Recall Election Prompts Review of California's Sacred Prop. 13

[Judi Lynn]

Recall Election Prompts Review of California's Sacred Prop. 13
By Gary Gentile The Associated Press
Published: Aug 28, 2003




LOS ANGELES (AP) - Like sunny weather and clogged freeways, tax-cutting Proposition 13 has become a fact of life in California - and as sacrosanct as the automobile and the patio grill.
For the past 25 years, the tax rollback has been politically untouchable. A generation of politicians felt compelled to declare they would not mess with it.

But now, in this strangest of political seasons in the Golden State, there is talk of changing Prop. 13, and it has generated both wrath and praise.

Billionaire investor Warren Buffett, recruited to advise Republican Arnold Schwarzenegger's campaign to unseat Gov. Gray Davis in the recall election in October, stirred a fierce backlash when he told The Wall Street Journal that Prop. 13 might need to be revised.

Why, he asked, should he pay some $12,000 more in property taxes on his Omaha, Neb., home than he does on his $4 million home in Laguna Beach?
(snip/...)

http://ap.tbo.com/ap/breaking/MGA9MY33XJD.html

[wryter2000]

1. Speaking as someone from California

If this stoopid recall undoes Prop 13, it will have been worth it. If the issue loses the election for Ahnuld, that'll be good, too.

[GregW]

2. Speaking as an ex-Californian ...

I think Prop-13 hurt California immeasurably and should be terminated.

[not systems]

3. prop 13 is class warefare

Older home-owners vs newer home-owners and renters.

It should have been taken down by the court.

It should be repealed and would be if people
voted in their own intrests rather than false
interest created by wishfull thinking and
right-wing propaganda.

[nn2004]

4. Why should someone on a fixed income get screwed

Someone that doesn't plan to sell and wants to life their life out in their home should not be extorted because surrounding property values go up.

Forcing someone to move out of their house because they can't afford some huge arbitrary tax increase reeks of unfairness.

[musiclawyer]

6. now one is saying pensioners should be thrown out.....

of their house. It's so easy to fix that it's laughable that no one cogently made the case before. Commercial properties--out from under the Prop 13 umbrella along with residential investment property. Give them their own set of rules to ensure fairness without being punative. Any first year law student can come up with a workable plan. As to the big houses with inflated equity, you can't do much about that. It's the price that mist be paid to protect the little people, unless you're going to just scrap the system and go to a value added or service tax...... Perhaps that's what Warren Buffet was intimating.

[DBoon]

8. I'd exempt residential rentals

The occupants of below-market rentals (yes they do exist) would be hurt by this.

Even those landlords keeping their rentals at what the market will bear do no need another excuse for raising the rent.

I think any building that provides a household with their primary residence.

I think owner-occupied dwellings should have their tax increases capped, though I could see raising the 2% annual increase to something more in line with the overall CPI, similar to the way most rent control works (rent increases about 50% of cpi etc.).

Vacation and other second properties should pay through the nose.

Definitely get business properties out from prop 13. No reason why some huge ag-biz should pay next to nothing in taxes.

As a homeowner, I of course have selfish reasons for this, but I can't see inflicting large tax increases because of speculative real estate activity in your neighborhood. It's not as though my income is keeping pace, and I certainly can't sell off 10% of my home to pay taxes. Of course in this case the "bigger idiot" is paying for the increase in taxes.

[JPace]

19. I was a resident of California....

when prop 13 was voted on. I was also a renter and
our apartment owner (big complex) said if we would
vote for prop 13 he could afford to lower our rents.

We voted yes.....two months later our rents were
raised by a whopping amount!

So much for renters in California.

[sierrak9s]

21. "Residential investment property"

is where renters live. Raise property taxes on such property, and I guarandamntee you that the owner won't be the one feeling the bite. Rents are too high as it is -- don't raise them even more!

[Hell Hath No Fury]

7. I am one of those people...

who would be pushed out if 13 were to completely fall. I live in the house I grew up in, and live very modestly. A property tax rate increase of the magnitude a reversal of 13 would force my family to sell our home and leave CA.

The folks I went to school with and who also were born and raised here live in houses under the same circumstances as me. None of us are rich, all of us are working class. And we would all have to leave the city if 13 were to go.

[greensforpeace]

14. We should subsidize the lower income homeowners

I agree with you. But we can get rid of Prop 13, and get the money from the wealthy, and provide money to those that cannot afford the increase.

We should never force anyone to move out of their house, but we should not let rich people have a free ride while their neighbors pay through the nose.

[newyawker99]

17. Hi greensforpeace!!

Welcome to DU!! :toast:

[greensforpeace]

22. Thank You

Signed up long ago, just started to finally jump in...ya know elections and all... :hi:

[The Sushi Bandit]

20. I agree completely with your assesment!

the Dean for President Meet-up in Laguna Beach, CA

[HawkerHurricane]

5. The choice in California (and the rest of the US is clear)

Cut programs or raise taxes.
In California, the Reich Wing won't let them raise taxes, and NOBODY will cut programs. The Left doesn't want to, the and Reich doesn't dare.
This is the choice we have. And the Reich knows it, but will never put it in those terms; if they told the truth they would never be allowed in office.

