Prop 13: Idiocy Comes Home to Roost in California

[one...two...tree 2,762]

....

Proposition 13 was cleverly designed to make it virtually impossible for California to raise taxes. Any tax increase requires a supermajority. Property taxes are fixed at 1% of assessed value, and assessments themselves are fixed at the time of purchase, and can rise only very slowly thereafter. This leads to all sorts of idiotic consequences. Back when I lived in California, one of the few ways of raising taxes available to cities and towns was to increase the sales tax by some fraction of a percent. Result? Cities and towns did this, and then tried desperately to induce people to set up car dealerships and other places where people sell big, expensive things. Did it make sense to have so many car dealerships? Who cares! It's revenue!

Likewise, people in California don't always sell their houses when it would normally make sense to do so, because as long as they stay in their existing house, the assessment will not rise much and their taxes will stay low, whereas if they buy a new house, it will be assessed at its purchase price, and their taxes will go up.

"Free markets", indeed.

My favorite Prop 13 anecdote: while she was alive, my grandmother lived in a wonderful house that she had (I believe) designed herself in the 50s or thereabouts, and built on what was then an undeveloped hillside. As time passed, however, that property became much, much more valuable, which makes sense since it was on the border between LA and Beverly Hills, on a delightful secluded street that ran up the hillside and dead-ended at the top. Phil Spector lived next door, and Eartha Kitt lived up the street.

Meanwhile, I had a good friend who lived in a house in a terrible neighborhood (as in: there were shootings nearby on a fairly regular basis.) The only famous person who lived near her was Rodney King. Her house itself was great, but it was also in a state of considerable decay when she bought it, and needed a whole lot of work.

Guess who paid the least in property taxes, by a considerable margin? My grandmother, of course. Having a cap on property assessments in place for decades will do that.

The result, of course, is that California has been deferring maintenance for a very long time. Now their judges will be working from home, their schools will fall further into decay, and their bridges will continue to crumble. With any luck, Obama's stimulus plan will help out with the worst of it; my only regret about that is that it will postpone the day when Californians have to confront the idiotic tax policies they put in place.

http://www.washingtonmonthly.com/

[Ban Hammer 14,668]

welcome to cali

[peejay 327]

Poor grandma. They'll jack her taxes on the dreamhome and she won't be able to afford to live there anymore. She'll have to move to the dump next door to Rodney King. And a rich real estate mogul that can afford the higher taxes will move into granny's house. Social progress in action.

[Danno 1,228]

Poor grandma. They'll jack her taxes on the dreamhome and she won't be able to afford to live there anymore. She'll have to move to the dump next door to Rodney King. And a rich real estate mogul that can afford the higher taxes will move into granny's house. Social progress in action.

Now there ya go again, worrying about Old folks who who selfishly are trying to live out their golden-years in their own house.

INstead you should be worrying about freeing up the taxing schemes of left-wingers who will not tolerate limits on ways to raise taxes.

HOw are they gonna pay for research on the mating habits of snails ....or buy cable TV for inmates, if old folks won't pay "their fair share" in taxes?

[PlatyPius 5]

Poor grandma. They'll jack her taxes on the dreamhome and she won't be able to afford to live there anymore. She'll have to move to the dump next door to Rodney King. And a rich real estate mogul that can afford the higher taxes will move into granny's house. Social progress in action.

I have to agree with that. It has been her house for decades. Taxing her to point of her having to leave is just wrong.

Indiana, BTW, just this year passed something similar. We had two property reassessments lately, with the result of some people's property taxes doubling, tripling, even quadrupling the first time. The second time was a little better, with those rates only doubling at the most. I wasn't affected very much... mine have doubled since I acquired the house in 2001, but they still aren't very much relatively speaking ($1100/year). I know people, however, who had homes in certain parts of Indy, such as Broad Ripple (artsy district), who had property taxes that went from $2000/year to $10,000/year. They moved, of course.

Anyway, Indiana has also put a 1% cap on property taxes starting in, I believe, 2010. It's a screwed up mess of bills, laws, and measures. Get rid of property taxes. Get rid of local income taxes. Get rid of state income taxes. I can deal with Federal Income taxes and State sales tax. Stop throwing money at stupid-arsed things like the mating habits of the Elbonian Crotch Frog. Stop spending money we don't have.

That said, Indiana is actually in pretty good shape, financially. We leased off our toll road to the Ozzies and Italians, we have money in the bank, road projects going on (forever), a new airport in Indy, and a governor who - while maybe not as popular as he once was - is good financially for the state. Considering some of the things I've seen go on in California, government and money-wise, I can't say that I'm very surprised or sympathetic to their current money woes.

