patrick.net

mell says

there's a simple solution, revoke prop 13 for everybody but lower property taxes for everybody proportionally and enact a moratorium on raising them.

that's basically redoing prop 13, which is not a bad idea. but it won't happen. people like Zuckerberg don't think we are all paying enough. This is the same guy who hides all his money overseas to not overpay a penny, so he can have more money for himself and his socially fashionable causes.

mell says

there's a simple solution, revoke prop 13 for everybody but lower property taxes for everybody proportionally and enact a moratorium on raising them.

That would be fine. BUT - that is complete fairy tale land. This is a pure revenue grab - and that is all - with the long term intention of eliminating prop13. The only hope for prop 13 is that many CTA members will be affected by a re-assessment. To simply stop split roll and then "give a break anyway to the rich" (which is everyone who owns a house it seems) will never fly.

The purpose is not creating an equitable assessment but to simply pull in 12 billion in revenue a year to feed to the CTA and government agencies.

I realize I was looking for this abuse:

1. The Legal Entity Exclusion (Revenue and Taxation (R&T) Code Section 64(a)(c)

and (d))



One method of avoiding reassessment is to hold the property in a legal entity such as a limited-liability company (LLC) or corporation. For this method to work, upon purchase of the property, you must transfer the property immediately into a legal entity. (Do not delay as each year price of property goes up). Once the property is transferred into the legal entity, the property must remain in the legal entity to avoid reassessment.



The benefit of holding a property in a legal entity is that you can change ownership in the legal entity without triggering a reassessment. For example, if you bought a property and transfer the property into an LLC, you can easily change the ownership of the LLC without changing the ownership of the property: just sell the ownership interest in the LLC.

Tenpoundbass says

Anyone worrying about what the other guy makes, and not enough about how to make their own way. Is destined to continue handing that guy over all of their money.

Envy is bad, jealousy is righteous and greed is good.

I voted aGAINst!

mell says

there's a simple solution, revoke prop 13 for everybody but lower property taxes for everybody proportionally and enact a moratorium on raising them.

Yes! 100x yes. Put out a proposition where we cancel Prop 13 AND then cap the total collection of property taxes at 2% increases. Everyone gets "fairly" assessed (let the complaining begin!) and the % amount you are taxed is set low enough so that the total amount collected state-wide meets the target. New buyers will see their % dropped from 1% down to 0.4% and the ancients (and super-rich people who inherit stuff for free) will see their 0.05% rate increase to 0.4%. Maybe this could happen over a 10 year period.

This would give most of the much-vaulted "stability" falsely claimed to sell the original idea in the 1970's without the market distortion that was the inevitable (and predictable) long term result.

SunnyvaleCA says

Yes! 100x yes. Put out a proposition where we cancel Prop 13 AND then cap the total collection of property taxes at 2% increases. Everyone gets "fairly" assessed (let the complaining begin!) and the % amount you are taxed is set low enough so that the total amount collected state-wide meets the target. New buyers will see their % dropped from 1% down to 0.4% and the ancients (and super-rich people who inherit stuff for free) will see their 0.05% rate increase to 0.4%. Maybe this could happen over a 10 year period.

So are you saying a reset to a new basis for everyone, or on the property itself "one time"? And then instead of 1% a year you do 2% a year? And when the market goes up 10% per year for a house and someone buys, they will be paying much more in taxes for the same house? Not following... Or will the "assessed value" no matter who owns it never go up more than 2% at most? (I could live with that as well but it will never pass) If you limit increases and the market gets hot and housing doubles, don't you have the same problem? I don't see how you can cap increases if you don't want a disparity between market volatility and the taxes paid at that purchase time. Perhaps some sort of 5 year running average? But now we are getting into major public policy changes with likely major unintended consequences.... l

krc says

SunnyvaleCA says

Yes! 100x yes. Put out a proposition where we cancel Prop 13 AND then cap the total collection of property taxes at 2% increases. Everyone gets "fairly" assessed (let the complaining begin!) and the % amount you are taxed is set low enough so that the total amount collected state-wide meets the target. New buyers will see their % dropped from 1% down to 0.4% and the ancients (and super-rich people who inherit stuff for free) will see their 0.05% rate increase to 0.4%. Maybe this could happen over a 10 year period.

