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A great history professor I had at university was very interested in California politics. His take after years of research was that the thing holding California

A great history professor I had at university was very interested in California politics. His take after years of research was that the thing holding California back is Prop 13, which has to do with taxation: https://en.wikipedia.org/wiki/1978_California_Proposition_13 https://en.wikipedia.org/wiki/1978_California_Proposition_13 Dear HNers, please note: I understand Prop 13 is hugely controversial and the "third rail" of California politics. I don't have a dog in this fight, I'm just sharing information.

gibsonf1 3y ago
The increasingly bad management of California (and SF/LA etc) is not about taxes, its about managing based on ideology rather than the common-sense well-being of the citizens. Hence the citizens leave to more favorable places. If prop 13 had anything to do with it, we would have had people escaping the state back then instead of only in recent years.
uoaei 3y ago
The only ones who get upset when you point this out are people who thought they could get away with and benefit from such a loophole. They see no problem with excluding others from the possibility of enjoying the same benefit as long as they already have it. Climbing a ladder and then pulling it up after you is anti-social and shameful.
- Domenic_S 3y ago
  What are you talking about? Prop 13 applies to every homeowner.
boredumb 3y ago
So the thing holding back California is that they don't get enough taxes? There must be something more nuanced i'm missing, but it almost feels like a comedy sketch thinking of a California college professor explaining to people that California not taxing it's citizens enough is the thing holding it back.
- alexb_ 3y ago
  The nuance is that with restrictions on property tax there is absolutely no disincentive for citizens to support local policies that restrict housing development. You are incentivized to keep the housing supply as low as you can possibly get it, because raising the price of your own property has zero downsides. This creates homelessness due to a restricted supply of housing.
  - Dig1t 3y ago
    >support local policies that restrict housing development You are absolutely correct that this is the problem. But the solution is not to disincentivize home ownership with a tax, it is to fix zoning itself. Homeowners will still have an incentive to restrict housing supply even with a tax. However if you restricted the power of local zoning boards to tell people what they are allowed to build on their own land, then you would fix the housing crisis virtually overnight. There is a strong incentive for developers to build as densely as possible because they can make more money per acre, but the problem is that local zoning boards stop most development. https://www.almanacnews.com/news/2023/02/01/atherton-guts-most-of-multifamily-housing-from-plan-its-sending-to-state https://www.almanacnews.com/news/2023/02/01/atherton-guts-mo... >The council removed multifamily housing plans that were met with ire by residents, and softened changes to a lot on Oakwood Boulevard in Golden State Warriors' star Steph Curry's neighborhood ^ that is just one of a million examples of what I'm talking about. This has been going on for decades and the housing crisis we have now is the result.
    - alexb_ 3y ago
      Asking to change policy without changing the incentives that led to said policy is a fool's errand. You have to change what people are incentivized to do to actually change anything because people respond to incentives, not ideas. The way you fix zoning itself is by incentivizing people do to so. Plus, that's not the only supply problem that comes from Prop 13. People don't want to ever sell their houses because that means their property tax will be reassessed when they move. That's another huge problem caused by Prop 13.
Dig1t 3y ago
Is the argument basically just "arg if only we could collect even more taxes we could use the money to fix all our problems"? California already has super high taxes that are skewed towards taxing the rich more. Seems like a joke at this point saying that they need even higher taxes. Also California's system of propositions is one of the closest forms of direct democracy available anywhere, if you like democracy then you should like this system. It is sort of inconvenient that the system was used to stop tax increases for home owners, but these are exactly the reasons why the system was created in the first place, to give people power over their own lives.
- khuey 3y ago
  A better argument is "distributing the tax burden based on how long somebody's family has owned property in the same place has a large number of negative effects." One (of many) serious problem(s) with Prop 13 is that it removes an important feedback mechanism whereby inflating property values result in higher taxes which gives even those who currently own property a financial incentive to support policies that keep housing prices in check. With that feedback mechanism removed, a property-owning homo economicus's rational move is to support policies that drive property values sky high (e.g. very restrictive residential zoning to limit competition while simultaneously seeking intense commercial growth to boost demand) at the expense of other members of the community (e.g. renters and future generations), and that's exactly what has happened in California over the last several decades.
- deleted 3y ago
  [deleted]
- Manuel_D 3y ago
  It's not just more taxes. It's that Prop 13 effectively means your taxes go down over time. This encourages people to stay in housing units as long as possible. It also creates a big divide between people who bought early and those actually supporting the government through up-to-date tax rates. Most sickeningly is that privileged tax status can be passed parents and children, effectively creating a separate caste of people with lower taxes.
  - 3y ago
marsten 3y ago
If you're a new California homeowner, I recommend you never look up what others on your street pay in property tax.
- vondur 3y ago
  I wonder how many of the non business properties are still under Prop 13? I can't imagine it would be that many at this point. Business property can probably be held in some sort of trust so it appears to never have changed hands over the years.
  - khuey 3y ago
    A huge number of residential properties are receiving massive prop 13 subsidies. Open up https://www.taxfairnessproject.org/map https://www.taxfairnessproject.org/map and go poke around a random neighborhood in Palo Alto. Blue means the assessed valuation is close to the market price, while red means the assessed valuation is a tiny fraction of the market price.
  - labcomputer 3y ago
    Lots. You can inherit prop 13 rates from your parents or grandparents. It’s a completely sick system that is literally creating a landed gentry

gibsonf1 3y ago

The increasingly bad management of California (and SF/LA etc) is not about taxes, its about managing based on ideology rather than the common-sense well-being of the citizens. Hence the citizens leave to more favorable places. If prop 13 had anything to do with it, we would have had people escaping the state back then instead of only in recent years.

