
How has Prop. 13 affected tax distribution in Santa Clara County? - 80mph
https://sanjosespotlight.com/how-has-prop-13-affected-tax-distribution-in-santa-clara-county/#.XgTjnqQrays.twitter
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dartdartdart
The benefactors who currently own these homes are passing them down to
relatives without passing down the new higher property tax. What's more is
that homes that people who were 'lucky' to buy in the past, such as Palo Alto
properties, benefited from white-only clauses: "No person not wholly of the
white Caucasian race shall use or occupy such property unless such person or
persons are employed as servants of the occupants." \-
[https://www.paloaltoonline.com/news/2019/03/29/housings-
trou...](https://www.paloaltoonline.com/news/2019/03/29/housings-troubled-
history-of-discrimination)

It's historically unfair, and nothing to my knowledge has been done to undo
the damage from discriminatory housing policies.

If you want to read more, here's a recent 2019 study review on the economic
damage from unfair housing policies in Chicago:
[https://www.npr.org/local/309/2019/05/30/728122642/contract-...](https://www.npr.org/local/309/2019/05/30/728122642/contract-
buying-robbed-black-families-in-chicago-of-billions)

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bluejekyll
I believe the tax can only be passed on to children. Not “relatives” in
general.

It’s still worthy of debate if this should be the case, but it’s not as broad
as giving it to your nieces or nephews.

~~~
dragonwriter
> It’s still worthy of debate if this should be the case, but it’s not as
> broad as giving it to your nieces or nephews.

Prop 58 allowed exchanges between parents and children (in either direction),
Prop 193 expanded it to include those between grandparents and grandchildren
(in either direction). So you can't do it directly to nephews/nieces (or
aunts/uncles), but if you have the right set of living, willing relatives to
combine a prop 193 transfer and a prop 58 transfer you can do it.

~~~
masonic
But neither of those policies is the result of Prop 13, which is what the
parent implied.

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jedberg
Every time Prop 13 comes up, I like to tell the story of my own neighborhood.

On my block are four almost identical houses. They are all about 1800sq ft.

My neighbor, who is the original owner from 1962, pays $X in tax. My neighbor
on the other side, who bought in the 90s, pays $10X. I pay $20X (bought in
2008), and the one who just moved into the last house pays $40X.

We all get the same services from the city, but one person pays 40X the other.
The new owners are basically subsidizing the neighbors, despite being the ones
who have to spend more of their income to pay their mortgage.

It's completely ridiculous.

~~~
__david__
I think it would need more ridiculous for your poor neighbor to be forced to
move out just because a bunch of rich people paid a whole lot for neighboring
houses and inflated the property values. Prop 13 at least gives you some
comfort that the same thing will not happen to you—there is less uncertainty
in your future with regard to your expenses (assuming your property tax is the
2nd largest bill after your mortgage).

~~~
jedberg
This is a red herring by the anti-tax zealots. Somehow in the 49 states
without prop 13 this doesn’t happen.

Worst case, the retiree can downsize their home and cash out their equity,
freeing what is most likely an oversized property for a younger family, or
they can take out a home equity line to pay the taxes.

And luckily because of the rising property values it would be really easy to
get that equity line since the LTV would be really low!

~~~
masonic

      cash out their equity
    

... which means they pay income taxes on the _unindexed_ gain ( _not_ adjusted
for inflation).

When you combine that tax hit with the cost of a replacement property, and
_it_ being taxed at the full current rate, it's not worth it.

Those voters who voted No on Prop 5[0], which would have made tax basis
portable statewide, have nobody else to blame for the low property turnover
among long held real property.

[0]
[https://ballotpedia.org/California_Proposition_5,_Property_T...](https://ballotpedia.org/California_Proposition_5,_Property_Tax_Transfer_Initiative_\(2018\))

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Ericson2314
The simply fact (as articulated by CityLab article whose name I forget) is
"housing cannot be both affordable and a good investment".

Encouraging the desperation of capital through mass home ownership is a cruel
joke. Even ignoring the fact that relatively few "homeowners" have paid off
their morgage ([https://fivethirtyeight.com/features/how-many-homeowners-
hav...](https://fivethirtyeight.com/features/how-many-homeowners-have-paid-
off-their-mortgages/)), the value extracted is basically by rent seeking
against other maybe future member of the same "middle class".

People should own capital through a UBI (common ownership of a bit of
everything) or actual productive enterprise (your immigrant small businesses),
not price gouge each other.

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JMTQp8lwXL
Prop 13 is rent control by another name. I would love to hear economists speak
as damningly about Prop 13 as they regularly do about rent control.

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abtinf
Rent control is using the power of the state to coerce individuals.

Limiting tax increases reduces the power of the state to coerce individuals.

The two have nothing in common.

~~~
JMTQp8lwXL
A reminder that Hacker News has an "assume the strongest interpretation of
one's argument" idea. (In case it's not clear, expanding with my thoughts
below).

What is the primary effect of rent control? Everyone renting before the
enactment pays proportionally less in rent than those after enactment.

What is the primary effect of Prop 13? Owners who purchased before 1978 pay
proportionally less in property taxes than those who purchased after 1978.