So are you saying a reset to a new basis for everyone, or on the property itself "one time"? And then instead of 1% a year you do 2% a year? And when the market goes up 10% per year for a house and someone buys, they will be paying much more in taxes for the same house? Not following... Or will the "assessed value" no matter who owns it never go up more than 2...

There is also the original reason for prop 13 that is still there. Which is that old people will be on the street if you increase their taxes. It was the case when fucking unions were going nuts with taxes and people were on the street, hence the tax revolt. Society used to actually care about dignity for old folks. In fact, best option would be to eliminate all property taxes for absolutely everyone. There are places in this world with no property taxes, and they are just fine. There are states with no income taxes, and those are fine too. I'm telling you, CA is a fucked up high tax place and no matter how much you give, it's never enough.

And, not sure if you were doing the math, but going .05 to .4 is 8x the previous taxes - and that is for the "ancients" who are likely on fixed income. I know many retired folks who couldn't make that fly. To take folks that are elderly, on fixed income/SSI/S and then take that size of a hit on their property will not be pretty. And no political party will do that. So now we get into the ever-popular "exemptions" so that it becomes another muddled mess.


The beauty of prop 13 is that if you believe in CA and want to buy in CA, you don't have to be subject to the whims of the property assessment process that afflicts so many other states. You buy once - you get the benefit as long as you continue to hold that property.

Again, if you have resentment because someone "bought earlier" then simply don't buy.
***** NOTE **
Under Proposition 13, the annual real estate tax on a parcel of property is limited to 1% of its assessed value. This "assessed value," may be increased only by a maximum of 2% per year, until and unless the property has a change of ownership.

FortWayneAsNancyPelosiHaircut says

Only reason prop 13 is alive is because there is money protecting it. As long as businesses are protected by it same as residential, they'll spend money fighting to keep it. Once they are split off, they won't have any incentive to protect residential properties.

Bingo.

I'm not against changes to how CA RE is taxed, and I do think we should change it - some of the tax bill disparities are too wide. But I don't like prop 15.

This will utterly screw many small business owners, with a razor focus on them, while being very mild to most people. I bet there's a lot of sandwich shop type businesses that don't really make a killing, but do cash flow. But this bill can easily tack on an extra 50k a yr in taxes. I'd be pretty damn pissed if my paychecks got taxed 50k a yr, if you're only profiting 100-200k anyway.

And then like ftwayne said, they will come for residential.

I read somewhere that the purpose of the inherited tax basis was to help families retain their homes after parents die, opposed to the loss of the sentimental home, and making it more likely the remaining children need to move. Sounds reasonable to me, although maybe the reduced tax basis should gradually ramp up over time, allowing children some time to get their money on and plan. But, I do agree that homes used as rentals shouldn't get an inherited basis - only child-occupied homes.

Prop 15 does allow 1 child to inherit the tax basis for their parents primary home, if the child moves in within 1 yr. But, it only works for 1 home. I think it should work for as many homes as there are children to occupy them.

btw prop 15 includes some new verbiage about taxes going up according to some new CA RE price index. Get ready for index algo corruption to maximally fuck you in the ass to optimize their tax revenues.

Dholliday126 says

Quite frankly if they just got rid of prop 13, housing would crash down to texas like levels and everyone would win.

Doubtful. I don't see prop 13 as suppressing house building and development. It is really more about NIMBYism and "saving the hills", etc... Basically, very specific local policies are the culprit. For better or worse, Californians are more interested in "controlling" what is built out around them. Texans don't give a crap - very little restriction compared to CA.

krc says

So are you saying a reset to a new basis for everyone, or on the property itself "one time"? And then instead of 1% a year you do 2% a year? And when the market goes up 10%

Sorry. I'm not explaining this well. Let me try again.

