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I'm glad the article brought up Prop 13. It is my belief that Prop 13 is the biggest cancer on the state of California, and one that we will almost never be rid of. Prop 13 is why people don't move. Prop 13 is why California occasionally has budget issues. Prop 13 makes my parents home property taxes 1/4th the amount of my own, despite their home being 4x the value of mine.



Prop 13 was a reaction against confiscatory taxes that broke an important social contract.

The contract: If you save, invest, and pay off your home mortgage so that you own it free and clear, later in life when you are retired and living on a fixed income no one can come along and confiscate the property that you bought and paid for fair and square.

The contract breech: Property taxes going up so fast that the only possible solution was to sell your home. Now, of course the value of the home was going up, which was what was driving the taxes. But forcing pensioners to sell their homes, disrupting/destroying a life-time of plans and work was never going to be a smooth ride -- who could have thought that it would be?

The government pre-Prop 13 was viewed as kleptocratic by a sizeable portion of the population, with arguably good reason.

So, do you have a better solution that has empathy for pensioners that played by the rules all their lives and have plans to settle into modest enjoyment of their so-called "golden years"? Prop 13 was an attempt to stop perceived thievery, a crude bludgeon, perhaps, but a sufficient number of desperate people saw it as a solution to get it enacted.


> Prop 13 was a reaction against confiscatory taxes that broke an important social contract.

> The contract: If you save, invest, and pay off your home mortgage so that you own it free and clear, later in life when you are retired and living on a fixed income no one can come along and confiscate the property that you bought and paid for fair and square.

That doesn't explain why Prop 13 applies to commercial, industrial, and rental properties.


Helping large-scale property owners to collect unearned economic rents was the primary motivation for Prop 13. Crippling the state and local governments’ democratic power to collect taxes was the secondary motivation.

Sob stories about retirees on fixed incomes getting taxed out of their homes was only the propagandistic sales pitch, a clever way to convince a majority of voters to support the referendum.

The wealthy anti-tax activists who promoted prop 13 didn’t actually care about unwealthy elderly people per se. If such people had been the main focus, it would have been straightforward to come up with a much less dramatic remedy.


It’s hard to have sympathy for people whose home has skyrocketed in value and they now “can’t afford” the property tax on their multimillion dollar homes.

What it needed is a way for people whose homes had only gone up a small amount from getting budget busting increments. Once your home has doubled in value, there are other financial mechanisms to solve that problem and you can afford to pay the increase.


Why do you have no sympathy?

If you are a retiree who has worked hard the paper value of your home if you were forced to sell is not a real gain.


Why should the people that saw the biggest increase it net worth be protected from the taxes everyone has to pay?

A better solution would be offering up a property lien instead of taxes. The govt collects when the property is eventually sold. People get to stay in their home and property taxes remain fair.


That's an interesting idea, but I see three main problems:

1) It doesn't solve the immediate revenue problems of the taxing authority

2) It doesn't provide any more incentive to move than the current situation in California

3) It exposes taxing authorities to risk in a housing market downturn where people may start surrendering their property rather than sell because selling would net them little money, or even cost them money.


It's better than the status quo, and reduces the lost taxes to a far smaller number of units (every corporation and person vs some older people). Solutions don't have to be %100, especially when you can stack them to get to a target revenue number.

It also allows older people to move without 'losing' a prop 13 tax benefit, since they can retain more value of the large house they don't need anymore with a smaller lower maintenance condo.


> It's better than the status quo

Without putting more thought into it, I don't know. I don't see how this changes the revenue picture.

> reduces the lost taxes to a far smaller number of units (every corporation and person vs some older people)

That is independent of the tax lien idea.

> It also allows older people to move without 'losing' a prop 13 tax benefit, since they can retain more value of the large house they don't need anymore with a smaller lower maintenance condo.

This I can see. I know Florida had issues with people who wanted to downsize but couldn't afford to because of the tax jump from selling their homesteaded property.

That said, I'm not sure this alone would open up enough inventory to actually reduce prices.


>I don't see how this changes the revenue picture.

The government gets all of the deferred taxes on the next sale. That’s immensely better than the current scenario where they don’t get any reasonable amount.


So, they go from getting a reduced amount each year to getting nothing each year with the expectation of a larger lump sum at some indeterminate point the future. I'm not sure that's a good deal in a housing market where turnover is low, and I don't see anything in a simple tax lien plan that is going to drive increased turnover.


