6 ms·

Prop 13 solved two problems at once. It forced a reduction in the out-of-control government spending, and it saved seniors from losing their houses. IMHO the

Prop 13 solved two problems at once. It forced a reduction in the out-of-control government spending, and it saved seniors from losing their houses. IMHO the only problem with Prop 13 was the "grandfathering" clause. The cuts should have been perpetual and across the board.

throwthroyaboat 4y ago
Doesn't Prop 13 also apply to commercial property? And second/third/30th houses? I think they smuggled a bear in as a rabbit with this one.
- btilly 4y ago
  It does, but commercial property tends to change ownership and undergo construction more often. Therefore property taxes on commercial property tends to be higher. As a result, cities have an incentive to build commercial property over residential homes. The result is that the people working in those offices are competing for limited residential space (leading to high prices) and often have to settle for long commutes (leading to gridlock).
  - lapetitejort 4y ago
    When was the last time Disneyland changed hands?
  - mdorazio 4y ago
    > commercial property tends to change ownership and undergo construction more often Definitely going to need to see a reference on that one.
  - larkost 4y ago
    Prop. 13 means that a commercial renter can rent out the land to one tenant after another virtually forever without the taxes going up very much at all (way below inflation). At some point it gets to a point where it is never economically advantageous for either renter or landlord to ever have the landlord sell... the situation is only disadvantageous for the city/community (which is getting far less in taxes than other places). Remember that companies never die of old age.
    - imtringued 4y ago
      You should never sell land because ground rent doesn't disappear, land is a monopoly.
  - abeppu 4y ago
    Even if commercial property is changing hands, there are well-known loopholes to structure that as multiple transactions, none of which transfer more than a 50% stake, and which therefore do not trigger a Prop 13 Reassessment. https://journal.firsttuesday.us/change-the-law-close-prop-13s-corporate-loophole/65104/ https://journal.firsttuesday.us/change-the-law-close-prop-13...
- rcpt 4y ago
  The intent of the law was malicious. That's why it applies everywhere. Angry voters wanted a "tax revolt". Jerry Brown's Prop 8, on the same ballot, would have given homeowners a specific break but they wanted blood.
zip1234 4y ago
It created a landed gentry in California and has caused out of control housing prices. The world changes, trying to insulate one particular group from change is deeply unfair.
bcatanzaro 4y ago
Grandma is a millionaire. She can take out a reverse mortgage to pay her taxes and she'll still be a millionaire. Or she can agree to a lien that pays her taxes upon her death or move. We don't need to worry about grandma losing her house.
- jen20 4y ago
  You do have to worry about working families losing their houses in gentrifying areas though. The UK gets "property" tax right in the form of council tax. It's low, paid for by the person living in the property, and often is punitively high for the owners of empty properties. When people say that the US is a "low tax economy" they seem to forget property taxes, which make the effective rate in almost _all_ US states higher than the UK (and much of the rest of Europe) if you own a home. It's just a "poor value for money" economy instead.
- nomel 4y ago
  > Grandma is a millionaire. You must come from a privileged family.
  - rcoveson 4y ago
    In California, being a millionaire at "grandma" age is no more privileged than average.
    - dragonwriter 4y ago
      > In California, being a millionaire at "grandma" age is no more privileged than average. [citation needed]
  - bcatanzaro 4y ago
    The only reason to say grandma can’t pay her property tax is because grandma’s house has appreciated substantially and now grandma is wealthy. Wealthy people should pay their taxes.
mdorazio 4y ago
> It forced a reduction in the out-of-control government spending No, it didn't. California just kept adding taxes everywhere else to make up the difference and still had an annual deficit most of the 13 years I lived there. > It saved seniors from losing their houses Why are seniors magically allowed to be immune to basic market forces when no one else is?
- Supermancho 4y ago
  > Why are seniors magically allowed to be immune to basic market forces when no one else is? Because they have fixed incomes (generally). This income is immune to market forces. That's why. While many elderly invested wisely (and at the right time) to become wealthy, especially when leveraging dips (like during the 80s), it doesn't change the average case. Living month to month on a fixed income is the norm after retirement.
  - abeppu 4y ago
    Except, while it was always rhetorically useful to talk about seniors with limited and fixed incomes being able to stay in their homes, Prop 13 also benefits people with multiple homes, landlords with rental properties, kids inheriting their parents house and running it as an AirBnb, etc. It benefits _corporations_ and non-residential property. Corporations can also skirt around it by not triggering a reassessment by not transferring ownership all at once. Meanwhile, why are only senior home owners worthy of that stability? Why do seniors who rent not get rent stabilization as a matter of law? If this were really motivated out of altruistic concern for vulnerable retirees, the law would look very different.
    - throwaway_4ever 4y ago
      > kids inheriting their parents house and running it as an AirBnb This doesn't exist anymore as of Prop 19. If an inherited home is not primary residence, it is taxed at full market value.
      - 4y ago
dredmorbius 4y ago
Inexpensive senior housing comes from the same place inexpesive housing for everyone else does: building more housing. Unlike first-time buyers, though, for whom asset inflation is itself strictly a tax (paid by them, to seniors, but far more so, banks and investors), price inflation of an asset you already hold is free money. It's highly distortionary.

