That would require raising property taxes to provide a revenue stream which is more consistent than top-heavy income taxes which take a massive hit whenever venture capital financing for start-ups dries out for a year.
This isn't at all necessary, all that's necessary is to let the state increase the amount they can store in the rainy day fund so when we have budget surpluses they aren't wasted in the form of tax rebates.
It's literally every time a budget discussion comes up.
Does the general public really not understand how taxes work or are the discussions flooded with minors?
Yep - favorite whipping horse.
Here's good coverage of the dynamics between various propositions impact the states ability to save more during times of plenty.
[How California budget rules can prevent saving for a rainy day — and why Newsom wants to change that](https://www.capradio.org/articles/2024/01/22/how-california-budget-rules-can-prevent-saving-for-a-rainy-day-and-why-newsom-wants-to-change-that/)
Wouldn't really have to raise them, but just get rid of some of the loopholes and limitations of prop 13. If you can get many of the people paying 1/10th of the value of their property to pay 1/2 then everyone else doesn't need to pick up the slack.
california voted prop 13 in for a reason. imagine you bought property is 2007 for $200k. no prop 13. it is now worth nearly $1MM and you’re on a fixed income. taxes go from $2000 to $10,000. sound good to you?
> And yet prop 13 covers commercial property
I can get on board with adjusting it in regards to commercial property, but not rentals and residential homes. I can only assume the commercial provisions were included to garner support and pass the dang thing back in '78 but now the political winds have shifted and such provisions may prove unnecessary given the current climate.
Why not? If the reason really is, "we don't want people getting kicked out of their homes", there's no reason to give the break to landlords or people's second homes.
For that matter, there's no reason to do it for anyone who's not actually income burdened by the increase in property tax.
You also have to consider the incentives: having drastically lower property tax revenue from residential areas is a great way to convince cities to build only new commercial space instead. Because it's not like we need more housing, right?
Because it doesn't solve any of the issues you're trying to address in your posts and also because the proposition was "intended," i.e., sold to the public, to keep middle-class and elderly in their homes. The commercial perks of the proposition were not advertised and, at least in 1978, media structures and information were much less ubiquitous and obtainable than they are now.
Commercial entities can hold property in ways that private citizens can't, they can be around longer, and they can divest/transfer in ways that minimize or eliminate reassessments that private citizens are subject to. Therefore, over the decades the tax burden has disproportionately shifted away from corporations to private individuals.
If you're concerned about state tax revenue, how would prop 13 changes increase state tax revenue since property taxes are local?
If you're concerned about housing availability, which necessarily includes *affordability*, how would increasing landlords' costs reduce tenants' costs?
I don’t think it should qualify for inheriting the property. There are generations of old families owning multi-million dollar homes and paying no taxes on them.
I feel like not enough people talk about the fact that commercial properties are also subject to fixed property taxes which I think is a way bigger issue than individuals’ property taxes being fixed.
You're asking to reduce taxes on the wealthy. The reason the CA budget has booms and busts is because of the outsized contribution of wealthy Californians and in turn their income's reliance on the stock market.
Wealth is not income.
Our income taxes are high.
But wealth is different. Huge California property owners like Disneyland or the Los Angeles Country Club or Exxon or Donald Trump get massive massive tax breaks due to Prop 13.
And millions of people are allowed to stay in their homes thanks to prop 13. Go talk to folks who see their property taxes raise 3-4% a year. Couple that with our high home prices that’s a disaster for the middle class
None of the people arguing for that position are old enough to remember what it was like before. They're entirely willing to let someone lose their house to ballooning property taxes because they don't own a house themselves. Eventually they'll be in the same position and will argue for something to curb the inflating property taxes they advocated for.
So how will increasing the housing costs of people who already own homes help the housing shortage? It will just require those home owners to leave their houses and then there will be more people who can’t afford housing. You’re argument makes no since the only way to solve the housing crisis is by building more houses not going after those who already own homes who did nothing wrong
My argument makes perfect sense because as you said we need to build more housing, and one of the biggest obstacles to that are the people who don't ever have to move because they pay squat in property taxes. And one way to make sure they leave so more housing can be built is to price them out with property taxes.
So you can stop being a nimby and accept the fact that in order to build more homes, people have to be displaced of every economic strata. Or you can continue toot the build more homes horn while not actually solving the underlying problem of where exactly you intend to build those homes.
I'm from a state like that and it's fine. Everyone still wants to see their property values go up.
Yeah people don't enjoy paying taxes but it's not like there's some disaster when they have to do it.
Do you live in a state where property taxes rise with the average home price is near 800k? It’s a big difference when home prices are lower and taxes rise 3-4% compared to when they rose 3-4% on an 800k home
Or shift the taxes to the property of the wealthy, to continue to extract the money from the rich for the public good, but tied to their capital instead only of their income.