It removes the incentive to stay in a home to keep the low tax rate. That’s a big deal.

And the deferred revenue can be significant. A friend bought a house where the owner was paying $600 per year when the rate for the same home should have been $11,000 per year.


Government can apply prop 13 style 'minimum payments' along with the deferred payment. Or make people do reverse mortgages and make the market sort it out.

Usually although, you have provide some sort of incentive to people adopt something, and no taxes vs some small amount taxes is attractive to a voting block. And democracy is getting enough voting blocks to get you over the pass rate.

Also since government works over large numbers and is very long term, they can do actuarial calculations to see when revenue would kick in and issue fairly reliable bonds based on it.


No, stop assuming the stupidest way to implement it and then attacking that implementation. People get the same annually capped increases and then the lien of the remainder of the normal increase.


Because they own a multi-million dollar asset? They can, worse case, take out a reverse mortgage and live happily ever after. There are better financial options available than a reverse mortgage but anyway you look at it they are rich.

What do you mean by "is not a real gain"?


Asset gains only become real when the asset is sold. That’s what I mean.

Also - a financial instrument based on the value of collateral can easily go south if the value of the collateral falls.

There is no guarantee that home values will remain stable nor that whatever assets you put the loan into will perform adequately too.

Given that retirees typically don’t have the ability to correct for investments gone wrong out of future earnings, your recommendations would be foolhardy for most.

Simply buying a house to live in is fine.

The only reason we are having this discussion is that the people complaining about prop 13 want a mechanism to force older people out of their homes so they can take have them instead.


> Also - a financial instrument based on the value of collateral can easily go south if the value of the collateral falls.

That's not how a reverse mortgage works: https://en.wikipedia.org/wiki/Reverse_mortgage

> The only reason we are having this discussion is that the people complaining about prop 13 want a mechanism to force older people out of their homes so they can take have them instead.

That's just not true. We want baby boomers to pay their fair share of taxes and not squirrel away their wealth for their heirs at our expense. In addition, because of Prop 13 (and similar programs else where) mean OTHER tax payers are paying a higher rate than they need to in order to cover the short fall.


If you were worried about wealth being passed on to heirs, you’d be focussed on estate taxes rather than just trying to tax people who just want to live in their own homes.

Also, what about all of the other people lives you’d destroy? I live in Oakland in a neighborhood where most homes are either rented, or owned by families that are neither boomers, nor high income tech employees.

Any honest discussion about this has to admit that these are would be hardest hit and their communities decimated so that beneficiaries of the tech boom can buy them out.


Honestly, I'm talking about Toronto, where similar attempts to keep our taxes low "for the poor widow in her house she raised her five children in" has resulted in an inability to properly fund our transit system. This is a systemic problem as boomers retire and look for ways to minimize the contributions to a society they are no longer interested in funding.

You are clearly very emotional about this topic but it's NOT about "techbros" "stealing" property from "poor" retirees on a fixed income.


Thanks for clarifying.

It’s clear that you don’t care about the consequences to anyone who owns a home other than the ‘Boomers’ who you want to make pay.

I didn’t say ‘tech bros’. But I did mention tech. I stand by that but I agree that it is narrow - It’s a stand in for anyone who is young and in a position to have high future earnings.


> It’s clear that you don’t care about the consequences to anyone who owns a home other than the ‘Boomers’ who you want to make pay.

It's clear that you are so emotional about this issue that you can't help but personally attack those who disagree with you. Let's leave it here.


The personal attacks started with you calling me ‘emotional’.

You could have actually answered my point about the people who were adversely affected instead doing that.

Instead you chose the intellectually dishonest route.

Let’s leave it there instead shall we?


It would force those older people to build an apartment building that would not only allow that old person to live there but also a dozen other (equally old?) people.


There are other options beside selling e.g. reverse mortgage or heloc


Because there are a thousand other practical solutions people have presented that you're ignoring in deference to your ideological motive that you don't like taxes.


I’m quite happy with taxes on investment gains and income and even estates.

I don’t like taxes being used to take away property from people just because you want what they have.


> I don’t like taxes being used to take away property from people just because you want what they have.

This is just a variant of "the left is just jealous of rich people" argument. That's not an argument and I'm not jealous, I'm actually quite rich by most standards, I just don't think it's earned or justified, especially in a country with a vivid history of genocide.


