The Truth About Prop 13

You're the one who doesn't get it. Prop 13 allowed my mother to keep our house in the 80s when my father left and made my mother a single parent with 3 kids. Instead of paying the market tax rate of nearly 4xs the amount she was paying her prop 13 rate from 1973. Now a senior citizen she can afford to stay in the same house on a fixed income, if she had to pay the market rate it would raise her taxes 10xs!. I bought my own home in 2000 before the big run up, I truly could not pay triple the taxes on my home if it were reassessed today. Prop 13 allows families to budget and keep their homes that belong to them not as object you can tax at will. Prop 13 changed my mother's way of thinking, prior to that she had always voted as a Democrat since then she has always voted as a Republican. Home don't exist so you can tax them!

Robert, regardless of whether or not your arguments against Prop 13 make any sense, your first sentence on your last paragraph identifies you as a socialist

"Why should some homeowners get government subsidies and others do not?"

I know this may be a weird concept to you, but not taking someone's money =/= giving someone money. The idea that a reduction in taxes means the government is subsidizing you, please spare me. Your argument relies on the idea that all money is government's money, and whatever they let people keep is a subsidy.

If you want to argue against Prop 13, fine, you may have a point. But don't equate lower taxes to subsidies.

Dear Ben:

But it IS a subsidy. You see it most clearly in its application to commercial properties. Business in California charge current prices for their goods and services. But benefits to the community provided by the public sector are stuck in valuations of past years. The cost of those public services, without which businesses could not operate, are prevented by the State Constitution from currently charging what they need to provide those services. That's a subsidy!

You mentioned 37 states ahead of California in taxation. How about telliing us what they offer the property owners for homeowner's exemptions and senior citizen caps on property taxes. California property owners are offered a $7,000 homeowners' exemption or its' 1% dollar equivalent of $70.00. Not a lot coompared to other states. One in particular, offers 50% or $50,000 which ever is less as a homeowner's exemption and a senior citizen cap on property taxes. Prop. 13 didn't get us into the mess the state is in. Look at lavish salaries, benefits and retirement benefits given to the bureaurats (employees), titled as professionals obtained through union negotiations. Would you be happy if every citizen gave 90% of their earnings so the state elected representati ves could spend us into debt even more. Please excuse the typographical errors. The computer won't delete.

Dear Robert:

No it's not. Letting people/businesses keep money they earned can't be a subsidy. It's only a subsidy when they receive money.

If you want to argue for user fees, go ahead. If you want to argue that public services are subsidies for anyone who pays less for them than the proportion of their use of them, then public goods are subsidies for everyone except those who pay the most taxes

I personally absolutely agree with Robert. He is not a socialist, he simply understands economics. Warren Buffet, who is no socialist nor you can call him a stupid man has been a long time opponent of the Prop 13. Now with the real estate values dropping in California I am wondering how will this "helpful" initiative hold up to the frustrated resent home buyers whose income is pinched, easy credit is no longer available and property taxes remain high as in the good old hey days.

This is from an article explaining how Prop 13 works:

The homeowner who remains in the property for a period of time does not pay less property tax in a down market when the current market value of the home drops. Since these homes are assigned their acquisition based values under Proposition 13, after a few years the property's assessed value will be lower than the market value even in a down market so their property taxes will still go up 2 percent for that tax year. Therefore, local government doesn't suffer the vagaries of the economy but has a steady source of property tax revenue.

Living in a nice neighborhood and paying low tax, while others are paying the higher rate, is not a right. Even if you don't want to call it a subsidy it really is. The same as student discount Opera tickets or senior discount bus fare. It may be socially conscious to provide such discounts, but it is very hard to feel sorry for anybody who bought his home in the 70s for under $100,000.00 and is refusing to sell it at $900,000.00 because they can't afford to pay the property tax.

With regard to Prop 13, voters seized the opportunity to protect their assets from seizure by politicians. Simple as that. No ideology involved. Where is the proof that Prop 13 was an extremist attack?

As for subsidies, Ben makes an excellent point: if lower property taxes for long term homeowners are subsidies, then services are subsidies for those whose taxes don’t cover them.

Did California turn from a communitarian ethic to a market ethic? Or did some Californians turn, because they concluded that the more they supported the socialists, the more the socialists would take from them?

Setting aside the emotives of “far-right,” “extremist,” “inequality,” and “obsolete faux populism,” let us consider that “our” priorities are not necessarily congruous. Is it beyond belief that, in California, there are identifiable population classes whose priorities have one thing in common: each class seeks to acquire and protect its assets. Is it beyond belief that fairness, equality, inequality and other such concepts no longer have much weight, because they have been misused by those in government to transfer assets from one class to another in a way that is now perceived, not as a way to promote a healthy society, but simply as a way to gain favor with a voting population.

What then?

In my neighborhood, original owners now pay about $1000 per year in property taxes, but they have a house value appreciation of about a million dollars. These people are, quite literally, "millionaires" that could trivially afford $11k per year by re-mortgaging a tiny fraction of their house. In fact, the county has a deal for "seniors" to automatically put a lien on the house each year without penalty to pay the (tiny as they are) taxes. These people want it both ways: taxed as though their house is worth $100k but sales proceeds of the full $1 million when they cash out.

