Mods, if this is the wrong forum, please move it but I suspect a debate may break out.
I was reading an article today that mentioned that Howard Jarvis framed his campaign to pass Proposition 13 as a way to make the property tax system more equal. Not being from California , I don’t know all that much about the prop 13 , but my understanding is that property is only reassessed at the time of a sale, so that even though my house and my next door neighbor’s identical house are actually worth exactly the same amount of money my taxes will be based on the $150K I paid 30 years ago while the neighbor’s will be based on the $550K he paid last year.
If my understanding is correct, how could that plausibly besible be framed as making the property tax system “more equal”?
Well, theoretically, it helps those who settled in a good location by keeping the tax rate based upon what they paid for the house (and could afford). What it also does is completely disregard what the property is worth based upon the comps of surrounding property.
I imagine more equal in this case, means making it more equal for the people without to be equal to the people with. Probably to disallow gentrification effects.
The only good side to I see is it helps older homeowners by not pricing them out of their homes due to property taxes.
Unfortunately, it increases the pressure on the housing market because the earlier you buy, the less you will be in time over taxes.
And I really hate what it does to school funding. California has some of the best and some of the worst schools in the country, sometimes several miles apart.
Wow! I had no idea California was that way. It’s the opposite here in Canada.
My house is now worth at least four times what I paid for it 20yrs ago, I’d be loving my tax bill! And for as long as I stay? A VERY sweet deal indeed!
As it is, I AM concerned as we retire, if things continue this way, taxes could, conceivably put us out of our home. (We’d leave with a tidy payout, but still, it’d be a drag!)
Straissa, you got it right. Its to protect older homeowners. What was happening was people would buy a house in 1950 in a small suburb. Then, in 1970, that suburb would explode, and the house value would go from $100,000 to $1.5 million in a short period of time. Property tax was, then, based on the new market value, and it made a lot of people have to sell their homes because suddenly, there was a $150,000 property tax for their house. Proposition 13 leveled the tax increases based on the original price, which meant that the property taxes remained sane.
I’m in CA. My house isn’t under Proposition 13. In 2015, my property tax was $2,024. My latest in 2020 is now $4,953. Its killing me.
I’d feel the same as well but I don’t intend on living in my house until I die. My grandparents bought their house in Sacramento in 1958 and my grandfather was still living there sixty years later when he died in 2018. We sold his house, which had the original kitchen, no central heating/cooling, and termite damage, for $250,000 which I considered a stupid amount to be paid for it. Had my grandparents sold their house in the 90s, they probably wouldn’t have been able to afford another home in the neighborhood they had been in for so long.
Though, truth be told, they would have been fine without Prop 13. With both their retirements, they had plenty of money though the lived as if they didn’t. Depression era mentality I guess.
There are better ways of doing that, like specific relief for older homeowners.
Here’s a specific example, from my block. I pay about $6K a year on a house which is probably worth about $1.5 million now. Good deal, but my neighbor two doors down who has been here longer than me pays about $2200 a year on a house worth $1.2 or $1.3 million. The guy between us, who move in later, pays over $10k on a house worth $1.2 million.
Even worse, it applies to commercial property also, but there is a proposition on the ballot to do away with that for high value properties.
All properties (residential, commercial, agricultural, family owned, corporate owned, no matter its value) pay the same rate. It’s a lot like Steve Forbes’ flat tax. It all looks “equal” until you look at how it individually effects different types of taxpayers.
You may have heard someone referring to Jarvis’s arguments for extending 13’s protections to commercial real estate. It’s in the news because we’ve got a proposition ending this (while still covering homeowners) on the ballot.
In the 1960s and 70s, there was a significant movement in California calling for tax assessment reform for homeowners, which tended to pull support from social justice types.
Jarvis was not one of those people. While building his coalition, he argued that the “split roll” (assessing commercial real estate at current market prices) was, well, unfair. He probably used that word.
Sadly, I don’t have Robert Kuttner’s Revolt of the Haves In front of me, but the early chapters give a thorough picture of the messed-up assessment system and Jarvis’s political wrangling in the years leading up to 13’s passage.He really steamrolled some of the people on the left who allied with him.
Every homeowner in California, whether they purchased their home yesterday or in 1978, is protected under Prop. 13… Now, every homeowner has their property tax rate set at 1 percent of the initial market value, and any annual increase will be capped at 2 percent. The longer someone stays in their home, the lower their “effective” tax rate will be in comparison to its market value.
If I understand this correctly: you can basically buy a house in your 20s and even though your incomes will rise dramatically over the next 40 years (before you retire) your property taxes are capped so effectively you pay a smaller and smaller percentage of your income toward local municipal support?
Meanwhile the government is under pressure to continuously improve infrastructure and systems but because their income has become limited and they don’t get any dividend as the prosperity of local individuals has increased, they becomes chronically under-funded. I think I have that right?
Wow - I had no idea how fucked up this whole thing is. As others have noted it really strikes me as an insanely stupid way to protect a small group of people whose incomes are no longer rising. Why not just set up a system that allows people to apply for a property tax exemption once they retire (or using whatever criteria you want)?
They actually already have a cap upon retirement. The problem is that it gets capped at the retirement age which leads me to believe Prop 13 wasn’t about the oldies. It was about people who simply can’t afford for anything to go up (as the side benefit) but it was for the corporations and wealthy to keep more of their $$
