[jelliclesfarm]

It was fairly designed. The alternative is to kick people out right after they finish paying their mortgages and have retired. Is that what you’d call a good design?

That’s precisely the point about the state’s finances. You have to go back to Gov.Gray Davis disastrous handling of the state pension funds that has led to staggering unfunded pension liabilities.

[..] The California Pension system is way under water and in dire need of reform. The state's unfunded pension and retirement liabilities approach $1 trillion, or roughly $80,000 for each taxpayer in the state.[..]

From 2016: https://www.latimes.com/projects/la-me-pension-unfunded/ : Understanding California's public pension debt

2018: https://amp.sacbee.com/opinion/editorials/article199693069.h... : The pension nightmare for California’s cities is getting scarier

There was a whole investigative piece done in 2015-16. Search for Gov.Gray Davis + ‘unfunded pension liabilities’ + California

It’s been downhill for a while and mostly because the wealth creators are not even eligible to vote in California. Ask the right questions to get the right answers..that’s my guiding principle. Otherwise, everything is just noise.

[ericd]

Nope, that wasn’t the only alternative. If it was really meant for seniors, they should’ve made it age-based, and they should’ve set reasonable limits - the yearly tax exemption should’ve been set at a 1 bedroom condo level, with them paying whatever the excess is. This would’ve encouraged the behavior many seniors in other places engage in - downsizing when their kids leave home, to allow family-sized housing stock to open up for people with growing families.

And they certainly shouldn’t have made the tax exemption inheritable. And it shouldn’t apply to corporations.

As it’s designed, the whole “don’t let seniors lose their homes” argument is pretty obviously just political cover for a pretty egregious wealth transfer scheme.

No argument about the pension liability problem, CA’s governance issues are a big reason we decided not to put down roots long term. Prop 13 is one of the bigger examples of that, in our minds.

[jelliclesfarm]

I agree. Wealth transfer should be considered as income and should be taxed moderately. There is no legal reason for kicking out seniors out of their homes from which the unrealized gains haven’t been harvested.

The truth is that most people don’t want to downsize. Why should anyone work 40-60 hours a week and pay a mortgage for most of their working adult life and taxes only to live in a condo when they have paid their dues and want to enjoy their retirement.

Should we be dictating to seniors that they deserve no more than a one bedroom condo just because they got older? Is that what you are suggesting?

That’s akin to discarding people and kicking them out of their homes. I don’t know any culture or country that would even suggest this except here in the United States. It’s actually truly appalling to me.

[ericd]

I'm not suggesting kicking them out, I'm suggesting that they pay property taxes at market rates, minus the property taxes of a 1 bedroom condo, which would be society's freebie to them. They could live in a small place and not pay property taxes, regardless of what happens with the market, or they can continue paying property taxes on a huge house, if they can afford to do so. That's more generous a deal than they'd get anywhere else in the US.

[NoRagrets]

1.in which universe do we pay taxes on good we didn't buy or sell? The gains haven't materialized. you realize that it would apply to everyone right and everyone would have to pay a different tax amount every year. Rents will fluctuate too. How does that even remotely come close to stable housing or affordable housing? 2. Will we be evicting renters if they can't pay that years rent due to market rate taxes. A foreign power can inject cash and destablise the housing stock with buying and selling easily. Thats how you destroy a nation and bankrupt its population. I am not sure the proponents of unstable housing are hearing themselves. if you dont understand the above point, there is nothing to discuss here anymore between us. 3. Taxing like that is a way to ensure that a citizen never owns property and the state becomes the landlord. That is communism. If thats what we want, we are not America anymore. Time to rewrite the constitution. 4.your comment that seniors could live somewhere smaller or cheaper is ageist. One might say that it is distillation of the truth of an ungrateful impotent underachieving parasitic loser younger generation. I might be inclined to support that notion. 5. Here is what I hear...people who should rent and are likely not qualified to own houses have been fed the fantasy that they too can own homes. This is what politicians do. They lie and rabble rouse for votes. In California, they have perfected it to an artform and start the brainwashing from school. Thats why we are an one party state. 6. The truth js that many people buy homes and can afford it in a competitive market. There is no shame in renting. People do that all the time everywhere else in the world. Its a bitter pill to realize that wishes don't align with wallets...but we are so lucky to be in California and in the USA. Especially because we have so much opportunities here for upward economic mobility. Ask any immigrant. We are all grateful to have that opportunity to start midlife in a diff country and thrilled when hard work is rewarded. Its possible. 7. Housing is important. Thats what we should focus on. Its like looking out of the window at our neighbors beautiful lit kitchen window while we neglect our own homes..and wanting their life is unrealistic. You can't order champagne on a beer budget. 8.But housing is a basic human right. We should work together and stop the govts from pitting one against the other. 9. Multi generational housing compounds is a good option in America. Asians do it..Indians, Middle Easterners. Anyone from a place with scarce resources and huge population will fund ways to conserve and build. It is one way to accumulate generational wealth. Americans haven't figured this out yet and it has worked for the Old World. Being the third most populous country in the world, we better start learning from them. There are tools like family trusts in the Western system tho'.. 10.There are many options. Singapore houses over 75% of its population in state owned rentals. Noone needs to be homeless. The ultra wealthy own homes. Would that be ok? There is a price for every form of refuge. Do we want to accept and obey rules like they do in sinagpore? 11.But what is the goal? Stable housing for all to live well and raise families or bankrupting/downsizing seniors whose home you desire? Why aren't corporations urged to operate out of cheaper locations? Why is the strategy always to penalize someone to get what we want? It is a childish tantrum. People die. All the time. Wait your turn and compete with your peers instead of driving old people out of their homes. 12.every generation works for the next one. Seniors did their part. Now the next generation should work for the next. They shouldn't expect grandpa and grandma to foot the bill for their kids future. Soft nations will fold and collapse like a souffle. Attacking the weakest and most vulnerable in society..the seniors..is indicative of this. Imagine able bodied, young people who had the very best in the world..free education...stable govt..no wars..a safety net..the top one percent of the world wanting grandpas and grandmas to live in the boondocks because they can't make it and have gotten used to importing everything, outsourcing everything and relying on cheap immigrant labor, no manufacturing, no tech innovations, just extractive ways to suck little amounts from the back of concentrated capital. Capitalism means creation of capital. We as a nation have gotten used to living on the interest of capital rather than creating it. I wish we'd stop advertising our limp youth to the whole rest if the world. Its embarrassing. 13.I am not going to address the ageist and financial suggestions for elder abuse. Because thats what it is...your suggestions.