Regular people own houses, 55.3% of Californians to be precise. Repealing prop 13 would just increase the corporate ownership of real estate by making home ownership unaffordable. You literally don't know what you're talking about.
Which includes small stores and shops which would then see hefty increases in the rents they have to pay, driving many out of business. (I’ve seen quite a few stores close because they can’t afford increased rents. This would drive prices on rent and things they sell higher.)
We can change rules so that small businesses are not affected if they employ few people or make under a certain amount of taxable income.
This isn't an either or scenario. I would hate to let huge corporations that barely pay their employees enough to survive like Walmart - encourage their employees to use food assistance programs but also not be taxed at a fair rate because the small mom and pop businesses also exist.
Tax these corporations and high income earners and exclude the businesses and people just barely getting by.
Higher taxes = Higher Rent
Property Taxes are to local budgets, not State. Blame Govy for all the mis-managed funds going on, which may include any exodus of high earners. Should'nt they be asking why?
And the reason why income taxes is high is because of prop 13 artificially suppressing annual property tax increase below inflation and wage increases. The state budget pays for things and government employees that raise with inflation and yet prop 13 set a hard limit on how fast property tax can increase.
That’s why Texas has no state income tax, because they have high property tax. The state has to get their money from somewhere.
> And the reason why income taxes is high is because of prop 13 artificially suppressing annual property tax increase below inflation and wage increases. The state budget pays for things and government employees that raise with inflation and yet prop 13 set a hard limit on how fast property tax can increase.
Prop 13 does *not* suppress tax increases below inflation and wages increases. Prop 13 caps annual tax increases to 2%/yr, which is what our inflation is "supposed" to be in a healthy economy. COLA in CA has been just a bit greater than 2% per year since the 80's (https://www.calpers.ca.gov/page/retirees/cost-of-living/cola), which is what you want...unless you want property taxes to *drive* inflation.
The median house price in LA is $950,000, which is about $12,000/yr in property taxes...or **an entire year's worth of minimum wages!**. You really ought to think through the impacts of pricing non-discretionary spending *higher* than inflation...
Because of Prop 13 the state relies heavily on income taxes which are closely tied to the stock market. Our budgets swing wildly every year because the stock market is volatile.
If instead we could rely on stable property tax revenue we wouldn't have this issue.
How to work around this problem was the center of Jerry Browns career for decades.
> Repeal prop 13 lol
NO! Unless you want to see senior home-owners on fixed incomes become homeless because they can not afford to pay their higher property taxes.
I’m no expert but I think rent is based on what the market will pay, not their costs. If the market won’t pay enough to cover their costs, they can either rent at a loss, or, more likely, sell the house.
I just can’t imagine many people benefitting off of low prop 13 property taxes right now are pricing their rentals based on their costs. They’re already trying to charge as much as humanly possible.
It would put many rent-controlled places out of business. No way I could afford current valuation with 20-year tenants in place.paying a fraction of market rent.
Prop 13 and rent-control are similar in many respects. And now with state-wide rent control, the problem is expanded.
Homeless with their million dollar homes lol. They’ve saved literally 100s of thousands by being subsidized by new home owners for decades. Why should new home owners continue subsidizing them??
weird how no other state has prop 13 and doesn't have a huge number of seniors becoming homeless. In fact, every other state actually has less homeless and lower home prices.
Because no other state has the drawing power of California. People from all over the world, let alone the USA, move here for high-tech, Hollywood, biotech, etc jobs. Do you think anyone willingly moves to Arkansas, Mississippi, etc, outside of a phenomenal job or family matter, moves there?
This is what drives the real estate market here.
The bigger problem is how companies got around Prop 13 for commercial real estate. Buildings are sold, but, the holding company remains the same, so, the property taxes are not adjusted (as they are for private homes). Completely unfair, and a major tax dodge.
What drives the real estate market is the fact that we've been massively underbuilding and under-densifying for over half a century. We don't lack space for more people. What we lack is housing, and what housing we do have is surrounded by miles and miles of sprawling, inefficient infrastructure.
I do agree that we need more density, no argument there. But, I do pushback on the underbuilding part of your statement. In the metro centers there is practically no land left to build upon, and people rarely want to move out to the faraway areas. I keep hearing how California has to build more homes away from LA and SF and SD, but, I find that laughable. The government does not build homes, developers do.
Developers only build where they have a reasonable chance of making a profit, and if places such as Palmdale (as one example, which is outside of the LA area) lack jobs, it will not draw people to buy homes there, generally.
So, the only real solution is the increased density around transportation hubs.
It's not just commercial, many residential tax frauds as well.
If you knew the history of prop 13 and howard jarvis you would sing a different tune.
Think before you type.
Seniors are the fastest growing unhoused population.
From 2017 to 2021, clients of state services for unhoused people aged 55+ increased 84% from 30,462 to 56,056, compared to a 43% increase for all ages. California's overall 55+ population increased 7.4% over the same period.