uoaei 3y ago

The only ones who get upset when you point this out are people who thought they could get away with and benefit from such a loophole. They see no problem with excluding others from the possibility of enjoying the same benefit as long as they already have it. Climbing a ladder and then pulling it up after you is anti-social and shameful.

Domenic_S 3y ago
What are you talking about? Prop 13 applies to every homeowner.

boredumb 3y ago

So the thing holding back California is that they don't get enough taxes? There must be something more nuanced i'm missing, but it almost feels like a comedy sketch thinking of a California college professor explaining to people that California not taxing it's citizens enough is the thing holding it back.

alexb_ 3y ago
The nuance is that with restrictions on property tax there is absolutely no disincentive for citizens to support local policies that restrict housing development. You are incentivized to keep the housing supply as low as you can possibly get it, because raising the price of your own property has zero downsides. This creates homelessness due to a restricted supply of housing.
- Dig1t 3y ago
  >support local policies that restrict housing development You are absolutely correct that this is the problem. But the solution is not to disincentivize home ownership with a tax, it is to fix zoning itself. Homeowners will still have an incentive to restrict housing supply even with a tax. However if you restricted the power of local zoning boards to tell people what they are allowed to build on their own land, then you would fix the housing crisis virtually overnight. There is a strong incentive for developers to build as densely as possible because they can make more money per acre, but the problem is that local zoning boards stop most development. https://www.almanacnews.com/news/2023/02/01/atherton-guts-most-of-multifamily-housing-from-plan-its-sending-to-state https://www.almanacnews.com/news/2023/02/01/atherton-guts-mo... >The council removed multifamily housing plans that were met with ire by residents, and softened changes to a lot on Oakwood Boulevard in Golden State Warriors' star Steph Curry's neighborhood ^ that is just one of a million examples of what I'm talking about. This has been going on for decades and the housing crisis we have now is the result.
  - alexb_ 3y ago
    Asking to change policy without changing the incentives that led to said policy is a fool's errand. You have to change what people are incentivized to do to actually change anything because people respond to incentives, not ideas. The way you fix zoning itself is by incentivizing people do to so. Plus, that's not the only supply problem that comes from Prop 13. People don't want to ever sell their houses because that means their property tax will be reassessed when they move. That's another huge problem caused by Prop 13.

Dig1t 3y ago

Is the argument basically just "arg if only we could collect even more taxes we could use the money to fix all our problems"? California already has super high taxes that are skewed towards taxing the rich more. Seems like a joke at this point saying that they need even higher taxes. Also California's system of propositions is one of the closest forms of direct democracy available anywhere, if you like democracy then you should like this system. It is sort of inconvenient that the system was used to stop tax increases for home owners, but these are exactly the reasons why the system was created in the first place, to give people power over their own lives.

khuey 3y ago
A better argument is "distributing the tax burden based on how long somebody's family has owned property in the same place has a large number of negative effects." One (of many) serious problem(s) with Prop 13 is that it removes an important feedback mechanism whereby inflating property values result in higher taxes which gives even those who currently own property a financial incentive to support policies that keep housing prices in check. With that feedback mechanism removed, a property-owning homo economicus's rational move is to support policies that drive property values sky high (e.g. very restrictive residential zoning to limit competition while simultaneously seeking intense commercial growth to boost demand) at the expense of other members of the community (e.g. renters and future generations), and that's exactly what has happened in California over the last several decades.
deleted 3y ago
[deleted]
Manuel_D 3y ago
It's not just more taxes. It's that Prop 13 effectively means your taxes go down over time. This encourages people to stay in housing units as long as possible. It also creates a big divide between people who bought early and those actually supporting the government through up-to-date tax rates. Most sickeningly is that privileged tax status can be passed parents and children, effectively creating a separate caste of people with lower taxes.
- 3y ago

marsten 3y ago

If you're a new California homeowner, I recommend you never look up what others on your street pay in property tax.

vondur 3y ago
I wonder how many of the non business properties are still under Prop 13? I can't imagine it would be that many at this point. Business property can probably be held in some sort of trust so it appears to never have changed hands over the years.
- khuey 3y ago
  A huge number of residential properties are receiving massive prop 13 subsidies. Open up https://www.taxfairnessproject.org/map https://www.taxfairnessproject.org/map and go poke around a random neighborhood in Palo Alto. Blue means the assessed valuation is close to the market price, while red means the assessed valuation is a tiny fraction of the market price.
- labcomputer 3y ago
  Lots. You can inherit prop 13 rates from your parents or grandparents. It’s a completely sick system that is literally creating a landed gentry