[Jasman0717 9]

That proposition was written by the northern politicians. Orange County, a fairly rich county, gets very little of the property taxes collected, it all goes up north. Orange is a donor county.

[one...two...tree 2,762]

california battles mississippi for worst schools in america

back in the 70s, california used to be the envy of america. great public schools. tuition free universities. now.the state ranks among the bottom 5 states.

these articles about california's financial woes. like schwarzenegger terminating thousands of jobs because of the most recent budget crisis. always fail to mention proposition 13, passed in 1978 which doesn't allow the state to raise property taxes. property tax is perm. set at 1%.

section 1 of proposition 13 states: the maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. the one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.

http://thekrays.wordpress.com/2008/08/01/c...elated_content/

[csmith1216 1]

proposition 13 dont we pay more than enough in taxes already?

[Jasman0717 9]

My condo is down about 300k from what it was a year ago and I won't be getting any tax break

[csmith1216 1]

california battles mississippi for worst schools in america

back in the 70s, california used to be the envy of america. great public schools. tuition free universities. now.the state ranks among the bottom 5 states.

these articles about california's financial woes. like schwarzenegger terminating thousands of jobs because of the most recent budget crisis. always fail to mention proposition 13, passed in 1978 which doesn't allow the state to raise property taxes. property tax is perm. set at 1%.

section 1 of proposition 13 states: the maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. the one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.

http://thekrays.wordpress.com/2008/08/01/c...elated_content/

Do you own your home?

[csmith1216 1]

proposition 13 dont we pay more than enough in taxes already?

Your infrastructure is crumbling, your children aren't being educated, you don't have enough police or firemen to meet the current needs, your levies are completely out of date, and the government is about to be shut down because it can't pay its workers. So...actually no, I don't think you're paying more than enough taxes already.

they could taxes us 20% more and they would find a way to spend it all on things we dont need, then ask for more.

[Danno 1,228]

california battles mississippi for worst schools in america

back in the 70s, california used to be the envy of america. great public schools. tuition free universities. now.the state ranks among the bottom 5 states.

these articles about california's financial woes. like schwarzenegger terminating thousands of jobs because of the most recent budget crisis. always fail to mention proposition 13, passed in 1978 which doesn't allow the state to raise property taxes. property tax is perm. set at 1%.

section 1 of proposition 13 states: the maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. the one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.

http://thekrays.wordpress.com/2008/08/01/c...elated_content/

YEah back in the 70's...

IF you could enjoy all that free collage and such back then on that tax rate paid back then.... why can't you now?

In fact houses have sky rocketed in value since then and I bet property tax revenue has as well.

The the truth is, Cal is a bankrupt state, people and business have been leaving the state for years now. Instead of trying to figure out WHY and how to reverse this you want to steam ahead doing the same things which traded "contributers" to the system for "takers".

Good luck with that.

In the end you will come with your hands out begging the rest of the country (who typically don't have such givaways) to bail you out.

[one...two...tree 2,762]

Prop 13: 30 years later, it’s time to stick a fork in this loser

In case you missed it, Sunday marked the 30th anniversary of the passage of Prop 13, the measure that capped California property tax increases and ignited a taxpayer revolt across the country that blah, blah, blah…If you don’t know much about it, the folks at Cal Tax Research will be happy to give you the history here.

The real debate going on today is what we have gained and what have we lost. Two Sac Bee columnists lay out the debate here and here. The Bee’s Dan Walters gets to the heart of it:

“Then-Gov. Jerry Brown, who was running for re-election, had strongly opposed Proposition 13 along with virtually every other political figure, but immediately declared himself a “born-again tax cutter” and later ran for president while chanting that mantra.

Brown is back in state politics as attorney general and a likely candidate for governor again in 2010. If the state’s fiscal crisis continues, as it likely will, he may once again have to confront the never-answered question that Proposition 13 posed:

What do Californians want from government, and what are they willing to pay for it?

“

My personal take: It’s been a disaster for the state and remains grossly unfair. There’s simply no justifiable reason that I pay 10 times the property tax as my neighbor (which I do). But more on my thoughts later.

The big “news” this morning is that California taxpayers remain delusional and are still in love with their precious Prop 13. According to a Field Poll release on Monday:

“The property tax reduction initiative passed in 1978 with 65 percent of voters in favor and 35 percent opposed. The Field Poll found that if the vote were held again today, 57 percent would still vote “yes.” Another 23 percent would vote “no,” and the rest are undecided.”

A quick scan of the state’s major newspapers editorial pages shows a range of takes on Prop 13’s legacy.