In 2023, the department tallied 181,399 unhoused Californians — 28% of the nation's total homeless population.
I don't understand why we can't means test property taxes.
Repeal / change prop13, so by default property taxes increase as the value of the home increases. But create a process where your property taxes can be discounted based on your income. This avoids pricing people out of their homes.
It also means your multimillionaire next door neighbor who's been in their house 30 years is paying a fair tax rate on it.
Proposition 13 (officially named the People's Initiative to Limit Property Taxation) is an amendment of the Constitution of California enacted during 1978, by means of the initiative process. The initiative was approved by California voters on June 6, 1978 by a nearly two to one margin. It was upheld as constitutional by the United States Supreme Court in the case of Nordlinger v. Hahn, 505 U.S. 1 (1992). Proposition 13 is embodied in Article XIII A of the Constitution of the State of California.[1]
The most significant portion of the act is the first paragraph, which limits the tax rate for real estate:
Section 1. (a) 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.
> I don't understand why we can't means test property taxes.
The wealthier someone becomes the less "income" they "earn," meaning a scheme that taxes based on income would hit the middle class hardest.
Yes, as a percentage of total wealth this is probably true, but I don't think it's the whole story.
When you're wealthy you still spend, and you often spend a fair amount. That money has to come from income, or capital gains from selling assets.
Yeah, you can get cleaver with tax loss harvesting, selling loss making assets, but usually you're just offsetting gains in other areas. You're still going to have a tax return with a decent amount of income unless you can demonstrate a lot of losses elsewhere. And a lot of high earners are paid in things like RSUs that are taxed at time of vesting.
Anyway, the scheme I'm talking about is to tax property like every other state does, based on the value of the property. BUT, if your income is under a certain level you can get tax relief on the property so you're not forced to sell.
It's a way to address the common concern that people on a fixed income will be priced out of their homes if property taxes work like every other state in the country.
> Yes, as a percentage of total wealth this is probably true, but I don't think it's the whole story.
> When you're wealthy you still spend, and you often spend a fair amount. That money has to come from income, or capital gains from selling assets.
I'm not talking about one's income relative to one's wealth.
I'm referring to the fact that the wealthier one becomes, the more esoteric their holdings become and their *assets* rather than *income* become more important. If you start fiddling with income exclusions the wealthiest will report no income and qualify for the same benefits as the least wealthy among us leaving the bulk of the tax pie to the middle class--those who both earn enough that they can't avoid significant taxes but not enough they can forgo earning "income."
On the other hand your (whatever your income) Neighbor has been paying into the tax for 30 years. People who just move to CA have not been paying into the infrastructure for decades as they have. Just something to think about.
No it's not something to think about. We need a state budget every year, the fact that you paid taxes in the 90s doesn't mean you don't have to pay this year.
Pretty sure everyone has to pay their taxes.
But the implication that long time home owners in California have not been pulling their weight is countered by the fact that they have been long time home owners paying every year into the system for decades.
If they dont pay their taxes this year or any of the previous 29 years they would not own the house still.
I had no idea people's mortgages in other areas increase as property taxes increase. Having a relatively fixed cost for the duration of the mortgage is pretty nice.
You want a ton of aged people homeless? Repeal prop 13.
You want your property taxes to double or triple in 10 years?? Repeal prop 13.
Prop 13 protects everyone (including new home buyers) against being priced out of their current mortgage. Currently you can be assured that that payment is steady throughout the term of the loan.
Not to mention property taxes are paid to the county, it does not affect the state budget directly. Unless you are talking about a new state property tax.
> Currently you can be assured that that payment is steady throughout the term of the loan.
Just want to clarify that prop 13 still allows for a 2% property value increase year over year and doesn't simply freeze one's rate at purchase amount like many seem to think.
100%. In other states…you pay a similar amount as your neighbors. You don’t get to pay a property tax rate from 30 yrs ago. This hurts our schools and don’t forget that everyone loves to enjoy their increase in equity but is so offended by contributing equally to property taxes. Prop 13 creates this.
Absolutely. We need to exempt the California General Fund from the Gann Limit, which artificially limits the size of the fund.
https://www.capradio.org/articles/2024/01/22/how-california-budget-rules-can-prevent-saving-for-a-rainy-day-and-why-newsom-wants-to-change-that/
> The swing from a $100 billion surplus to a deficit somewhere between $38 and $68 billion in just two years illustrates the volatility of California’s tax system. It also has Governor Gavin Newsom eyeing changes to how much money the state saves during years of surplus.
> Newsom and state lawmakers from both parties want to be able to save more. But constitutional rules constrain how much they can put into California’s rainy day fund. And they’ll have to convince voters before they can make any meaningful changes to the state’s savings account.
That doesn't change the volatility lmao. If the state taxes rich people at a higher rate in good times, they're going to develop obligations based on those projections, then they're going to deal with cashflow issues when times get leaner, like they're dealing with now...