> The contract breech: Property taxes going up so fast that the only possible solution was to sell your home. Now, of course the value of the home was going up, which was what was driving the taxes.

The State of California offers another solution. It's called Property Tax Postponement: https://www.sco.ca.gov/ardtax_prop_tax_postponement.html

"The State Controller’s Property Tax Postponement Program allows homeowners who are seniors, are blind, or have a disability to defer current-year property taxes on their principal residence if they meet certain criteria including 40 percent equity in the home and an annual household income of $35,500 or less."

The taxes are deferred until a change of control, like due to a sale or transfer to next of kin. Many or most high-cost-of-living jurisdictions have similar programs.


That’s a really low annual household income, particularly for California. But perhaps it's tweakable.


This is aimed at elderly people making a living from a pension, social security, etc. Not for people currently earning a full-time salary.


Yeah, but $35,000 from one's pension/401(k)/Social Security is still peanuts for California. That's got to be well below effective poverty level for someone living in San Francisco, LA or San Diego, even without rent.


Then we can talk about changing that limit. Several states have programs like this and they work just fine, eg. https://www.state.nj.us/treasury/taxation/ptr/

It's a totally different problem from prop 13.


So the future home purchaser ends up paying all of those deferred taxes? Yikes.


No, the future purchaser pays market price, but some portion of the money that the seller gets from the sale goes to paying back the deferred taxes they owe.


Just because a solid majority of people think something is a good idea doesn't make it a good idea. That's the problem with Prop 13, and with democracy in general.


Sending the post-work population to a nice quiet farm upstate doesn't sound so bad to me...

It's hard for me to have much sympathy for the dream of keeping your home forever when the great majority of people I know have basically no hope of ever owning a home in the area.


> to a nice quiet farm upstate doesn't sound so bad to me.

Just so you're aware, the phrase "sent to a quiet farm upstate" is a euphemism for "killed", usually applied to animals like family pets.


Why don’t you go upstate then?

(Serious question - how do you justify sending retirees away from their homes, rather than simply working somewhere else?)


I'm reminded of all the boomers who said that one should simply work a summer job to pay for college, and then simply get a job when the degree is done...

My impression, as a person under 60, is that the older land-owning generation largely had things much, much easier, and have been blissfully unaware of the changes society has undergone. Or else perfectly aware, but unwilling to recognize their debts to society and circumstance and pay it forward.

Those low property taxes translate directly into booming tuition, as the state funding for higher education has been systematically gutted. The higher tuitions, in turn, imply massive student debt. Simply get a summer job, rite?

As for me? I work where it makes most sense for me to work. Not-working can happen anywhere.

So for retirees, my advice is this: Sell the house, take the millions of dollars in windfall, and go to Bali or Florida or something already. I'm sorry if you have to make new friends; please consider this outcome the next time you settle for a societal structure without robust community. But in getting out, you'll reduce the demand pressure slightly, improve the depressed tax base, and have enough money for a long, long vacation.


Higher education costs has zero to do with property taxes. One pitchfork at a time.


> Higher education costs has zero to do with property taxes

In California they are linked, in that property tax rollback and the procedural impediments to raising other taxes at either state or local levels were part of the same initiative constitutional amendment.


I've gotten offers from places like this, the pay deduction is staggering. If I got an offer that paid even the median of what I can make on the coasts, in a place like upstate New York I would get out of the coasts in a heartbeat and buy a house.


How do you justify people occupying extremely valuable land that they aren’t using to anything close to its potential, while also not paying anything close to their share of the taxes that keep the local government afloat?


My big problem is not merely keeping their own land under-developed, but that there is a huge overlap between these squatters and NIMBYism to prevent me from using the land to its potential, even if I manage to buy property from one of their neighbors.


Ok, so it is about using taxes to push people you don’t like out?

What makes a particular property owner into a ‘squatter’?


It is not about using taxes to push people out. The feudal nature of Prop 13 is a problem, but people eventually leave anyway. Once the owner leaves, the new owner should be able to bring it to its full potential by building apartments and condos. In most of the country, including the vast majority of the land in every city in California, this is illegal. The only way to maximize the value of the land is to turn it into luxury housing.

Prop 13 is a blunt instrument that rewards speculators more than it protects homeowners. What would be a much better system is some sort of forbearance, that the owner does not have to pay the full property tax until the property is sold, and then the back taxes are paid from the profits.

Immortal entities like corporations should not have Prop 13 protection.