Last year, with Prop 13 still active, California collected (lets say) $100 BIllion dollars for all property taxes. As a new homeowner, I paid $20k — 1% of of the "assessed value" of the shack I just bought for $2MM. My ancient neighbor payed 1% also, but that amounted to only $975 — 1% of an identical shack with "assessed value" of only $97,500 thanks to Prop 13.

This year, with my plan, everyone has their shack re-assessed accurately. My shack is $2MM and my neighbor's is also $2MM (not $97,500). California intends to collect the same as last year with a 2% increase. That means $100B + 2%, which is $102B dollars. After summing up all properly assessed property values, California determines that the accurate total assessed value of all properties is $22T. So, to collect $102B the tax rate for EVERYONE is set to 102B/22T = 0.463%. So, I pay $2MM x 0.463% = $9,260 and the neighbor with identical property pays that, too. (We need some phase-in or other protections so we don't kick grandma out of her house, etc.)

If, the year after that, the total value of all property in the state increases from $22T all the way up to $25T then, to collect $104B (after that 2% increase) the rate is set to 104B/25T = 0.416% so that the state collects the $104B. So, even though my house went from $2MM to $2.3MM (woo hoo!), everyone's tax rate % went from 0.463% down to 0.416%; my first year was $2MM x 0.463% = $9,260 and my second year was a very modest increase: $2.3MM x 0.416% = $9,568 even though my house value (and everyone else's) went up a lot.

That achieves pretty good tax stability (from the homeowner standpoint and from the tax collector standpoint too). It also removes market distortion — if you sell your shack, the buyer will face the exact same taxes as you paid the previous year (plus 2%).

btw I made a post on here years back, and calculated (w/ napkin math) that if we got rid of prop 13, while holding total RE tax revenue constant, then instead of people paying 1% of assessed value, they could pay about 0.66%, w/o affecting revenue. This was specifically residential RE tax figures.

Not that I'm suggesting it, but it's an interesting figure to show how much of a free ride some get.

Seems like that only works if the real estate market reverts closer to a 2% pricing gain in the long run - right? Otherwise, total revenue to the state, limited by the 2% max across all properties, will see a decline relative to market value and vs current revenue with prop13. I can't see the state living with that either as the argument will be that "rich owners" are benefiting by holding an appreciating asset that is not taxed "fairly." I can't see the state accepting that as the current prop13 would be better in an appreciating market since they get the reset immediately at a value that is much higher than a 2% appreciation.

So, if you wanted to match current revenues, I think you would need closer to a 6% because of the frequency of the reset at an appreciation rate that is much greater than 2%.



++++++++++++++++++++++++++++++++++++++++

California, under prop 13:

“Personal income in California -- an approximate measure of the size of the state’s economy -- has grown at an average annual rate of 6.3 percent since 1979,” Taylor’s 2012 report says. “Over the same period, revenue from the 1 percent property tax rate has grown at an average annual rate of 7.3 percent.”

How is that possible?

While Proposition 13 limits taxes on any particular piece of property as long as it remains under the same ownership, taxable values are upgraded when it changes hands. That, along with ever-rising market values, accounts for much of the steady increase.

krc says

only works if the real estate market reverts closer to a 2% pricing gain in the long run

Correct. That's an inherent problem with setting that 2% limit. Probably why California now has the highest state income tax and (nearly) highest sales tax. Maybe it should be "rate of inflation" increases instead. Or something. If you're really crazy (insane), the CA government should set a budget for the year and then set the tax % at the right amount to exactly grab that amount of money. That could actually work if only homeowners are allowed to vote (isn't that exactly how voting worked back in the old days?).

krc says

revenue from the 1 percent property tax rate has grown at an average annual rate of 7.3 percent.”
How is that possible?

Simple: Assessed value of all the properties has increased at a rate of 7.3%.
If you build a whole bunch more houses and those houses are assessed at a huge amount of money, you would grow total assessed value.
If someone sells their house, the new owner is re-assessed at "fair market value," which might be massively higher. My neighbor's shack, for example is assessed at a value of about $100k, but if she dies/sells, the new tax donkey will be assessed at $2MM. Taxes will go from $1k to $20k overnight.