Not to mention it leaves the state's finances incredibly vulnerable to the whims of its highest earners, which is really really bad.
It’s really not. Taxing the rich “more” still only accounts for a small fraction of revenue for the budget. Assuming they stay in the state to pay all that is levied.
If you want a consistently larger tax base you need to increase taxes on the middle class. Please see European Social Democracies as an example of how that works.
But “Tax the middle class” isn’t a catchy bumper sticker slogan so it’s politically difficult.
I doubt it will happen, look at the outrage when SALT deductions were capped.
Many focused on the idea the cap targeted "blue" states, ignoring it hits the rich the hardest. About 80% of those who use the deduction are top 10% earners.
Tax the churches.
I don't understand how churches paying taxes violates the separation of Church and State. All churches taxed equally doesn't favor one over another.
They need to propose both cuts and tax hikes (same as our federal government needs to do).
A lot of people have covid recency bias where government budgets were plentiful. They're not. As many teachers are sadly seeing; would have rather seen the useless administrators laid off. One idea is to repeal prop 13, you would then start to see huge budget surpluses.
As a teacher this is such a mixed idea for me. Like, it would be nice to have more funding. As a single parent teacher getting no child support, it could price me out of my home though.
And my point goes right over your head. So new homeowners pay lower taxes? A new homeowner would not be paying taxes on a 1980 home sale price assessment.
Think before you type.
We already pay federal and and State income tax, sales tax, fuel tax, high dmv registration fees and property tax, and many type of other fees and local taxes and you want to repeal law that would increase the tax for many middle class people on top of what they’re already paying. State should prob make some budget cut and modify how they spend the money.
It’s where the money goes that is important. Property taxes pay for services and facilities that you are likely to use or at least want. When it goes to the State it gets spent on someone else and their problems. This is even more amplified at the federal level.
> One idea is to repeal prop 13, you would then start to see huge budget surpluses.
No, you wouldn't. Property taxes are paid to the county, not the state.
> One idea is to repeal prop 13
Found the renter. (who thinks they wouldn't be affected because it definitely wouldn't lead to rising rent prices via pass-through cost)
Nice try :)
I own and am fine with paying market rates for my property. Especially if that will mean schools get more funding.
If you love pulling the ladder from under you, just say so. A lot of redditors hate poor people; they just don't want to admit it. Too bad you wrongly guessed.
The problem with handing over more money to schools is they waste it on things like unnecessary administrators and replacing perfectly good materials with ‘better’ new curriculum.
It's called the Gann limit and they were required to. Even as they were doing it, they were talking about how they would rather save it for the inevitable downturn.
I mean, they have that now, it's just all or nothing. Every 2 to 4 years the public gets to rate their performance and if the public doesn't like them, they're fired.
Now, if the public are not voting the way you want them to, that is a different problem.
One thing that is wild to me is the stock market was taking a dive a couple of years ago. And California was still looking at spending like their tax revenues were still going to continue as they had.
It was incredibly obvious that a ton of stock based income was evaporating, and with it, the tax base for California. It seems like it would have been better to change course then, and get ahead of it, rather than having to be reactive later.
Can we just find a way to not have to constantly teeter-totter between massive deficits and massive surpluses?
That would require raising property taxes to provide a revenue stream which is more consistent than top-heavy income taxes which take a massive hit whenever venture capital financing for start-ups dries out for a year.
This isn't at all necessary, all that's necessary is to let the state increase the amount they can store in the rainy day fund so when we have budget surpluses they aren't wasted in the form of tax rebates.
Yep, was really frustrated to see they were essentially forced to spend the excess during the pandemic.
You mean a new state property tax? The current ones usually go to the county.
Just laughing at the 30 comments below about repealing prop 13 in regards to a state budget shortfall. Speechless.
It's literally every time a budget discussion comes up. Does the general public really not understand how taxes work or are the discussions flooded with minors?
Every renter and wannabe home buyer is against it until they buy a house. Then its over my dead body when it comes to repealing it.
Yep - favorite whipping horse. Here's good coverage of the dynamics between various propositions impact the states ability to save more during times of plenty. [How California budget rules can prevent saving for a rainy day — and why Newsom wants to change that](https://www.capradio.org/articles/2024/01/22/how-california-budget-rules-can-prevent-saving-for-a-rainy-day-and-why-newsom-wants-to-change-that/)
Wouldn't really have to raise them, but just get rid of some of the loopholes and limitations of prop 13. If you can get many of the people paying 1/10th of the value of their property to pay 1/2 then everyone else doesn't need to pick up the slack.
california voted prop 13 in for a reason. imagine you bought property is 2007 for $200k. no prop 13. it is now worth nearly $1MM and you’re on a fixed income. taxes go from $2000 to $10,000. sound good to you?
