4 ms·

Prop 13 for individuals/families serves largely the same purpose as rent control - to ensure that the place they live in stays affordable. If property values i

Prop 13 for individuals/families serves largely the same purpose as rent control - to ensure that the place they live in stays affordable. If property values increase and there is no rent control, do you really expect landlords to not pass the property tax increases to the renters? In fact, I would argue that more home ownership would be a lot better than rent control, because if the home owner chooses to leave a given area by selling, he/she is able to benefit from the increased values. Renters on the other hand cannot. While it would be very interesting to contrast the tax situation in Washington state (property taxes adjust every year there from what I understand) with that of California, I doubt the current situation would greatly improve prop 13 gone, and I know for sure a lot of people would be squeezed.

michaelt 12y ago
In the UK, houses are placed in 'council tax bands' based on the estimated value on 1st April 1991. So the tax band stays the same regardless of housing market fluctuations. The tax rates for the bands are then set by the local council, as a political decision. Band A property? £1000 a year. Band E property, maybe it's £3000 a year. Admittedly, assessing a tax band is a little subjective - but it seems to work OK. Any idea why local government taxes in the US aren't calculated the same way?
- sologoub 12y ago
  I'm sure they can, but like you said - it's all political. From what I know, WA state uses real estate tax as one of the primary revenue streams (in addition to sales tax), whereas CA also has income tax. CA and WA seem to have similar sales taxes, so the main difference in funding is in WA not having an income tax. There are many more differences, but I don't know if those are for a "good reason" or bloat. My personal biases make me lean to CA budgets being bloated...
- maxlybbert 12y ago
  Property taxes in the US are mainly state law. Like anything else about taxes, California created a very weird system for its property taxes. Property taxes are a percentage of the property's value, but states have very creative ways to define the property's value. For instance, North Carolina automatically updates property values every few years ( http://www.ncga.state.nc.us/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_11.html http://www.ncga.state.nc.us/EnactedLegislation/Statutes/HTML... ), and there is a way to dispute the tax assessor's office. California put limits on what property tax can be used for, how much it can change per year, and when the property's value gets reassessed (answer: when the property sells) in the '70s ( http://en.wikipedia.org/wiki/California_Proposition_13_%281978%29 http://en.wikipedia.org/wiki/California_Proposition_13_%2819... ). It was done through a ballot measure, which means the legislature can't make any changes by itself.
  - maxlybbert 12y ago
    ... " and there is a way to dispute the tax assessor's value."
batbomb 12y ago
If Prop 13 were limited to primary residence OR to those aged 65 or older, or had means testing, that would make a lot more sense. Of course, somebody decided it would be easy to apply it to everyone, even large commercial properties. The fact that it applies to commercial properties is kind of insane. http://www.sfgate.com/news/article/Bill-to-close-Prop-13-loophole-gets-rare-mix-of-5490455.php http://www.sfgate.com/news/article/Bill-to-close-Prop-13-loo...
- bmm6o 12y ago
  It would seem insane, except that one of the main purposes of the Proposition was to de-fund government. If you weren't around at the time, "drown government in the bathtub" might not ring a bell.
kansface 12y ago
The point is that home owners have the very strong and perverse incentive to stop all new construction under prop 13. Currently, their homes appreciate 15% each year while their taxes move less than 1%. They are minting money with no down side. New construction means they make less money, plain and simple. | In fact, I would argue that more home ownership would be a lot better than rent control... This may be the case, but its an experiment that will never happen. SF is at an extreme housing deficit, and refuses to build new housing commensurate to its population growth (1 unit per 10 new people for the past decade). Prop 13 is a large part of the problem - minus squeezing, home owners have no incentive to allow new construction.
- sologoub 12y ago
  Disclaimer: I don't live in SF or Bay Area, but visit for work often. That said, I do live in a place that is fairly constrained on new development, but not as badly as SF. For my part, the lifestyle that makes both of these places so appealing includes a certain level of density, but not much more than that. It's hard for me to fault people who bought their properties for defending the lifestyle they bought into. On the commercial use of prop 13, I would tend to agree that it's not the best idea today. I am entirely against means testing and such for personal uses, including non-primary residences. A simple use case for non-primary residence non-commercial use is if one is taking care of elderly parents. Should the parents be forced out of their home because their child happens to own the property? This is not commercial use to me either, unless rent is being charged of course.
- kelnos 12y ago
  The problem with that line of reasoning is that 15% increase isn't immediately available to the homeowner. To turn that into cash, they have to move. I imagine many homeowners could simply just not afford an uncapped property tax hike. Part of the attraction of homeownership is security, in that homeowners aren't subject to fluctuations in the rental market. Prop 13 helps to reinforce that security, delaying the property tax increases to the point where the homeowner would be able to afford them -- at moving time. It's certainly not perfect, but I'm not convinced repealing prop 13 is the answer. Perhaps a hybrid approach: live-in owners are subject to prop 13 caps on increases, but rental properties are not? Coupled with a repeal or loosening of rent control would allow landlords to pass on at least some of that cost increase to renters, which I think is a reasonable thing. Again, not perfect, but perhaps an improvement.