These are huge, (in my view) obvious parallels between the two. Both policies
encourage the market to become sticky: renters won't leave, for fear of giving
up their cheap rent as time goes own; for landowners, they are discouraged to
sell, knowing an identical property would raise their annual property tax
expenses. As property values go up, it further encourages landowners to hold,
becoming a negative feedback loop on the housing supply.

~~~
jedberg
> Owners who purchased before 1978 pay proportionally less in property taxes
> than those who purchased after 1978.

It's even worse than that, since prop 13 isn't a one time thing. Just like
rent control, you lock in _whenever you purchase_.

My neighbor pays double what I do for effectively the same house. It's totally
unfair to them.

~~~
JMTQp8lwXL
I'd imagine it's very unfair for people who bought in 2006 vs 2008 vs 2010.
One time, I asked an older coworker about this, and he told me that getting a
reassessment was popular for those who purchased in the bubble after it
popped.

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sabujp
Repeal prop 13 so everyone pays a fair share, get rid of single unit detached
homes in metros with high population density and build lots of high density
housing condos and town houses, e.g. say a 3 bedroom that a family making at
least 140k can afford on a 30 year. Get rid of stupid expensive HOAs. One can
dream.

~~~
crdoconnor
It's funny how the "NIMBYs" are apparently very unpopular around here but the
tax incentives that create the NIMBYs are very popular.

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tingletech
I was in the second grade when prop 13 passed, but I still remember a palpable
change in the morale of teachers the day this passed. I think the split roll
thing makes sense, but I made the mistake of getting involved in some facebook
discussion about this -- some folks are so in love with prop 13, you would
think it was the second amendment.

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bluejekyll
Why should we care about single family property taxes set at the time of
purchase?

People move, and sell, or pass away and their families then acquire the
property and must decide what to do. There’s a reasonable question to discuss
about prop 13 passing from parents to children, but in general property
turnover on single family homes in the US are 5-7 years. Focusing on this part
of prop 13 is almost intended to cause people to fight each other rather than
the real problem.

Corporations don’t pass away. Even when they are acquired by other
corporations, they try to block reassessment of property. I can’t at the
moment find what happened with the taxes after all of the bank acquisitions in
2008, but I do remember them fighting any increases based on the fact that the
property did not change hands.

There are other corporate properties in CA that also have never increased
their tax bill, such as Disneyland. So as we consider removing prop 13
protections from corporations in 2020, let’s remember that corporations don’t
die, but people (sadly) on the other hand do. Any correction in the market of
taxes on your home is setup almost exactly the way we want. People on a fixed
income don’t need to worry about paying more, while people benefiting from the
current economy can.

~~~
jedberg
I pay 20 times what my neighbor pays, and the other neighbor pays 40 times as
much, for the same services. How is this remotely fair?

Even worse, I can find you homes in California that are valued over $4MM that
are paying less than $1000/yr in property tax (buying that property new would
be about $50,000/yr).

How is this fair?

~~~
emcma
Imagine a retiree living in their own home sees a sudden increase in property
tax bill due to the rise of the market prices in the neighborhood. Without
prop 13, many people in that scenario will be forced to move away from their
own home.

The original idea of prop 13 is to protect home ownership. It sounds good but
it is being applied to people that have “house” ownership not home ownership.
Prop 13 should really be changed such that only if a homeowner living in the
same house could pay the tax derived from the purchase price. If you rent out
the property, you should pay the tax derived market price. If the property is
a vacation house and not the primary home, the owner should pay the tax
derived from the market price.

Commercial properties should always be paying the market price.

~~~
dragonwriter
> The original idea of prop 13 is to protect home ownership.

No, the original idea of Prop 13 was a Norquistian “starve the beast” approach
to government.

The big original _sales pitch_ for Prop 13 was to stop old people on fixed
incomes from having to sell their homes because of taxes, but if that was the
motivation rather than the sales pitch, it would never have applied to
anything other than owner-occupied primary residences; instead, it applies to
all real property regardless of use or ownership.q

~~~
masonic
There have been many times (including right now) that the Democrats had
complete control (Governor and supermajorities in the Legislature) and could
have passed a split-roll amendment, which would then need only 50%+1 of voters
to pass.

They never have. Ask yourself: why not?

~~~
jedberg
They did. It’s on the ballot in 2020.

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briandear
According to the article, tax receipts would double if property taxes
reflected their current value.

So we could repeal 13 and cut property taxes in half and still have the same
tax receipts we do now.

As far as keeping “grandma” in her home, if she is sitting on $2 million in
equity, why should she get to pay lower taxes than someone who first buys a $2
million house with minimal equity? Neighbors paying vastly different tax rates
for similar properties is unjust. Their consumption of public services isn’t
different but grandma pays less than the young family just getting started.
That’s ridiculous. Not to mention grandma is probably living in a 5 bedroom
house alone with her five cats — which is an underutilization of scarce
housing resources. Taxation should be absolutely equal.

I, for example, have kids in private schools, but I still have to pay property
taxes to support the local public schools and get no deduction for that
tuition despite me not consuming those resources. I’m ok with that because
public schools are important, but when grandma next door pays a fraction of
what I pay, it’s extremely unfair that I have to subsidize grandma. She isn’t
my grandma.

~~~
jrmg
_Neighbors paying vastly different tax rates for similar properties is unjust.
Their consumption of public services isn’t different..._

Couldn’t you make the same argument about any form of progressive taxation?
(Perhaps you would?)