Let’s start with mine. Our editorial board still has a major crush on Prop 13:

Correction: This was a Contra Costa Times editorial, and NOT from the Mercury News:

“Californians today should be wary of any attempts to dilute Proposition 13 because of current state deficits. The huge growth in state spending in recent years under both Govs. Gray Davis and Arnold Schwarzenegger — and the resulting deficits — should be warning enough of what could happen on a local level if Proposition 13 were gutted.

Voters must not allow any further erosion of the single best protection Californians have against runaway taxation.”

Up the road, the San Francisco Chronicle has mixed feelings:

“The measure has meant surety and hard restraint in property taxes. But it hasn’t brought fairness or balance to a growing state. For now, California is living with that trade-off.”

And way down south, the Los Angeles Times meekly calls for a re-examination:

“Defenders of the measure and its offshoots have taken to reflexive denunciations of any attempt to discuss Proposition 13 and whether it should be amended to provide fairer taxation for residents, and more rational levels of revenue to pay for the quality of infrastructure and governance that Californians still expect. But birthdays ought to be a time of self-examination. Proposition 13 provides predictability for homeowners, and it ought to be retained. But it may be time for a haircut.”

Clearly, if you’ve stayed in a house a long time, then Prop 13 has been a godsend. But it also has become a big dis-incentive to moving. Move, and you risk a big jump in property taxes.

Also, while it’s kept bills down for homeowners who stay put, I don’t think it’s helped keep overall housing costs more affordable. Clearly, even in the current downturn, housing is way more expensive in California than in most areas of the country. Brokers and Realtors know how much someone can spend on a house, and still try to get the maximum. So while taxes might be less, the mortgage for a new home buyer is probably the same overall, with the cost simply shifting to a higher mortgage rather than the taxes.

There’s a healthy debate over just how much impact this has had on the overall state budget. But one thing is clear: By relying much more on sales personal income taxes, California’s budget has been vulnerable to big swings in the economy. And legislators, and the governor somehow reamain unprepared for this phenomenon, year after year. Thus, we’re living through yet another budget crisis.

Also, much of the discussion about Prop 13 tends to be about how it has helped home owners. But people often forget that Prop 13 extends to commercial real estate as well. And because commercial property tends to change hands less frequently, businesses have probably been bigger beneficiaries of Prop 13 than the average Joe.

But let’s circle back to Walters’ question: What do Californians want from government, and what are they willing to pay for it?

The central hypocrisy of Prop 13 lies with the people, not just our government. And it’s a symptom of the era we live in. Everyone claims that we want smaller government (well, not everyone. But…) and that we want lower taxes. That’s the dominant theme of our political culture.

But take one step to cut one thing from a state or federal and there will be a howl of protest. And so spending continues to grow, but probably at a pace slower than what is really needed to fix our schools and infrastructure. Yet government can’t raise the appropriate taxes to pay for it.

So, what to do? Answer: The lottery. The lottery is essentially a means by which we trick ourselves into paying taxes. It’s the work around that government has developed to balance out the contrarian impules that flow from the tax cutting culture and the desire for more government spending.

And notice that in this latest budget crisis, our governor is once again turning to the lottery to paper over the budget problems.

It’s time to stop this nonsense. Scrap the lottery. Scrap Prop 13. And just start from scratch. Create an equitable and predictable tax system that funds the programs California needs to get back on track and recover its legacy as a leader in state government and education that it last had back in the 1970s.

http://blogs.mercurynews.com/obrien/2008/0...-in-this-loser/

[PlatyPius 5]

proposition 13 dont we pay more than enough in taxes already?

Your infrastructure is crumbling, your children aren't being educated, you don't have enough police or firemen to meet the current needs, your levies are completely out of date, and the government is about to be shut down because it can't pay its workers. So...actually no, I don't think you're paying more than enough taxes already.

they could taxes us 20% more and they would find a way to spend it all on things we dont need, then ask for more.

Like giving homeless people in San Francisco "paychecks" for being homeless? (and wondering why there are more homeless rather than fewer)

[DEDixon 39]

Poor grandma. They'll jack her taxes on the dreamhome and she won't be able to afford to live there anymore. She'll have to move to the dump next door to Rodney King. And a rich real estate mogul that can afford the higher taxes will move into granny's house. Social progress in action.

My thoughts, exactly. How could people ever afford to retire in their home.

California's problem isn't Prop 13, it is too much spending.

People say OMG, the schools are bad, but then you hear about the janitor making 90K on overtime. Police officers make over 200K on overtime. Public service workers retire at current pay. The illegals in our schools and hospitals. Much could be done to do more with what we have, however first choice is always to raise taxes. If Prop 13 ended, it would not solve anything. They would simply spend all that it brought in... it would be nice for a while, but soon they will start projecting revenue and spending on projections and again the projections would fall short and then we are in a mess all over again.

Funny when people say... if only Prop 13 would end. BS!