[onislandtime]

Prop 13 needs to be reformed because taxes need to be fair. Taxes can be deferred for those who cannot afford to pay the full tax so they don't have to move. The benefit should be restricted to a primary residence, no vacation, investment, or commercial properties. Deferred taxes can be paid when the owner sells the house if there is enough equity. At some points victims of prop 13 will out number those that benefit from it. One can only hope people will wake up and do the right thing.

[eweise]

Taxes are fair under Prop 13. What's fair about making people pay more tax just because the market value of their house has increased? They will pay taxes on those gains (over a certain limit) when they sell.

[ryandrake]

> What's fair about making people pay more tax just because the market value of their house has increased?

If you believe that, then why ratchet them up just because the property is sold? If you're going to detach property taxes from the value of the property, then do it for new homeowners too.

If we are scaling property taxes with the property's value, we might as well do it for everyone and not treat people special just because they were living there longer. Other costs people deal with scale at least by local cost of living. Groceries, electricity, water service, etc. all increase year after year. Do we let people pay 1960s costs for everything else just because they happened to move to the area in 1960?

Prop 13 as it currently stands, is a wealth transfer from young, new homeowners to elderly, established homeowners.

[jjav]

> If you believe that, then why ratchet them up just because the property is sold?

An argument here is that it's about budgeting and predictability.

If I choose to buy a $1M property today, I need to consider and budget for the $10K+/yr in taxes on it because I know full well that's what I'll have to pay. If that doesn't work for me, I don't have to buy it.

But someone who bought a $50K property and responsibly budgeted for the $500 in taxes on it will be severely punished through no fault of their own if that $500 becomes $10K.

[rcpt]

People who made a $50k leveraged bet which is now worth $1M are who we're supposed to ruin our schools, parks, infrastructure and housing market for?

[jjav]

> People who made a $50k leveraged bet

They did not "make a leveraged bet". They bought a home to live in and watch their child grow in it.

Not everyone looks at real estate as a investment vehicle to maximize profits. It's just a home. It's not healthy for society to view homes merely as if they were shares of stock to be traded for maximum value. If you want to make leveraged bets, better to play the options market.

[rcpt]

Oh ok great. So how do I buy one of these "just a homes"?

[wooger]

It doesn't even need to be someone who moved to the area who's grandfathered in to the cheap taxes: Families can share ownership of a property and retain it forever.

It's an insanely unfair system.

[eweise]

Property values go up over time. I initially paid $8k a year and now its $14K, which is actually about right for the market. I am protected from wild increases so that I don't have to move my kids out of a neighborhood and school they've grown up in.

I agree that scaling property taxes with their values is bad. Not sure why government expenses magically double when housing value do.

[gkop]

Look into land value tax. The goal of property tax is not just to fund collective expenses, but also to encourage the most valuable use of the land for the collective benefit (eg. let's not waste valuable inner Bay Area land on single family homes, but instead with more dense uses like four plexes).

https://en.wikipedia.org/wiki/Land_value_tax

[eweise]

I guess that makes sense if your goal is to use land most efficiently. Not sure that what is most important though.

[gkop]

Agreed, it's a balance. I think replacing prop 13 with taxes deferable until sale would be a good step in the right direction.

[avidiax]

How is it fair that two houses built side by side in the same year with the same floorplan might have one pay literally 10x the property tax than the other, merely because it changed hands? What's worse, the 10x house actually realized those capital gains, so the state also got that cash.

[CincinnatiMan]

Theoretically the house that changed hands, the new owners knew what they were signing up for and could verify their budget could handle the higher taxes. Whereas the original owners, whose home value has shot up significantly since purchase way back when, may not be able to pay for the new higher taxes if they were applied in full.

[eweise]

Simple, the people in the houses moved in at a different time. A house isn't just a thing you buy and sell. You live in the house, raise a family, become part of a community. My neighbor across the street bought her house 30 years ago. She's an artist and doesn't make much money. She is well known in the community. Should she be forced out of her house so that some rich tech worker can move in?

If want to cry unfair, then it would be better to aim at commercial real estate. That's a pure money business. Why should they get protection under prop 13? Make no sense at all.

[refurb]

You don’t force her out of her house, you simply allow her to defer the taxes until she sells or dies.

Why should some whose house went from $200k to $2M be getting a tax break?

[jjav]

> Why should some whose house went from $200k to $2M be getting a tax break?

Because they bought a 200K house and budgeted for taxes on a 200K house.

The paper estimate of it being worth 2M right now doesn't change anything about the house they actually live in.

[refurb]

So you feel the right solution is to give millionaires massive tax breaks and have middle class folks who can barely afford a house pick up the slack?

It is absurd and an anomaly. Let them stay, but when the reap a $1M+ profit on the house when they sell or die, they can pony up the tax, just like everyone else.

[curryst]

Which is why you let people defer them, rather than just getting rid of them.

If they budgeted for a 200k house, that turned into a 2M house, they should be ecstatic when they sell it, the government takes the property taxes and they still get to keep more than 200k.

[imtringued]

Don't you dare touch the holy commercial real estate that is luring in all those stupid techies who are driving up the value of my house. Oh god I hate techies, I made this neighborhood good for them, they are taking advantage of my hard work and now they dare to come here and settle down? Preposterous. Look at all the landlords kissing their asses by building expensive luxury apartments so they have a place to live in and driving up the price of housing. I bought this neighborhood without the techies and they should stay outside.

This is satire. Please do not take it seriously.

[rcpt]

> A house isn't just a thing you buy and sell

Oh great I'll take one of those. Maybe two. Where do I sign up?

[epistasis]

A tax on the market value of a house should go up when the market value increases.

This is double true when the value went up without any change to the structure. Structures depreciate, and become less valuable over time. When property values go up in California, it's almost entire land value that goes up. The value increase isn't from the labor of the land owner, it's just simple rentierism.

Land gets more valuable because of what one can access close to it: jobs, relationships, people, universities. All this value is socially created. This sort of wealth hoarding is hugely damaging to the economy, and all sorts of thinkers revered by people in the US have nothing but the worst possible words for it, from Adam Smith to Thomas Paine.

It is quite strange for the wealthiest members of a community to depend upon the less wealthy to fund a community, but that's what Prop 13 is all about. This situation, where the wealthy could buy their way out of taxation, is a lot of what led to the French Revolution.

[jjav]

> where the wealthy could buy their way out of taxation

This is literally the opposite. If you buy (a property), you'll have the taxes based on what you bought. You can't buy your way to a lower tax rate.

[imtringued]

You're right. Early adopters bought their way out of taxation, house appreciation made them wealthy. It's not that you start out wealthy, you get wealthy in the process and once you are wealthy you don't get taxed more. That's the effect he was describing.

[jjav]

> Early adopters bought their way out of taxation

I wouldn't phrase it that way because it's not what they did, even if decades down the road it turned out that way (it could well have gone the other way like it did for homeowners in Detroit years ago).

What they did was buy a home they could afford, based on monthly mortgage + taxes payments, which is the entirely reasonable and responsible thing to do.

Having the property tax balloon out of control and out of any conceivable affordable range due to actions of other people in the area, is hardly fair.

[epistasis]

Every year their taxes get smaller and smaller, as the tax is, by law, sub inflationary.

The older the wealth, the lower the taxes.