I won't vote for it, not because of issues, because I entirely mistrust California government at any level. They ALWAYS find a way to fuck the voter and the middle class. Those who haven't learned this lesson and choose to trust them, well, it's Linus and Lucy with the football again. If you want to trust the grifty grafty crooks and sociopaths who already have fucked California to the gills, then go ahead and keep up the progress of the suicide of the State by giving them more graft and more control. Keep getting less and less infrastructure and services for more and more money.

Shit, they have this last year abdicated their protection of the citizenry, but will attack and fine the citizens for protecting themselves. At the very least, they could toss you a carbine and give you a foxhole instead of tying your hands behind you and releasing you to the tender mercies of the recently sprung prison population, cartels, ghetto whompers and illegals who have now been deputized.

It probably doesn't matter, anyway. Most taxes are raised by the voters who don't pay the taxes. That's why California keeps the immigrants flooding in and barefoot and pregnant. The voters are their sheep, and they do not experience the consequences. They see it as free schools, lunches, and baby sitting with some other free shit tossed into the equation. Businesses and middle class will just continue to flee, and we have already seen many of the results of that.

In this rare instance Mark Fuckerberg is right, prop 13 has been a huge disaster gutting public funding for California. The entire thing should be repealed, all of it. Having to move away isn't the worst thing that can happen, haha it might be the best.

The one time I agree with Fuckerberg

krc says

basic jealousy

Yes, yes, I know: F*ck Off, I got mine. Screw your ass. You're just jealous.

B.A.C.A.H. says

krc says

basic jealousy

Yes, yes, I know: F*ck Off, I got mine. Screw your ass. You're just jealous.

It’s not that. Just government wants more money. And as usual it’s tax increases on everyone while sone suckers think it’s tax on rich only. It’s simply not the case. Those boys upstairs always try to figure out how to get more out of us by putting up against each other

Thanks to Mr. Mark Zuckerberg for the initiate.
1978 Prop 13 = Go and rob all your neighbors legally through the government by "accusing" the government to keep robbing.
Look at your neighbors taxes:
https://www.officialdata.org/ca-property-tax/

Blue says

Thanks to Mr. Mark Zuckerberg for the initiate.
1978 Prop 13 = Go and rob all your neighbors legally through the government by "accusing" the government to keep robbing.
Look at your neighbors taxes:
https://www.officialdata.org/ca-property-tax/

I don’t care about my neighbors taxes. I’m not operating from jealousy, and yes I pay more than my old neighbors.

They should imo limit number f times property taxes can be inherited. That would make sense. But it must come with guarantees of where money will go. Right now any taxes go into bottomless pit for Gavin to give out to his wealthy friends.

I’m still pissed off about money laundering under excise that it was for illegals.

epitaph says

In this rare instance Mark Fuckerberg is right, prop 13 has been a huge disaster gutting public funding for California. The entire thing should be repealed, all of it. Having to move away isn't the worst thing that can happen, haha it might be the best.

How did Prop 13 "gut" public funding when we are easily in the top 5 per capita for highest tax burden? (by state)

Fortwaynemobile says

They should imo limit number f times property taxes can be inherited.

If you mean limit it to 0, then sure! A single inheritance would push the "fix" off for an additional 30 years. California will simply not last long enough to see that happen.

Blue says

Thanks to Mr. Mark Zuckerberg for the initiate

I've got a much better way that The Zuck could help: stock should be marked to market yearly and taxed on the paper gains (with some holdback in case of a subsequent stock slump). Plus, income taxes should be paid on any money going to a foundation (slush fund) or other tax-avoidance scheme.

Patrick says

Commercial property should not be exempt from property tax increases because businesses can live forever, never resetting their tax basis.

Fuck! California already has one of the most unfriendly private business environments in the country. And that's despite Prop 13. Prop 15 will just accelerate the bloat in the most bloated public sector in the US. Don't hold your breath waiting for those trickle down tax dollars to make it to you..

NuttBoxer says

Patrick says

Commercial property should not be exempt from property tax increases because businesses can live forever, never resetting their tax basis.

