[mehrdadn]

It's not exactly hard to imagine what problems occur here. You spend a huge chunk of your life saving to buy a home, and you plan it so that you can pay the taxes on it when you retire, then the rest of the city forces you to "enjoy" higher taxes you never demanded, predicted, or wanted, based on an income stream that you no longer have to pay it with, suddenly driving you out of the home/neighborhood/town you worked your entire life to finally afford. In many senses it's hardly "fair".

I don't know what the answer is here; I see it as a tough policy challenge. There might very well not be a solution that's "fair" to everyone. If you think there's an easy "moral" solution and you can't think of decent arguments for both sides, I feel like you're only kidding yourself.

[ladberg]

Then you can just sell your house and buy another one in a less expensive area and make insane profits. The people who support prop 13 are literally lottery winners who are complaining about paying taxes on their winnings.

If you don't want to move then you can get a reverse mortgage and still profit, you just won't get to pass the house to your children. Still, you'll make way more from the property value increases than anything you would have paid in taxes and can pass those gains on to your children.

[nullc]

> Then you can just sell your house and buy another one in a less expensive area and make insane profits.

That is extremely presumptive. Your friends, family, and support infrastructure is all in the place you've been over the last 40 years.

Purchasing another home and moving to it have huge transactional costs.

It would have been completely reasonable to include plans for the reverse mortgage as part of your finical planning already: Americans often have a significant fraction of their net worth tied up in their homes. So that money may well be spoken for. It also may be just unavailable: The city's assessment of your home's value may not match with a lender's assessment.

Think of it this way, if I show up at your town council's office and offer to pay 2x the property taxes you currently pay, should I be able to bid you out of your home? If that wouldn't be ethical, why is it ethical to do it in a distributed way?

I think Prop13 is nuts, but the opposite idea of continually subjecting people's homes to volatile and unpredictable market price based taxes is also nuts.

[majormajor]

"Congrats, you have won the lottery, now you have to move somewhere way cheaper - probably because it doesn't have many of the features that drew you here in the first place!"

"All because a bunch of people with more money than you are now willing to pay a bunch of money for your neighbors' places."

I think laws and policy should exactly be focused on protecting those who have less from the impact of those who have more. Not because they're morally superior or anything, but just to try to keep things balanced because the people with the money already enjoy so many other advantages.

Moving is hugely disruptive to people's life, so the ability to plan expenses - both for property tax and in terms of rent control - has a lot of non-financial appeal as a policy. "Make people move when folks with more cash want to come in" is at best a somewhat heartless position, and at worse a major driver of homelessness.

[cheriot]

> "All because a bunch of people with more money than you are now willing to pay a bunch of money for your neighbors' places."

You're missing the part where city policy creates the housing shortage. It's the city that approves zoning for a huge number of offices and then refuses to allow more homes. The homeowners reaping these massive rewards are who vote in favor of the housing shortage.

There's easy ways to deal with the down sides of increasing property values. Delay the payment to sale or even tax the value from some number of years ago.

> Moving is hugely disruptive to people's life

The housing shortages in CA are doing this to renters and anyone else that's forced to move. Older couple that can't handle stairs, growing family, etc.

Prop 13 is a horrible way to address any of these problems.

[pc86]

Then you move. That's how it works; if you can't afford the property taxes, you can't afford to live there.

[seiferteric]

The image of 90 year old widows being forced out of their home was how prop 13 was passed so...

[Gibbon1]

Lot of other states have laws that either cap or defer property taxes for retired people. Not much reason California couldn't do the same.

[ak217]

Prop 13 would be fine if it only applied to retirees over the social security retirement age, and did not pass down the basis to their children.

[mehrdadn]

Ah, duh! I'm so dumb. If only the rest of us were smart enough to think of these simple and fair solutions ourselves :)

[HideousKojima]

Or abolish property taxes and fund cities with consumption taxes or some other tax

[yonran]

Property taxes are a consumption tax on the property that you occupy. Even better, the land portion of the property tax can also be considered a Pigovian tax because it is a tax on the natural resources that you are depriving others of occupying.

[avmich]

A more generic tax would be a wealth tax. Don't tax real estate at all; instead, tax net worth.

However, if all you have is a house in an area with rapid price growth, this change won't save you.

[pc86]

Presumably it would "save" you because your end tax would still be lower (as people whose multi-million dollar homes comprise only a fraction of their wealth would subsidize you). It's a bad idea for a bunch of other reason, though.

[avmich]

The "not saving" part is because if your house appreciates in taxable value - no matter, house tax or whole person worth tax - you have to pay more, and if all you have is the house itself (plus something which generated enough value to pay tax when house was cheaper) then your expense grows without your income. Even if you would comparatively pay less tax than your neighbor.