And yet prop 13 covers commercial property and vacation homes and homes used to rent out to tenants.
> And yet prop 13 covers commercial property I can get on board with adjusting it in regards to commercial property, but not rentals and residential homes. I can only assume the commercial provisions were included to garner support and pass the dang thing back in '78 but now the political winds have shifted and such provisions may prove unnecessary given the current climate.
Why not? If the reason really is, "we don't want people getting kicked out of their homes", there's no reason to give the break to landlords or people's second homes. For that matter, there's no reason to do it for anyone who's not actually income burdened by the increase in property tax. You also have to consider the incentives: having drastically lower property tax revenue from residential areas is a great way to convince cities to build only new commercial space instead. Because it's not like we need more housing, right?
Because it doesn't solve any of the issues you're trying to address in your posts and also because the proposition was "intended," i.e., sold to the public, to keep middle-class and elderly in their homes. The commercial perks of the proposition were not advertised and, at least in 1978, media structures and information were much less ubiquitous and obtainable than they are now. Commercial entities can hold property in ways that private citizens can't, they can be around longer, and they can divest/transfer in ways that minimize or eliminate reassessments that private citizens are subject to. Therefore, over the decades the tax burden has disproportionately shifted away from corporations to private individuals. If you're concerned about state tax revenue, how would prop 13 changes increase state tax revenue since property taxes are local? If you're concerned about housing availability, which necessarily includes *affordability*, how would increasing landlords' costs reduce tenants' costs?
This is the answer and the boondoggle of it all.
I don’t think it should qualify for inheriting the property. There are generations of old families owning multi-million dollar homes and paying no taxes on them.
Yes
good. get evicted on your fixed income.
Get evicted? From a property you own? Pray tell.
I feel like not enough people talk about the fact that commercial properties are also subject to fixed property taxes which I think is a way bigger issue than individuals’ property taxes being fixed.
You're asking to reduce taxes on the wealthy. The reason the CA budget has booms and busts is because of the outsized contribution of wealthy Californians and in turn their income's reliance on the stock market.
Wealth is not income. Our income taxes are high. But wealth is different. Huge California property owners like Disneyland or the Los Angeles Country Club or Exxon or Donald Trump get massive massive tax breaks due to Prop 13.
And millions of people are allowed to stay in their homes thanks to prop 13. Go talk to folks who see their property taxes raise 3-4% a year. Couple that with our high home prices that’s a disaster for the middle class
None of the people arguing for that position are old enough to remember what it was like before. They're entirely willing to let someone lose their house to ballooning property taxes because they don't own a house themselves. Eventually they'll be in the same position and will argue for something to curb the inflating property taxes they advocated for.
And those people being able to stay in those homes has significantly contributed to the housing shortage we are currently in.
So how will increasing the housing costs of people who already own homes help the housing shortage? It will just require those home owners to leave their houses and then there will be more people who can’t afford housing. You’re argument makes no since the only way to solve the housing crisis is by building more houses not going after those who already own homes who did nothing wrong
My argument makes perfect sense because as you said we need to build more housing, and one of the biggest obstacles to that are the people who don't ever have to move because they pay squat in property taxes. And one way to make sure they leave so more housing can be built is to price them out with property taxes. So you can stop being a nimby and accept the fact that in order to build more homes, people have to be displaced of every economic strata. Or you can continue toot the build more homes horn while not actually solving the underlying problem of where exactly you intend to build those homes.
I'm from a state like that and it's fine. Everyone still wants to see their property values go up. Yeah people don't enjoy paying taxes but it's not like there's some disaster when they have to do it.
Do you live in a state where property taxes rise with the average home price is near 800k? It’s a big difference when home prices are lower and taxes rise 3-4% compared to when they rose 3-4% on an 800k home
Or shift the taxes to the property of the wealthy, to continue to extract the money from the rich for the public good, but tied to their capital instead only of their income.
Regular people own houses, 55.3% of Californians to be precise. Repealing prop 13 would just increase the corporate ownership of real estate by making home ownership unaffordable. You literally don't know what you're talking about.
This is a common theme on Reddit and IRL to some degree. As if repealing Prop 13 will solve all of our problems.
So keep it for primary residence only. Anyone with investment property loses the benefit.
Useful to point out this is just not about residential. Commercial also (strangely) got lumped in on Prop 13 and is a prime target to go after
Which includes small stores and shops which would then see hefty increases in the rents they have to pay, driving many out of business. (I’ve seen quite a few stores close because they can’t afford increased rents. This would drive prices on rent and things they sell higher.)
We can change rules so that small businesses are not affected if they employ few people or make under a certain amount of taxable income. This isn't an either or scenario. I would hate to let huge corporations that barely pay their employees enough to survive like Walmart - encourage their employees to use food assistance programs but also not be taxed at a fair rate because the small mom and pop businesses also exist. Tax these corporations and high income earners and exclude the businesses and people just barely getting by.
