[olliej]

Businesses in CA got people to vote for prop13 in the 70s I think (the propaganda justifying it was essentially “the Supreme Court said your property taxes have to pay for the same quality of education for poor people”, but the actual reason is a massive tax cut for corporations as they never actually sell property so get a permanent cut to property taxes).

It basically says “unless a property changes ownership the taxable valuation cannot increase by more than 2%”, it doesn’t matter if it’s a rental property that has rent increased by 50%, or a corporate owned property that has financial reports reflecting its true value, it’s capped at 2% increase.

This has a follow on impact of increasing the actual property tax rates (because the majority of properties are undervalued by actual market rates the only option is higher base tax rates) which means if you do buy a new property you get hit with massive property taxes (over time they will become cheap relative to property value but initial cost is insane).

We’ve owned our house for a decade, and if we were to try and buy it today the property taxes on it would be higher than our current mortgage payments because of the increase in actual market value.

The actual fix for this is complicated (there’s a real issue where a person is retired say and their property taxes could increase to being unaffordable forcing them to sell their home), but I feel a reasonable improvement would be to say that taxable value for residential rental property increases at the maximum of “2% or rate of rent increase”, and commercial property gets taxed at the value included in financial reports, or something to that effect. Alas prop13 is actually a modification to the California state constitution so the only way to fix it is through an amendment to the constitution.

[pc86]

It's interesting that in your example, your specific situation would still have tax rates subsidized by your neighbors while the people you consider the out-group (corporations, landlords) get minimal or no benefit from it. I'm also not convinced corporations are getting any outsized benefit, business buy and sell real estate all the time.

The fix doesn't seem complicated. Assess a home's value. Tax it. If you're concerned about it disproportionately impacting low or fixed income folks, move as much of that tax as you can to income and commuter taxes.

[olliej]

There’s so much wrong with this.

The people paying the property taxes are the tenants. Except they’re paying market rate for the property while the owner pays far below that actual rate. In other words the artificially lowered tax rate is just a profit center for the owner.

Second, the owner does benefit from those property taxes: the property taxes fund a bunch of the infrastructure that makes their property have value, that makes tenants interested, covers police and fire, etc

Except because the land owners in these cases aren’t paying their fair share, so in addition to profiting off tenants that are paying market rate for the property owners are being subsidized by the increased base rate others have to pay.

People do not have direct control over the market value of their property so it is trivial to have a world where people’s property taxes could increase beyond what they could afford at all, while simultaneously pricing them out moving (to “realize” the “value” of their home), but if you’re renting a property out at the market rate then you should be paying taxes at the market rate.

[pc86]

You seem to think I'm arguing for some sort of landlord handout when in actuality I'm arguing that people pay fair market rate for everything, including their property taxes, at all times.

If your property taxes are too expensive for you, you should move.

[coryrc]

You could delay the tax collection above a certain amount until sale of the property. But I'm against allowing people to sit on valuable property while contributing little back to society. Get a reverse mortgage or move out.

[pc86]

Delaying the collection has weird side effects and edge cases where if you hold on to the property long enough you could get into a position where you will actually lose money selling it, or worse yet even have to write a check to the government when you sell your house.

I would agree in general that if you can't afford the market-rate property taxes on your home, you should move. And stuff like Prop 13 just makes your neighbors subsidize you.

[archagon]

Nobody should be forced to move due to their home increasing in value outside their control.

[pc86]

I see this argued a lot but never with any reason why other than hand-wavey arguments about "fairness." Why are high property taxes pricing someone out of area inherently worse than property values or insurance costs forcing someone out?

If you can't afford to live there, shouldn't you have to live somewhere else? Even if you think housing is a human right, housing in the specific city/neighborhood/suburb/street of your choice is not.

[lores]

Economics ignore anything that's uncountable like life enjoyment or community ties. People who have lived somewhere long enough for prices to have spiralled out of control likely score high on those measures. Kicking people out of a life and community they not only enjoy, but probably even define them, is in my opinion barbaric.

[archagon]

I think it should be something close to a right to continue living in your primary residence until you pass away. Being forced to move against your will is a difficult and traumatic experience, especially if you’re older and rely on a local support network.