Fuck! California already has one of the most unfriendly private business environments in the country. And that's despite Prop 13. Prop 15 will just accelerate the bloat in the most bloated public sector in the US. Don't hold your breath waiting for those trickle down tax dollars to make it to you..

No kidding. What are some of the commenters on this site thinking? Businesses are already fleeing at record rates thanks to high taxes along with retarded Democrat regulations and COVID restrictions.

Raise your hand if you think California's manifest problems is that we aren't taxed high enough?

I understand the arguments how Prop 13 distorts market pricing and lots of people on this site live in California and are screwed out of housing. But we need to have the fuckers in Sacramento reduce our sky high income and sales tax FIRST before we agree to MOAR taxes for a State run with super majority Democrats.

Santa Cruz is a pretty nice example of Prop 13 intergenerational exemptions. Lots of sugar shacks with weed strewn yards, just left because families seldom if ever visit and don't even see a reason to maintain, but it costs nothing to keep them, even without renting them.

Prosperous hippie dippie fluffies who are inheritors are all over the place, some owning condo blocks that their parent owned in the day and they live off of the rents while staring at the sun. You can't always tell who they are, because many don't look that different from the bums, except they have better skin and hair.

One guy a few doors down claims all the Vet benefits. His family has had property downtown and around town that he inherited. He was a draft dodger from Vietnam in the day.

They actually physically caught him and forced him to enlist. He wound up discharged because they managed to keep him out of conflict to be the driver and secretary for an officer. However, he went AWOL to do drugs and women so often, they kicked him out. Somehow, he managed to keep his vet status and all the benefits.

He says he keeps one of his inherited apartments downtown empty, so that he can get stumbling drunk downtown and just go there to sleep it off rather than running into the cops like he did when he was driving. The weird thing is, he acts incredibly sanctimonious about being a Vietnam Vet, and belongs to their group downtown at the Vet's center. If he hadn't inherited money, he would most likely be homeless, he's almost always drunk. He also spends a lot of time with a camper traveling around the West Coast.

Another friend of my wife's inherited a condo block, only works when she feels like it as a dietician, but spends most of her time traveling and living from the income. Many of these types, if they weren't inheritors, wouldn't be here, or they would be struggling and exasperated. There are several other examples. This woman is actually pretty nice, although incredibly naive because of an entitled and protected existence. I feel like a war torn alley cat whenever i talk with her. These people also have the dazed and confused Libby outlook, even with the Hun chomping at their doorsteps.

i told my wife a long time ago that in California, you are competing with the wealthy, and it isn't a fair fight. However, it used to be that middle class was OK, still safe, still reasonably nice, you could still enjoy things reasonably well.

socal2 says

NuttBoxer says

Patrick says

Commercial property should not be exempt from property tax increases because businesses can live forever, never resetting their tax basis.

Fuck! California already has one of the most unfriendly private business environments in the country. And that's despite Prop 13. Prop 15 will just accelerate the bloat in the most bloated public sector in the US. Don't hold your breath waiting for those trickle down tax dollars to make it to you..

No kidding. What are some of the commenters on this site thinking? Businesses are already fleeing at record rates thanks to high taxes along with retarded Democrat regulations and COVID restrictions.

Raise your hand if you think California's manifest problems is that we aren't taxed high enough?

I understand the arguments how Prop 13 distorts market ...

You can't do that by letting lopsided - some would say crooked - propositions stand. It doesn't work. Housing will stay scarce and inflated and you will have more and more homeless shitting on the streets and more and more families cramming 10+ people into a 4 bedroom house, crime etc. The argument that it will make things worse is one more reason for a serious reset/reform. Like politicians cannot raise taxes indefinitely, they automatically lower back after a year and have to be voted in again by the people. Or if you don't have a balanced budget you lose you seat or go to jail, esp. if you raised taxes to balance the budget and still fell short because you slushed it elsewhere. Sure you can keep going this way hoping you and your family will be fine and your house prop 13 protected, but the combined problems - also caused by this - will sooner or later catch up with the best zipcode. CA is doomed and so is the US if the Dems take over until there is some serious reform. This state is ready for the crapper. At least Trump may be able to stave off the looming federal decline if he wins again.