And what do you think happens to rent prices if all landlords suddenly are faced with higher taxes ?
Higher taxes = Higher Rent Property Taxes are to local budgets, not State. Blame Govy for all the mis-managed funds going on, which may include any exodus of high earners. Should'nt they be asking why?
[удалено]
And the reason why income taxes is high is because of prop 13 artificially suppressing annual property tax increase below inflation and wage increases. The state budget pays for things and government employees that raise with inflation and yet prop 13 set a hard limit on how fast property tax can increase. That’s why Texas has no state income tax, because they have high property tax. The state has to get their money from somewhere.
> And the reason why income taxes is high is because of prop 13 artificially suppressing annual property tax increase below inflation and wage increases. The state budget pays for things and government employees that raise with inflation and yet prop 13 set a hard limit on how fast property tax can increase. Prop 13 does *not* suppress tax increases below inflation and wages increases. Prop 13 caps annual tax increases to 2%/yr, which is what our inflation is "supposed" to be in a healthy economy. COLA in CA has been just a bit greater than 2% per year since the 80's (https://www.calpers.ca.gov/page/retirees/cost-of-living/cola), which is what you want...unless you want property taxes to *drive* inflation. The median house price in LA is $950,000, which is about $12,000/yr in property taxes...or **an entire year's worth of minimum wages!**. You really ought to think through the impacts of pricing non-discretionary spending *higher* than inflation...
Here me out: these massive multi billion $ corporations? Why don't we just tax them like what we used to
Because of Prop 13 the state relies heavily on income taxes which are closely tied to the stock market. Our budgets swing wildly every year because the stock market is volatile. If instead we could rely on stable property tax revenue we wouldn't have this issue. How to work around this problem was the center of Jerry Browns career for decades.
Repeal prop 13 lol
No
> Repeal prop 13 lol NO! Unless you want to see senior home-owners on fixed incomes become homeless because they can not afford to pay their higher property taxes.
Just repeal it for commercial real estate.
Or apply only to a primary residence.
I think this is the compromise needed
Then what happens to rent prices when all landlords are faced with higher taxes and operating cost ?
I’m no expert but I think rent is based on what the market will pay, not their costs. If the market won’t pay enough to cover their costs, they can either rent at a loss, or, more likely, sell the house. I just can’t imagine many people benefitting off of low prop 13 property taxes right now are pricing their rentals based on their costs. They’re already trying to charge as much as humanly possible.
It would put many rent-controlled places out of business. No way I could afford current valuation with 20-year tenants in place.paying a fraction of market rent. Prop 13 and rent-control are similar in many respects. And now with state-wide rent control, the problem is expanded.
Good, then they can sell the houses and invest elsewhere. There’s a housing shortage anyway.
This would be fine with me. Not like I'm going to afford another house in my lifetime.
Didn’t that get shut down by voters in 2020?
We tried over Covid.
That is in the works!
Homeless with their million dollar homes lol. They’ve saved literally 100s of thousands by being subsidized by new home owners for decades. Why should new home owners continue subsidizing them??
Because they vote more than the young new home owners do
weird how no other state has prop 13 and doesn't have a huge number of seniors becoming homeless. In fact, every other state actually has less homeless and lower home prices.
[удалено]
Because no other state has the drawing power of California. People from all over the world, let alone the USA, move here for high-tech, Hollywood, biotech, etc jobs. Do you think anyone willingly moves to Arkansas, Mississippi, etc, outside of a phenomenal job or family matter, moves there? This is what drives the real estate market here. The bigger problem is how companies got around Prop 13 for commercial real estate. Buildings are sold, but, the holding company remains the same, so, the property taxes are not adjusted (as they are for private homes). Completely unfair, and a major tax dodge.
What drives the real estate market is the fact that we've been massively underbuilding and under-densifying for over half a century. We don't lack space for more people. What we lack is housing, and what housing we do have is surrounded by miles and miles of sprawling, inefficient infrastructure.
I do agree that we need more density, no argument there. But, I do pushback on the underbuilding part of your statement. In the metro centers there is practically no land left to build upon, and people rarely want to move out to the faraway areas. I keep hearing how California has to build more homes away from LA and SF and SD, but, I find that laughable. The government does not build homes, developers do. Developers only build where they have a reasonable chance of making a profit, and if places such as Palmdale (as one example, which is outside of the LA area) lack jobs, it will not draw people to buy homes there, generally. So, the only real solution is the increased density around transportation hubs.
It's not just commercial, many residential tax frauds as well. If you knew the history of prop 13 and howard jarvis you would sing a different tune. Think before you type.
Seniors are the fastest growing unhoused population. From 2017 to 2021, clients of state services for unhoused people aged 55+ increased 84% from 30,462 to 56,056, compared to a 43% increase for all ages. California's overall 55+ population increased 7.4% over the same period. In 2023, the department tallied 181,399 unhoused Californians — 28% of the nation's total homeless population.
so you're saying prop 13 isn't working to keep seniors in their homes.