[dragonwriter]

> The alternative is to kick people out right after they finish paying their mortgages and have retired.

False dichotomy much? If there was actually a problem with that happening under the preexisting tax policy (there wasn’t, really, on any significant scale, and if there had been there would be less now just from the improvement in the range of financial vehicles to let people access equity in their home, which is the source of the supposed risk) it would have been easy to solve it without either:

(1) Prop 13’s low fixed nominal property rate for all property (not limited to owner-occupied residential, or even residential property), or

(2) Prop 13’s limit on assessment increases without sale or other qualifying event on all property (not limited to owner-occupied residential, or even residential property), or

(3) Prop 13’s requirement for a 2/3 vote of the state legislature on any bill that includes an increase of any non-property taxes (even if it was a revenue neutral or negative shift), or

(4) Prop 13’s requirement that special local taxes be referred to public ballot with a 2/3 vote of the electors required to pass.

How? Simply by adopting an income-based limit on property taxes on an owner-occupied primary residence.

> You have to go back to Gov.Gray Davis disastrous handling of the state pension funds that has led to staggering unfunded pension liabilities.

California public pension funding has been improving and is around the national average funding ration (71.9% in 2019 vs. 71.3% nationally.) [0]

> The California Pension system is way under water and in dire need of reform. The state’s unfunded pension and retirement liabilities approach $1 trillion

They don’t and never have (even the source you directly cite claims only $241 billion at the time, which is very much not approaching $1 trillion); more recently the total liabilities are around 2/3 of that $1 trillion claim ($660 billion), and the unfunded share less than 1/5 of that ($185 billion). [0]

[0] https://www.pewtrusts.org/en/research-and-analysis/issue-bri...

[jelliclesfarm]

I refuse to get into prop 13 debate with you. I am sorry but I didn’t read your reply. I don’t think taxing unrealized gains is fair. I am saving us both time and bandwidth by not engaging with you on this. Thanks.

[dragonwriter]

> I don’t think taxing unrealized gains is fair.

Taxing assets isn’t taxing gains, realized or not.

Flows vs. stocks.

(You might also object to asset taxes, but that is a fundamentally different thing than taxes on unrealized gains.)

[jelliclesfarm]

can you give an example of taxable assets?

ex: i bought a tractor and i will be making payments for 60 months. i paid the required taxes on it at the time of purchase and that is included in the loan repayment. i can depreciate the tractor as a fixed asset. i can claim deductions for repair/maint/service. the tractor is useful and still working even after i pay off the loan. after 60 months, i am not expected to pay a tax for it. even though i have no more payments and i still use the tractor to farm to generate income.

the realisation requirement is the fundamental rule of the IRS. asset appreciation is deferred up until realisation. the quality of life doesnt improve in an old house. if there are improvements made to the building, the assessment changes and the tax amount will change too. california increases property taxes by a capped percentage every year. it is govt spending that has gotten out of control and this spending is not always for the benefit of the tax payers in california. so perhaps thats where the fault lies.

if you change the IRS rules in this regard, the entire economy would become unstable and collapse. the problem is that CA govt spending is bloated and there is no accountability. there is a lot of money. the state is highly taxed. we are not asking enough questions and instead targeting the weakest participant because its the easiest and laziest thing to do.

[dragonwriter]

> can you give an example of taxable assets?

Real property in most US jurisdictions; cars in several US jurisdictions (though this is sometimes obscured.by opaque terminology; e.g., California has “registration fees” that are, in effect, an ad valorem asset tax on automobiles); net personal wealth in several international jurisdictions.

> the realisation requirement is the fundamental rule of the IRS

That's income taxes (on gains), not property/asset taxes (on value).

One is a flow tax, the other a stock tax.

[NoRagrets]

Exactly. There is a realization requirement for tax on value of asset class like property especially if it’s primary residence.

Registration fees is akin to use tax.

Seizure of agency over assets and dissolution of property rights is what happens in communist regimes and dictatorships.