These people put down $5k to purchase the house and (even if they never paid a penny of principal) have at most a $25k mortgage. It's the people who have the same house but with a $200k down payment and $800k mortgage that can't afford the taxes.

Prop 13 allows children to inherit their parents' tax break. Offspring who are adults when their parents die probably don't live "at home" and really have no desire to do so, so Prop 13 isn't keeping them in the home. Instead, they often rent out the home to others so that they can still enjoy the tax shelter. The rent price is based on "true market value" but they pay taxes on the reduced value, pocketing the difference as extra. Prop 13 is truly "the gift that keeps on giving," but it unfortunately only gives to a select group of people and does so at the expense of others.

Warren Buffet is not a "long time opponent" of prop 13. He made an observation and gave his opinion.

The only ones complaining about prop 13 are the ones not benefiting under it. Why try to justify the economic excesses of corrupt politicians just because you're getting screwed and your neighbor is not?
The lack of Prop 13 for new home buyers and the state using homes as piggy banks helped many down the road to default/foreclosure and the current housing crisis.

One mans "subsidy" is another's "fair shake."

Dear Robert,

I'm cracking up at your purported intellectual assessment of whether Prop. 13 is fair initiative to California property owners as a whole. There is simply no debate that California (like every other state) has the right to tax and raise revenue for the general welfare. But your point of fairness as way off point. Californians voted for Prop. 13 by a substantial majority, and guessing at the reasons why they did so thirty years ago is speculative and not even worth arguing over. The fact remains, however, that a broad majority of voters still want it, and they are asking the government, and you, to look for money to cover our current expenses in another pocket. Leave our property tax structure alone, and quit blaming Prop. 13 as the sole reason for California’s overwhelming debt. Nevada doesn’t have an income tax, but they seem to be doing fine. I’d be willing to swap my Prop. 13 for a repeal of State income tax, but how about you?

The fact of the matter is that we spend more than we earn, but going after Prop. 13 offers no better or viable solution than taxing or raising revenues in another way, including cutting educational benefits, which Constitutionally the government has no requirement to guarantee. (Yes, we have the right as citizens to “an education”, but there is nothing in the Constitution that mandates that the government pay for it.)

So let me ask you this, Mr. Smarty Pants: where were you thirty years ago when the elderly property owners who you want to take money from were paying property taxes in California? To say that it’s not fair that the person next door to you is paying substantially less property tax simplifies a very complex set of circumstances. Going after a group of people for more money simply because they’re paying less is tantamount to complaining that it’s not fair that you have to wait longer to buy your concert tickets than the guy who slept out on the sidewalk for them the night before.

I’ve got a better idea for raising revenue in California. Let’s triple-tax lame journalists who fake intellectualism and offer weak and unsubstantiated arguments on the repeal of Prop. 13?

Best regards, Dan

Dear Robert,

I'm cracking up at your purported intellectual assessment of whether Prop. 13 is fair initiative to California property owners as a whole. There is simply no debate that California (like every other state) has the right to tax and raise revenue for the general welfare. But your point of fairness as way off point. Californians voted for Prop. 13 by a substantial majority, and guessing at the reasons why they did so thirty years ago is speculative and not even worth arguing over. The fact remains, however, that a broad majority of voters still want it, and they are asking the government, and you, to look for money to cover our current expenses in another pocket. Leave our property tax structure alone, and quit blaming Prop. 13 as the sole reason for California’s overwhelming debt. Nevada doesn’t have an income tax, but they seem to be doing fine. I’d be willing to swap my Prop. 13 for a repeal of State income tax, but how about you?

The fact of the matter is that we spend more than we earn, but going after Prop. 13 offers no better or viable solution than taxing or raising revenues in another way, including cutting educational benefits, which Constitutionally the government has no requirement to guarantee. (Yes, we have the right as citizens to “an education”, but there is nothing in the Constitution that mandates that the government pay for it.)

So let me ask you this, Mr. Smarty Pants: where were you thirty years ago when the elderly property owners who you want to take money from were paying property taxes in California? To say that it’s not fair that the person next door to you is paying substantially less property tax simplifies a very complex set of circumstances. Going after a group of people for more money simply because they’re paying less is tantamount to complaining that it’s not fair that you have to wait longer to buy your concert tickets than the guy who slept out on the sidewalk for them the night before.

I’ve got a better idea for raising revenue in California. Let’s triple-tax lame journalists who fake intellectualism and offer weak and unsubstantiated arguments on the repeal of Prop. 13?

Best regards, Dan

Prop 13 has created a giant loophole. Neighbors pay enormous amounts of money for grandma's home care while grandma hasn't paid anything close to modern prices for someone else's home care for years. Property taxes are taken from the newcomers and they alone shoulder the burden. It is even more disheartening as these once original Californians (as of 1978) give these tax shelters (otherwise known as homes) to their own children- making the rest of us feel like ill timed big fat newcomer manatees. Prop 13 is incorrect and has a unfairness built in that needs to be rethought in the light of California's downward spiral as guess what? The newcomer fat manatee is just a family who wanted to buy a house but now can't support you all.

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