2 ms·

Quite true. Prop 13 is an abomination. Instead of only homeowners paying reasonable real estate tax, they've essentially made everybody in california subsidiz

by seiji 14y ago

Quite true. Prop 13 is an abomination. Instead of only homeowners paying reasonable real estate tax, they've essentially made everybody in california subsidize low-tax-locked real estate owners. Now you get to have the fun of paying virtual real estate tax without owning property. It turns out, we have the ability to not live there! It's not quite sane to take a multimillion dollar exit in California when Seattle has zero additional overhead. Though, it is an absolute dickhead move to build your company in California then "establish residency" in a zero-income/capital gains tax state solely to avoid California tax harassment.

bcoates 14y ago
It's California's stupid fault for picking that tax system. It's not like residence-based income taxes were decreed by God as the only way to fund a government.
- 001sky 14y ago
  residence based taxation is a stealth wealth tax. us is illegal wealth tax directly. problem was in 1970s, people bought 10k house on 3k/ye wages. 10 yes later, it was million dollar house. 3k/wages cannot pay taxes on million dollar house. so that is why they passed such a law. otherwise, people would have all had to sell house for capital gains and move out of california in 1970s. This is not justifying system, but explaining how these thnings come about. Again, it has to do with people not being able to afford the either the real-estate (at market values) or the taxes based on their incomes. taxes just second order effect though.
  - thrownaway2424 14y ago
    You will have to excuse me if I don't sympathize with the taxation problems of people who are sitting on unrealized million-dollar capital gains.
    - 001sky 14y ago
      The politicians were showing sympathy with the grandma on social security liing in her house she bough in 1940 with no plumbing, etc. It was not her fault NASA moved in next door to send men to the moon, etc. That, at least was the context. I don't have sympathy for entitled people either, particulalrly those we are talking about who "developed" and paved over CA with freeways. But before them was a genration of home-steaders, who had no income because they were modest people. They took a lot more risk and invested a lot of sweat equity to make CA a better plave to libe, so perhaps worth showing them some respect...etc. or not YMMV.
prostoalex 14y ago
>>> they've essentially made everybody in california subsidize low-tax-locked real estate That's not true - your tax base is set at the time of the purchase. And California real estate market is quite vibrant compared to other states.
- thrownaway2424 14y ago
  I think the point was that Prop 13 was a gambit by incumbent asset owners to disproportionately tax newcomers. This worked perfectly well (for the incumbents) as long as California enjoyed robust net population growth, because the disproportionate tax burden was primarily born by newcomers. However, now that net migration has slowed, the disproportionate burden is now mainly born by natives of the state. It just doesn't make sense to continue this scheme, unless you are just a bitter old Boomer who hates your own children. The problems of getting rid of Prop 13 will in the details. If you just eliminate it, you will drop housing prices across the board, and every homeowner will be hit (just as every homeowner reaped an unearned windfall at the time 13 was enacted.) There may be some way to phase it out over many years, or to get rid of the more ridiculous protections for corporate-owned real estate and inheritance transfers.
  - prostoalex 14y ago
    I'm having a tough time buying it. Imagine someone who's old and in the (lucky) position to sit on a highly appreciated real estate lot. Their potential behavior: (a) enjoy the low property tax they have to pay, while patting themselves on the back (b) sell to downsize and pocket the difference, retire to greener pastures I think (a) is more rational if you're on a giant farm, and this way you don't have to sell the pieces to pay the property tax bill any time the land value fluctuates because of external economic cycles. (b) is more rational with any residential estate. That's why a San Francisco magazine would complain about the influx of young tech workers, not the influx of little old retired ladies, and most older houses in Atherton and Palo Alto are bought for teardown value.
    - geebee 14y ago

by seiji 14y ago

bcoates 14y ago

It's California's stupid fault for picking that tax system. It's not like residence-based income taxes were decreed by God as the only way to fund a government.

001sky 14y ago
residence based taxation is a stealth wealth tax. us is illegal wealth tax directly. problem was in 1970s, people bought 10k house on 3k/ye wages. 10 yes later, it was million dollar house. 3k/wages cannot pay taxes on million dollar house. so that is why they passed such a law. otherwise, people would have all had to sell house for capital gains and move out of california in 1970s. This is not justifying system, but explaining how these thnings come about. Again, it has to do with people not being able to afford the either the real-estate (at market values) or the taxes based on their incomes. taxes just second order effect though.
- thrownaway2424 14y ago
  You will have to excuse me if I don't sympathize with the taxation problems of people who are sitting on unrealized million-dollar capital gains.
  - 001sky 14y ago
    The politicians were showing sympathy with the grandma on social security liing in her house she bough in 1940 with no plumbing, etc. It was not her fault NASA moved in next door to send men to the moon, etc. That, at least was the context. I don't have sympathy for entitled people either, particulalrly those we are talking about who "developed" and paved over CA with freeways. But before them was a genration of home-steaders, who had no income because they were modest people. They took a lot more risk and invested a lot of sweat equity to make CA a better plave to libe, so perhaps worth showing them some respect...etc. or not YMMV.

prostoalex 14y ago

>>> they've essentially made everybody in california subsidize low-tax-locked real estate That's not true - your tax base is set at the time of the purchase. And California real estate market is quite vibrant compared to other states.

thrownaway2424 14y ago
I think the point was that Prop 13 was a gambit by incumbent asset owners to disproportionately tax newcomers. This worked perfectly well (for the incumbents) as long as California enjoyed robust net population growth, because the disproportionate tax burden was primarily born by newcomers. However, now that net migration has slowed, the disproportionate burden is now mainly born by natives of the state. It just doesn't make sense to continue this scheme, unless you are just a bitter old Boomer who hates your own children. The problems of getting rid of Prop 13 will in the details. If you just eliminate it, you will drop housing prices across the board, and every homeowner will be hit (just as every homeowner reaped an unearned windfall at the time 13 was enacted.) There may be some way to phase it out over many years, or to get rid of the more ridiculous protections for corporate-owned real estate and inheritance transfers.
- prostoalex 14y ago
  I'm having a tough time buying it. Imagine someone who's old and in the (lucky) position to sit on a highly appreciated real estate lot. Their potential behavior: (a) enjoy the low property tax they have to pay, while patting themselves on the back (b) sell to downsize and pocket the difference, retire to greener pastures I think (a) is more rational if you're on a giant farm, and this way you don't have to sell the pieces to pay the property tax bill any time the land value fluctuates because of external economic cycles. (b) is more rational with any residential estate. That's why a San Francisco magazine would complain about the influx of young tech workers, not the influx of little old retired ladies, and most older houses in Atherton and Palo Alto are bought for teardown value.
  - geebee 14y ago