michaelt 12y ago

In the UK, houses are placed in 'council tax bands' based on the estimated value on 1st April 1991. So the tax band stays the same regardless of housing market fluctuations. The tax rates for the bands are then set by the local council, as a political decision. Band A property? £1000 a year. Band E property, maybe it's £3000 a year. Admittedly, assessing a tax band is a little subjective - but it seems to work OK. Any idea why local government taxes in the US aren't calculated the same way?

sologoub 12y ago
I'm sure they can, but like you said - it's all political. From what I know, WA state uses real estate tax as one of the primary revenue streams (in addition to sales tax), whereas CA also has income tax. CA and WA seem to have similar sales taxes, so the main difference in funding is in WA not having an income tax. There are many more differences, but I don't know if those are for a "good reason" or bloat. My personal biases make me lean to CA budgets being bloated...
maxlybbert 12y ago
Property taxes in the US are mainly state law. Like anything else about taxes, California created a very weird system for its property taxes. Property taxes are a percentage of the property's value, but states have very creative ways to define the property's value. For instance, North Carolina automatically updates property values every few years ( http://www.ncga.state.nc.us/EnactedLegislation/Statutes/HTML/ByArticle/Chapter_105/Article_11.html http://www.ncga.state.nc.us/EnactedLegislation/Statutes/HTML... ), and there is a way to dispute the tax assessor's office. California put limits on what property tax can be used for, how much it can change per year, and when the property's value gets reassessed (answer: when the property sells) in the '70s ( http://en.wikipedia.org/wiki/California_Proposition_13_%281978%29 http://en.wikipedia.org/wiki/California_Proposition_13_%2819... ). It was done through a ballot measure, which means the legislature can't make any changes by itself.
- maxlybbert 12y ago
  ... " and there is a way to dispute the tax assessor's value."

batbomb 12y ago

If Prop 13 were limited to primary residence OR to those aged 65 or older, or had means testing, that would make a lot more sense. Of course, somebody decided it would be easy to apply it to everyone, even large commercial properties. The fact that it applies to commercial properties is kind of insane. http://www.sfgate.com/news/article/Bill-to-close-Prop-13-loophole-gets-rare-mix-of-5490455.php http://www.sfgate.com/news/article/Bill-to-close-Prop-13-loo...

bmm6o 12y ago
It would seem insane, except that one of the main purposes of the Proposition was to de-fund government. If you weren't around at the time, "drown government in the bathtub" might not ring a bell.

kansface 12y ago

The point is that home owners have the very strong and perverse incentive to stop all new construction under prop 13. Currently, their homes appreciate 15% each year while their taxes move less than 1%. They are minting money with no down side. New construction means they make less money, plain and simple. | In fact, I would argue that more home ownership would be a lot better than rent control... This may be the case, but its an experiment that will never happen. SF is at an extreme housing deficit, and refuses to build new housing commensurate to its population growth (1 unit per 10 new people for the past decade). Prop 13 is a large part of the problem - minus squeezing, home owners have no incentive to allow new construction.

sologoub 12y ago
Disclaimer: I don't live in SF or Bay Area, but visit for work often. That said, I do live in a place that is fairly constrained on new development, but not as badly as SF. For my part, the lifestyle that makes both of these places so appealing includes a certain level of density, but not much more than that. It's hard for me to fault people who bought their properties for defending the lifestyle they bought into. On the commercial use of prop 13, I would tend to agree that it's not the best idea today. I am entirely against means testing and such for personal uses, including non-primary residences. A simple use case for non-primary residence non-commercial use is if one is taking care of elderly parents. Should the parents be forced out of their home because their child happens to own the property? This is not commercial use to me either, unless rent is being charged of course.
kelnos 12y ago
The problem with that line of reasoning is that 15% increase isn't immediately available to the homeowner. To turn that into cash, they have to move. I imagine many homeowners could simply just not afford an uncapped property tax hike. Part of the attraction of homeownership is security, in that homeowners aren't subject to fluctuations in the rental market. Prop 13 helps to reinforce that security, delaying the property tax increases to the point where the homeowner would be able to afford them -- at moving time. It's certainly not perfect, but I'm not convinced repealing prop 13 is the answer. Perhaps a hybrid approach: live-in owners are subject to prop 13 caps on increases, but rental properties are not? Coupled with a repeal or loosening of rent control would allow landlords to pass on at least some of that cost increase to renters, which I think is a reasonable thing. Again, not perfect, but perhaps an improvement.