SunnyvaleCA says

Fortwaynemobile says

They should imo limit number f times property taxes can be inherited.

If you mean limit it to 0, then sure! A single inheritance would push the "fix" off for an additional 30 years. California will simply not last long enough to see that happen.

If only there were guarantees on what the money going to state do for us. Right now, it’ll mean nothing for us. Raise taxes to 100% and it’ll still make no difference or be enough

mell says

you will have more and more homeless shitting on the streets

Of course you will. But this is completely detached from property taxes or house prices. CA has Homeless Industrial Complex and bums from all over the country is the grease which lubricates its wheels.

SunnyvaleCA says

I've got a much better way that The Zuck could help: stock should be marked to market yearly and taxed on the paper gains (with some holdback in case of a subsequent stock slump). Plus, income taxes should be paid on any money going to a foundation (slush fund) or other tax-avoidance scheme.

Exactly. Eliminating prop13 moves to a tax on fictional/unrealized gains.

And, yeah, I know several folks from the midwest who have rented for years. Some regret not buying back 10-15 years ago when the first moved to the state - they just couldn't wrap their head around the price of CA real estate. Others see the benefit of renting, which Patrick has pointed out for a while.

I’m for repealing Prop13 completely and then issuing a new law that clamps property tax on primary residences owned by senior citizens at 25% of normal rate.
That’ll take care of the “evicting grandma” argument while turning the tax skate trust fund babies into tax payers.

It should also depress house prices a bit, and obviate the need for all the tacked on house taxes since a lot more people will be paying their fair share. I constantly run into people who inherited their house and use their income to Lord it over the rest of us peasants with their new cars and fancy vacations. While I pay $10,000 a year in property taxes to make sure their stupid kids can go to school.

Fortwaynemobile says

I don’t care about my neighbors taxes. I’m not operating from jealousy, and yes I pay more than my old neighbors.

I agree. Doesn't bother me either and prop 13 lets me KNOW what my future taxes will be in perpetuity, and that these taxes will not be a political football or manipulated by government to get "more". But, had I been a renter for years (thinking CA RE would go down dramatically) and THEN decided to buy, I would likely be a little bitter. Hindsight is 20/20 though....

Illinois taxes for RE go through the roof as they have a flat tax AND they have a massive pension liability that cities need to fund. RE taxes is a political tool to fund the unions.

Shaman says

I’m for repealing Prop13 completely and then issuing a new law that clamps property tax on primary residences owned by senior citizens at 25% of normal rate.
That’ll take care of the “evicting grandma” argument while turning the tax skate trust fund babies into tax payers.

I don't think so. Let say the housing appreciates at 5% over a 15 year period. Taxes essentially double if you tax to market value (house is double the value). Even if they are paying a smaller fixed %, it is still an unplanned cost that likely they cannot endure (still double). Most people - even those owning/buying a house - are flat broke. And there are no more "tacked on housing" taxes with prop 13 unless you consider MR. Your taxes start at the value of the house you purchase at and are capped to specific increases that are known and defined.

Interesting article on how CA buyers tend to stay longer and have more stable minority communities, for whatever that is worth.
https://www.nber.org/digest/apr05/w11108.html

Don't think I want anything to do with something dreamed up by some sanctimonious ZuckFuck Think Tank, that he hires to virtue signal so his LibbyFuck wife might give him a blow job someday.

mell says

Housing will stay scarce and inflated

Prop 13 doesn't create scarcity. High building fees charged by localities, nimbyism, mandated union rate in certain areas for construction, building restrictions due to traffic infrastructure limits, permit restrictions (no ugly houses on a hillside or coastline) etc... do far more to create high prices than prop 13.

krc says

How did Prop 13 "gut" public funding when we are easily in the top 5 per capita for highest tax burden? (by state)

Property taxes are used to pay for public infrastructure. Ever wonder why California has the worst roads in the nation?

epitaph says

Property taxes are used to pay for public graft. Ever wonder why California has the worst roads in the nation but the richest 'public servants'?

There, fixed it.