prop 13 rate and the real rate as a lien against the property, to be paid when it changes hands. That preserves the (utterly unfounded) objection of "throwing out grandma on the street", while still recouping unpaid tax. There are some complexities with the lien happening for a very long time, like that happens when the lien matches the property value, but as long the lien is strictly called in, they should be minor.

pbuzbee 6y ago

In the case of HCOL places like the Bay Area, yes, perhaps they should move somewhere cheaper. The money they would make from selling their house gives them a lot of options. As it is today, young families are the ones buying in far out places like Tracy, Stockton, etc., and they still might pay higher property taxes than a retiree in the heart of the Bay Area. It seems backwards to me to have an incentive structure that keeps the labor force farther from work than retirees.

zepto 6y ago
> It seems backwards to me to have an incentive structure that keeps the labor force farther from work than retirees. That is a problem that we don’t have to solve by destroying communities through eviction. We can build workplaces where property is affordable, and those communities can develop into attractive places to live, and their property prices will rise too. It seems like a weird non-goal to try to create a society where there are only a few places where there is work and amenities. The natural response to one place becoming too expensive is to invest in making more places where people can live and work.
- pbuzbee 6y ago
  I wouldn't call it "destroying communities through eviction", but I do agree that cramming everyone into the same small set of places is its own harmful issue and should be reconsidered as well.
  - zepto 6y ago
    High property prices are just a signal that investment is better spent elsewhere. Trying to tax people out of homes because someone else wants them just means underinvestment in other communities.
- yongjik 6y ago
  Cupertino school district is planning to close some schools[1] because there aren't enough kids - fewer and fewer young parents can afford to live in this area. There are multiple ways to destroy a community. Apparently, one way is to artificially cap tax on long-time residents until only old people are left. [1] https://www.mercurynews.com/2020/09/14/cupertino-district-planning-to-close-schools-because-of-enrollment-decline/ https://www.mercurynews.com/2020/09/14/cupertino-district-pl...

deleted 6y ago

[deleted]

mamon 6y ago

Do you think it is fair for a person who owns $2M worth house to still receive benefits paid from taxpayers money? Because my take on this is: you're millionaire so you can take care of yourself, no public money for you. Also, no, they wouldn't have to move to Stockton, they wouldn't have to leave their home town. Sell your house for $2M, buy two condos, for $1M million each, move into one of them, rent out the other, and you're set for life, and you will still have your original $2M to pass to your grandchildren after you die. Or you can invest your $2M in ETF, and live in the rented condo, cashing $100k of capital gains profits every year. For someone with $2M (or 1.5M, or even 1M) net worth possibilities are endless and living off of taxpayers money shouldn't be one of them.

zepto 6y ago
> Do you think it is fair for a person who owns $2M worth house to still receive benefits paid from taxpayers money? Does this apply to all people who have $2M regardless of whether it’s invested in a house? > For someone with $2M (or 1.5M, or even 1M) net worth possibilities are endless and living off of taxpayers money shouldn't be one of them. It isn’t one of them.

refurb 6y ago

This is a solved issue in other states. Not sure why CA struggles so much. Just allow a homeowner to defer taxes until sale or death. When the house is eventually sold the city can get back their $800,000 in back taxes, with interest. That’s what my Canadian province does.

zepto 6y ago
People might be more amenable to solutions like that if the government provided healthcare and other such services.
- refurb 6y ago
  They do this in other US states as well. TX is a good example. And the govt already provides healthcare for retirees. It’s called Medicare. And how can the govt afford to provide healthcare and such when people sitting on assets with million dollar appreciation don’t pay any tax on it?

imtringued 6y ago

>Take a huge profit and leave, for where? Is supposed to be some joke? You know, if people knew they were going to get knocked out by property taxes they would have a strong incentive to prevent that from happening by simply building enough housing for themselves.