[DBoon]

9. They tried to cut programs in CA this time

Repubs put forth a plan to balance the budget without raising taxes. Didn't last long - among other things they wanted to eliminate a dog food allowance for seeing-eye dogs.

Yes, they really do want to throw the blind out in the streets!

[Xithras]

10. I LIKE prop 13, but it needs tweaking

Anyone from California can tall you that we're still in the middle of one of the most impressive real estate booms in history. Homes that were worth $50,000 ten years ago are now worth $350,000, and some areas have seen even greater gains.

Repealing Prop 13 would hurt the elderly and poor. We have Hispanic neighborhoods in my area where dirt-poor families can already barely hold onto the homes they paid $15,000 for 20 years ago. With real-estate values for new sales in these areas now pushing the $200,000 mark, it's easy to see where these people would be if property taxes were tied to market values...they would be homeless. Prop 13, despite its flaws, still does what it was intended to do: It protects the poor and elderly from tax increases they can't afford. It prevents gentrification, where developers drive up land prices to drive out the poor and minorities. And above all, it allows homeowners to know what their tax bill is going to be in advance, rather than have to stress the property tax rollercoaster that existed pre-13.

That said, there probably should be some changes made. Commercial and industrial land should be exempt from Prop 13...they have other ways of recouping their costs and can absorb proeprty tax increases. The yearly limit on agricultural land tax increases should probably be raised as well, to 10% or so. But the Prop 13 coverage for private homeowners should stay as it is. I could see the potential of raising the increase cap from 2% to 3% or 4%, and maybe a more progressive increase on homes initially valued over $1 million, but no more modification than that. Anything more would simply be an attack on our poorest citizens.

[greensforpeace]

16. Remove Prop 13 and Give to the ones that cannot affort it

The Hispanic neighborhoods that you mention should be subsidized, but why should rich areas get a free ride? The repeal of Prop 13 should include a platform for the low-income areas paid for by the high-income areas.

That way fairness is achieved...

[Xithras]

18. Won't work.

Area's with the lower tax rate would become a magnet to the middle class looking for a cheaper place to live. They would buy into the "subsidized" area, driving up prices (and driving out the very minorities it was meant to protect) through gentrification. Given the choice between buying a house with a $2,000 yearly tax bill and one with a $10,000 tax bill, which would you choose?

A better idea is the way I outlined in the other post. Eliminate prop 13 coverage for non-residential properties, maybe institute a slightly higher rate of increase for private homes, and institute a progressive taxation system for luxury homes ($1 million plus). The increased revenues from that alone should be enough to solve our budget problems without harming the poor or middle class homeowners.

[greensforpeace]

24. It could work...

The way I see it, areas would not be subsidized, people would be.

Take for example an area with a $10,000 tax bill, those that make less than say $80,000 get a tax credit (graduating scale...typical tax stuff...)...meanwhile the rich people pay full price.

Then voila!

Rich people pay their fair share (finally) and the rest of us just raise our families finally getting ahead...

[Tracer]

11. Can You Californians 'Splain Prop 13 To Me?

Is it like Prop 2 1/2 in MA where, supposedly, property taxes can't be raised by more than 2.5% in a year? I say "supposedly" because reassessments more than takes care of increasing the amount one pays, Prop 2 1/2 or no.

Doesn't each town in CA set it's own property tax rate? Wouldn't one town have a higher rate than another?

[Xithras]

12. No, they don't

Prop 13 did two things.

#1 It set a statewide property tax rate. Property taxes were reset to 1% of their appraised rate in 1975, or 1% of their appraised rate at the time of later sale. If you spent $200,000 on a California home today, your property tax would be $2,000 per year. In order to match inflation, the state can increase your property tax amount by no more than 2% a year (so you'd be paying $2,200 after five years).

#2 To prevent the legislature from hiking all of the other taxes to compensate, Prop 13 instituted a 2/3 majority requirement when implementing income tax increases (which is why the state budget requires a 2/3 majority...it always includes a tax increase or two).

[Tracer]

13. Thanks for the explanation.

But my reaction was YIKES!!!!

If my house was in CA under these rules, I'd be paying around $500 per year. Unfortunately, I'm being soaked for close to $6000. (approximately 1/4 of my pre-tax income).

[Xithras]

15. We couldn't do that in California

Since Prop 13 passed, the California real estate market has adapted and people have spent what would have been "tax money" on buying a bigger house. If Prop 13 were repealed and tax rates like yours went into effect, the results would be disastrous. As an example: both my wife and I are state paid educators...I work in higher ed and she is an elementary school teacher. When we bought a home two years ago, we paid $212,000 for a 30 year old 1500sf 3/2, which costs us about $1,500 a month in mortgage payments. If we had to pay even a 10% property tax rate (a number I've seen floated as "generously low" by anti-13 advocates), I'd be out of a home...I simply couldn't afford to spend over $3,000 a month on mortgage and taxes. Since the vast majority of California homeowners are in a similar position, a repeal of 13 would cause a real estate market implosion and a wave of bankruptcies in California in numbers unseen since the 1930's.

This is why even progressive liberal Democrat Californian's (like me) still support Prop 13.

[realFedUp]

23. This has been a good thing.

Now some transformation of it would really be nice...