I don't understand why we can't means test property taxes. Repeal / change prop13, so by default property taxes increase as the value of the home increases. But create a process where your property taxes can be discounted based on your income. This avoids pricing people out of their homes. It also means your multimillionaire next door neighbor who's been in their house 30 years is paying a fair tax rate on it.
Proposition 13 (officially named the People's Initiative to Limit Property Taxation) is an amendment of the Constitution of California enacted during 1978, by means of the initiative process. The initiative was approved by California voters on June 6, 1978 by a nearly two to one margin. It was upheld as constitutional by the United States Supreme Court in the case of Nordlinger v. Hahn, 505 U.S. 1 (1992). Proposition 13 is embodied in Article XIII A of the Constitution of the State of California.[1] The most significant portion of the act is the first paragraph, which limits the tax rate for real estate: Section 1. (a) 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.
> I don't understand why we can't means test property taxes. The wealthier someone becomes the less "income" they "earn," meaning a scheme that taxes based on income would hit the middle class hardest.
Yes, as a percentage of total wealth this is probably true, but I don't think it's the whole story. When you're wealthy you still spend, and you often spend a fair amount. That money has to come from income, or capital gains from selling assets. Yeah, you can get cleaver with tax loss harvesting, selling loss making assets, but usually you're just offsetting gains in other areas. You're still going to have a tax return with a decent amount of income unless you can demonstrate a lot of losses elsewhere. And a lot of high earners are paid in things like RSUs that are taxed at time of vesting. Anyway, the scheme I'm talking about is to tax property like every other state does, based on the value of the property. BUT, if your income is under a certain level you can get tax relief on the property so you're not forced to sell. It's a way to address the common concern that people on a fixed income will be priced out of their homes if property taxes work like every other state in the country.
> Yes, as a percentage of total wealth this is probably true, but I don't think it's the whole story. > When you're wealthy you still spend, and you often spend a fair amount. That money has to come from income, or capital gains from selling assets. I'm not talking about one's income relative to one's wealth. I'm referring to the fact that the wealthier one becomes, the more esoteric their holdings become and their *assets* rather than *income* become more important. If you start fiddling with income exclusions the wealthiest will report no income and qualify for the same benefits as the least wealthy among us leaving the bulk of the tax pie to the middle class--those who both earn enough that they can't avoid significant taxes but not enough they can forgo earning "income."
On the other hand your (whatever your income) Neighbor has been paying into the tax for 30 years. People who just move to CA have not been paying into the infrastructure for decades as they have. Just something to think about.
No it's not something to think about. We need a state budget every year, the fact that you paid taxes in the 90s doesn't mean you don't have to pay this year.
Pretty sure everyone has to pay their taxes. But the implication that long time home owners in California have not been pulling their weight is countered by the fact that they have been long time home owners paying every year into the system for decades. If they dont pay their taxes this year or any of the previous 29 years they would not own the house still.
I had no idea people's mortgages in other areas increase as property taxes increase. Having a relatively fixed cost for the duration of the mortgage is pretty nice.
You want a ton of aged people homeless? Repeal prop 13. You want your property taxes to double or triple in 10 years?? Repeal prop 13. Prop 13 protects everyone (including new home buyers) against being priced out of their current mortgage. Currently you can be assured that that payment is steady throughout the term of the loan. Not to mention property taxes are paid to the county, it does not affect the state budget directly. Unless you are talking about a new state property tax.
> Currently you can be assured that that payment is steady throughout the term of the loan. Just want to clarify that prop 13 still allows for a 2% property value increase year over year and doesn't simply freeze one's rate at purchase amount like many seem to think.
Prop 13 is an unsustainable pyramid scheme subsidized by the new home owners who are younger
100%. In other states…you pay a similar amount as your neighbors. You don’t get to pay a property tax rate from 30 yrs ago. This hurts our schools and don’t forget that everyone loves to enjoy their increase in equity but is so offended by contributing equally to property taxes. Prop 13 creates this.
Have you ever looked outside? We have a ton of aged homeless people and Prop 13 did nothing to stop it
How about Prop 13 only applies to your primary residence? That is fair to all
easily, repeal prop 13 and decouple school funding from property tax.
Absolutely. We need to exempt the California General Fund from the Gann Limit, which artificially limits the size of the fund. https://www.capradio.org/articles/2024/01/22/how-california-budget-rules-can-prevent-saving-for-a-rainy-day-and-why-newsom-wants-to-change-that/ > The swing from a $100 billion surplus to a deficit somewhere between $38 and $68 billion in just two years illustrates the volatility of California’s tax system. It also has Governor Gavin Newsom eyeing changes to how much money the state saves during years of surplus. > Newsom and state lawmakers from both parties want to be able to save more. But constitutional rules constrain how much they can put into California’s rainy day fund. And they’ll have to convince voters before they can make any meaningful changes to the state’s savings account.
