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Businesses in CA got people to vote for prop13 in the 70s I think (the propaganda justifying it was essentially “the Supreme Court said your property taxes have
by olliej 2y ago
Businesses in CA got people to vote for prop13 in the 70s I think (the propaganda justifying it was essentially “the Supreme Court said your property taxes have to pay for the same quality of education for poor people”, but the actual reason is a massive tax cut for corporations as they never actually sell property so get a permanent cut to property taxes).
It basically says “unless a property changes ownership the taxable valuation cannot increase by more than 2%”, it doesn’t matter if it’s a rental property that has rent increased by 50%, or a corporate owned property that has financial reports reflecting its true value, it’s capped at 2% increase.
This has a follow on impact of increasing the actual property tax rates (because the majority of properties are undervalued by actual market rates the only option is higher base tax rates) which means if you do buy a new property you get hit with massive property taxes (over time they will become cheap relative to property value but initial cost is insane).
We’ve owned our house for a decade, and if we were to try and buy it today the property taxes on it would be higher than our current mortgage payments because of the increase in actual market value.
The actual fix for this is complicated (there’s a real issue where a person is retired say and their property taxes could increase to being unaffordable forcing them to sell their home), but I feel a reasonable improvement would be to say that taxable value for residential rental property increases at the maximum of “2% or rate of rent increase”, and commercial property gets taxed at the value included in financial reports, or something to that effect. Alas prop13 is actually a modification to the California state constitution so the only way to fix it is through an amendment to the constitution.
- pc86 2y agoIt's interesting that in your example, your specific situation would still have tax rates subsidized by your neighbors while the people you consider the out-group (corporations, landlords) get minimal or no benefit from it. I'm also not convinced corporations are getting any outsized benefit, business buy and sell real estate all the time. The fix doesn't seem complicated. Assess a home's value. Tax it. If you're concerned about it disproportionately impacting low or fixed income folks, move as much of that tax as you can to income and commuter taxes.
- coryrc 2y agoYou could delay the tax collection above a certain amount until sale of the property. But I'm against allowing people to sit on valuable property while contributing little back to society. Get a reverse mortgage or move out.
- pc86 2y agoDelaying the collection has weird side effects and edge cases where if you hold on to the property long enough you could get into a position where you will actually lose money selling it, or worse yet even have to write a check to the government when you sell your house. I would agree in general that if you can't afford the market-rate property taxes on your home, you should move. And stuff like Prop 13 just makes your neighbors subsidize you.
- archagon 2y agoNobody should be forced to move due to their home increasing in value outside their control.
- pc86 2y agoI see this argued a lot but never with any reason why other than hand-wavey arguments about "fairness." Why are high property taxes pricing someone out of area inherently worse than property values or insurance costs forcing someone out? If you can't afford to live there, shouldn't you have to live somewhere else? Even if you think housing is a human right, housing in the specific city/neighborhood/suburb/street of your choice is not.