[dredmorbius]

Land tax is among, if not the most equitable tax there is.

[roenxi]

Taxes are pretty miserable. A person would be able to afford something. Then taxes happen. Now they can't.

There isn't a solution that is fair, the major activity in the debate over California housing seems to be people turning themselves in knots to find solutions where long time residents enjoy a high-demand city without paying for its upkeep. The goal is for long time residents to reap rewards without doing anything - there is no fair way to do that. It drives inequality too. Rich people tend to own lots of land for long periods of time.

> ...the rest of the city forces you to "enjoy" higher taxes you never demanded [...] or wanted...

I do not hesitate in pointing out this part of your post applies to most taxpayers. I personally disagree with most of what my tax money is spent on, and distrust the people who spend it. That is why it is taxed from me.

We should go with https://en.wikipedia.org/wiki/Georgism - it is fairest over the long term. Moving homes is not so terrible that it has to be prevented at all costs.

[oceanghost]

Is there a correlation though between city expenses and property values for large moves in property value?

Just because property values double doesn't mean the cost of pothole repair doubles?

[roenxi]

Pretty much must be, because the city is spending the money on something. If the city isn't using the money on something essential, they could reduce taxes.

Might be a struggle to get tax reductions past the voting public. But I think a bit of political elbow grease could get it done.

[oceanghost]

So the City should reduce total taxes by increasing property taxes?

That's semantics at best.

[refurb]

What’s really unfair is someone whose home goes from $100k to $2M, for a total capital gain of $1.9M gets a 90% discount on their property taxes.

The people with the greatest ability to pay are the ones getting the biggest tax break.

[jjav]

> The people with the greatest ability to pay are the ones getting the biggest tax break.

They don't necessarily have any ability to pay, which is the scenario that brought prop13 to life in the first place (low-income grandma kicked to the street by taxes).

Someone of modest income who bought a modest 100K house years ago isn't cash-flow rich today just because the paper value of their house went up. They are probably retired living on a small social security check and don't have much any ability to pay, let alone the "greatest ability".

It's fine to have different views on how society should handle this tricky scenario, but let's be intellectually honest with the core facts.

[lambdaops]

There are property tax postponement programs in California for that person and honestly, they should be downsizing: https://sco.ca.gov/ardtax_prop_tax_postponement.html

Also, I think low-income grandma was and always has been a useful narrative piece. Howard Jarvis, the author of prop13, was literally a lobbyist for apartments and businesses. Please watch The First Angry Man when you get a chance: https://www.kcet.org/shows/the-first-angry-man/episodes/the-...

[jjav]

> they should be downsizing

Often the house isn't much to downsize from. If they bought a modest house for 100K back then, it's probably not big.

I bought my current house in my 20s. It is tiny because it was all I could afford back then. I always expected to move up, but it hasn't happened. So I've made my life on this street, these parks and forests. I could afford to move up now but it's a nice area and it has become home. I'm not ready to retire but when I do, there's no point in downsizing, it's already tiny.

Also don't underestimate the pain of moving for an older person. I often wish my >90yr mother would move closer to here but at that age she is terrified having to change any of her regular doctors and neighbors.

The grandma may be an "useful narrative piece" and it was, but it is also very real. These are the people who benefit the most from being able to stay in their home to the end. It is very cruel to force an older person to move from their comfort zone.

Of course, corporations taking advantage of prop13 is a travesty. It should be for individuals in their own home only.

[seiferteric]

The part that doesn't make sense to me is that if your property value 20x's, your value from tax does not go up by 20x, so why is property tax linked to the market value of the property anyway?

[mehrdadn]

Yes, as I mentioned, there are indeed two sides to the argument.

[leetcrew]

fortunately there is a financial instrument for exactly this situation: the reverse mortgage. it's kind of absurd to treat the quintupling in value of one's home as some sort of hardship.

[mehrdadn]

Unfortunately even the intro on Wikipedia explains some problems with reverse mortgages.

Not to mention that it's kind of a lot to force, idk, 80-year-olds to take out reverse mortgages just so they can keep living in homes they've already paid for and own. Though I guess it's not surprising if people half their age don't care about their burden.

[leetcrew]

maybe I'm being insensitive, but it sounds like a problem I would absolutely love to have.

[deepakhj]

why does it apply to 2nd or 3rd homes?

It’s an easy policy challenge. Let the person carry the tax until a sale. Or they can carry it until death. It should not pass to kids and the tax assessment is taken at the final sale.