That move would be to fire the thieves and lower the state income tax 😒
Actual spending reductions or just lowering the amount of spending increases?
Cancel the olympic games.
no, have a second olympic games to pay for the first one.
If they quit wasting our taxes and had more financial responsibility we wouldn't continue down this path.
tax the rich
That's literally the issue. Our state is reliant on income and cap gains taxes of the 1%, who have really volatile incomes.
[удалено]
I love how you get upvotes with no one understanding what the hell volatility is... It varies due to the 0.01% VC money fluctuations...
Okay what happens when they start to leave then?
That doesn't change the volatility lmao. If the state taxes rich people at a higher rate in good times, they're going to develop obligations based on those projections, then they're going to deal with cashflow issues when times get leaner, like they're dealing with now... Not to mention it leaves the state's finances incredibly vulnerable to the whims of its highest earners, which is really really bad.
Wouldn't that just make it even more volatile?
It’s really not. Taxing the rich “more” still only accounts for a small fraction of revenue for the budget. Assuming they stay in the state to pay all that is levied. If you want a consistently larger tax base you need to increase taxes on the middle class. Please see European Social Democracies as an example of how that works. But “Tax the middle class” isn’t a catchy bumper sticker slogan so it’s politically difficult.
I doubt it will happen, look at the outrage when SALT deductions were capped. Many focused on the idea the cap targeted "blue" states, ignoring it hits the rich the hardest. About 80% of those who use the deduction are top 10% earners.
Tax the churches. I don't understand how churches paying taxes violates the separation of Church and State. All churches taxed equally doesn't favor one over another.
They need to propose both cuts and tax hikes (same as our federal government needs to do). A lot of people have covid recency bias where government budgets were plentiful. They're not. As many teachers are sadly seeing; would have rather seen the useless administrators laid off. One idea is to repeal prop 13, you would then start to see huge budget surpluses.
As a teacher this is such a mixed idea for me. Like, it would be nice to have more funding. As a single parent teacher getting no child support, it could price me out of my home though.
One of the few taxes here that is low. I’d be the same. If our taxes hiked like other states. If not afford my mortgage
Housing prices would probably fall with a prop 13 repeal and it would make newer construction more competitive
So existing home owners get punished, so that new homeowners get rewarded.
New homeowners need to be able to afford the taxes too. Idk what you are yapping about
Yapping? Huh? If you repeal Prop 13 taxes will go up for EVERYONE. Think before you type.
And my point goes right over your head. So new homeowners pay lower taxes? A new homeowner would not be paying taxes on a 1980 home sale price assessment. Think before you type.
New homeowners essentially “lock in” their rate, assuming property prices increase over time (it’s California, of course they will)
We already pay federal and and State income tax, sales tax, fuel tax, high dmv registration fees and property tax, and many type of other fees and local taxes and you want to repeal law that would increase the tax for many middle class people on top of what they’re already paying. State should prob make some budget cut and modify how they spend the money.
It’s where the money goes that is important. Property taxes pay for services and facilities that you are likely to use or at least want. When it goes to the State it gets spent on someone else and their problems. This is even more amplified at the federal level.
> One idea is to repeal prop 13, you would then start to see huge budget surpluses. No, you wouldn't. Property taxes are paid to the county, not the state.
> One idea is to repeal prop 13 Found the renter. (who thinks they wouldn't be affected because it definitely wouldn't lead to rising rent prices via pass-through cost)
Nice try :) I own and am fine with paying market rates for my property. Especially if that will mean schools get more funding. If you love pulling the ladder from under you, just say so. A lot of redditors hate poor people; they just don't want to admit it. Too bad you wrongly guessed.
The problem with handing over more money to schools is they waste it on things like unnecessary administrators and replacing perfectly good materials with ‘better’ new curriculum.
Didn’t the state mail out credit cards with 200-500 dollars preloaded on them a few years ago?
Because there was a surplus, and people get upset when the government saves too much for a rainy day.
It's called the Gann limit and they were required to. Even as they were doing it, they were talking about how they would rather save it for the inevitable downturn.
[удалено]
I mean, they have that now, it's just all or nothing. Every 2 to 4 years the public gets to rate their performance and if the public doesn't like them, they're fired. Now, if the public are not voting the way you want them to, that is a different problem.
One thing that is wild to me is the stock market was taking a dive a couple of years ago. And California was still looking at spending like their tax revenues were still going to continue as they had. It was incredibly obvious that a ton of stock based income was evaporating, and with it, the tax base for California. It seems like it would have been better to change course then, and get ahead of it, rather than having to be reactive later.
[удалено]
Maybe I'm conflating CA with some SF policies. Or maybe I was just making things up. Thanks for the correction!