throwthroyaboat 4y ago

Doesn't Prop 13 also apply to commercial property? And second/third/30th houses? I think they smuggled a bear in as a rabbit with this one.

btilly 4y ago
It does, but commercial property tends to change ownership and undergo construction more often. Therefore property taxes on commercial property tends to be higher. As a result, cities have an incentive to build commercial property over residential homes. The result is that the people working in those offices are competing for limited residential space (leading to high prices) and often have to settle for long commutes (leading to gridlock).
- lapetitejort 4y ago
  When was the last time Disneyland changed hands?
- mdorazio 4y ago
  > commercial property tends to change ownership and undergo construction more often Definitely going to need to see a reference on that one.
- larkost 4y ago
  Prop. 13 means that a commercial renter can rent out the land to one tenant after another virtually forever without the taxes going up very much at all (way below inflation). At some point it gets to a point where it is never economically advantageous for either renter or landlord to ever have the landlord sell... the situation is only disadvantageous for the city/community (which is getting far less in taxes than other places). Remember that companies never die of old age.
  - imtringued 4y ago
    You should never sell land because ground rent doesn't disappear, land is a monopoly.
- abeppu 4y ago
  Even if commercial property is changing hands, there are well-known loopholes to structure that as multiple transactions, none of which transfer more than a 50% stake, and which therefore do not trigger a Prop 13 Reassessment. https://journal.firsttuesday.us/change-the-law-close-prop-13s-corporate-loophole/65104/ https://journal.firsttuesday.us/change-the-law-close-prop-13...
rcpt 4y ago
The intent of the law was malicious. That's why it applies everywhere. Angry voters wanted a "tax revolt". Jerry Brown's Prop 8, on the same ballot, would have given homeowners a specific break but they wanted blood.

zip1234 4y ago

It created a landed gentry in California and has caused out of control housing prices. The world changes, trying to insulate one particular group from change is deeply unfair.

bcatanzaro 4y ago

Grandma is a millionaire. She can take out a reverse mortgage to pay her taxes and she'll still be a millionaire. Or she can agree to a lien that pays her taxes upon her death or move. We don't need to worry about grandma losing her house.

jen20 4y ago
You do have to worry about working families losing their houses in gentrifying areas though. The UK gets "property" tax right in the form of council tax. It's low, paid for by the person living in the property, and often is punitively high for the owners of empty properties. When people say that the US is a "low tax economy" they seem to forget property taxes, which make the effective rate in almost _all_ US states higher than the UK (and much of the rest of Europe) if you own a home. It's just a "poor value for money" economy instead.
nomel 4y ago
> Grandma is a millionaire. You must come from a privileged family.
- rcoveson 4y ago
  In California, being a millionaire at "grandma" age is no more privileged than average.
  - dragonwriter 4y ago
    > In California, being a millionaire at "grandma" age is no more privileged than average. [citation needed]
- bcatanzaro 4y ago
  The only reason to say grandma can’t pay her property tax is because grandma’s house has appreciated substantially and now grandma is wealthy. Wealthy people should pay their taxes.

mdorazio 4y ago

> It forced a reduction in the out-of-control government spending No, it didn't. California just kept adding taxes everywhere else to make up the difference and still had an annual deficit most of the 13 years I lived there. > It saved seniors from losing their houses Why are seniors magically allowed to be immune to basic market forces when no one else is?

Supermancho 4y ago
> Why are seniors magically allowed to be immune to basic market forces when no one else is? Because they have fixed incomes (generally). This income is immune to market forces. That's why. While many elderly invested wisely (and at the right time) to become wealthy, especially when leveraging dips (like during the 80s), it doesn't change the average case. Living month to month on a fixed income is the norm after retirement.
- abeppu 4y ago
  Except, while it was always rhetorically useful to talk about seniors with limited and fixed incomes being able to stay in their homes, Prop 13 also benefits people with multiple homes, landlords with rental properties, kids inheriting their parents house and running it as an AirBnb, etc. It benefits _corporations_ and non-residential property. Corporations can also skirt around it by not triggering a reassessment by not transferring ownership all at once. Meanwhile, why are only senior home owners worthy of that stability? Why do seniors who rent not get rent stabilization as a matter of law? If this were really motivated out of altruistic concern for vulnerable retirees, the law would look very different.
  - throwaway_4ever 4y ago
    > kids inheriting their parents house and running it as an AirBnb This doesn't exist anymore as of Prop 19. If an inherited home is not primary residence, it is taxed at full market value.
    - 4y ago

dredmorbius 4y ago

Inexpensive senior housing comes from the same place inexpesive housing for everyone else does: building more housing. Unlike first-time buyers, though, for whom asset inflation is itself strictly a tax (paid by them, to seniors, but far more so, banks and investors), price inflation of an asset you already hold is free money. It's highly distortionary.