They pretty clearly said that it’s about being prevented from using their own property the way they want.


Sure - but this is just indication that there is a small group of people that the poster has a beef with vs the huge group who would be adversely affected I.e. all homeowners.

Unless you take seriously the idea that most homeowners in California are squatters and NIMBYs.


How do you justify anyone owning anything and not using it to it’s ‘potential’?

More importantly who do you think should decide what the ‘potential’ is for what you own?


The market value is a pretty reasonable way to determine the potential.


That seems like a great argument for abolishing property taxes.


That is why Prop 13 will not go away in a foreseeable future, but the whole idea of tying all your savings to your house is flawed. Apart from putting all your eggs in one basket, it also creates all sorts of bad incentives like Prop 13.


Are you proposing that there is something safer than your house to put your savings in that would either allow you to outpace property taxes if prop 13 was abolished, or trivially move if it were?

It’s not meaningful to say something is a bad strategy if you can’t articulate an alternative.


There are many existing alternatives like 401(k).


Those are projected to underperform and are vulnerable to mismanagement in a way that owning your own home is not.


That is until homes eventually get properly taxed


This is not an adequate explanation for why Prop 13 tax basis can be inherited or why it is valid for commercial buildings. The "sell their homes" rhetoric does not work for investment properties either.


>The contract breech: Property taxes going up so fast that the only possible solution was to sell your home. Now, of course the value of the home was going up, which was what was driving the taxes. But forcing pensioners to sell their homes, disrupting/destroying a life-time of plans and work was never going to be a smooth ride -- who could have thought that it would be?

Financial instruments that prevent that already exist. If your home is worth millions of dollars it's not that hard to find a way to pay the property tax. "Having more money" is rarely a real problem.

> a sufficient number of desperate people saw it as a solution to get it enacted.

No, people who's material interests are in direct conflict with a functional society pushed for it. It passed through a combination of "think of the elders" concern-trolling and libertarian dark money.


Specifically, you could use a reverse mortgage to pay property tax. A similar solution that has been proposed is that unpaid property taxes could accumulate as a lien and thus be paid when the house is sold.


I thought this was standard-it happened to many properties after Katrina


Your solution is to make real estate into just a rental from the state.

That’s not a great one either.


That's true everywhere that property taxes exist. Why was it only banned in California?


California is unique in applying this limit to all real estate. Many states have taxable value caps for owner-occupied residences.

Also, nothing is "banned" by Prop 13.


Annual assessment of real estate value is banned under prop 13.


No, it isn't. The increase is just capped at a low number.


We cannot halt society's progress because a small amount of wealthy people's privilege will be injured.

I am sure there are reasonable solutions other than: "Do nothing and let the country rot."


I am pretty OK with not forcing pensioners to sell their homes in order to pay ever-increasing taxes.

It also seems nice to not tax small businesses out of existence.

On the other hand, it would be nice to not have as many closed storefronts and vacant lots in prime locations.


When you put it that way, the solution is obvious - the state government needs to spend less money.

Note well: I said "obvious", not "easy" or even "politically possible". But I think it's useful to note that, in important ways, California is doing this to itself.


> When you put it that way, the solution is obvious

When it's put in an ideologically biased way that ignores practical solutions to paying taxes on an increasing property value, it implies another ideologically biased solution that favours the material interests of the rich...

Sure.


Note that "the government has to spend that money, so here are some ways that you can manage to afford to pay your taxes" is also an ideologically biased viewpoint. (It's the current default viewpoint, but it's still ideologically biased...)


Of course, everything is ideological. I'm a socialist so I'm plenty familiar with going against the status-quo and my HN karma reflects that.

I'm arguing against hiding your ideological motive (lower taxes) under the guise of 'logical deduction' or 'obviousness'.


If anything, your HN karma reflects that your comments are largely political: > Please don't use Hacker News for political or ideological battle. That destroys intellectual curiosity, which is what the site exists for.

Note that AnimalMuppet was also downvoted for the same reasons.


HN is open to sound arguments against “the status quo” (whatever you think that is). If your karma suffers it’s likely because you’re not actually making well reasoned comments but are instead just spewing ideology.


It's not so much that HN isn't 'open', but there is a wide double-standard in the evidence required for libertarian-right arguments vs leftist arguments.

See this thread:

https://news.ycombinator.com/item?id=20780064

Lots of right-wing arguments upvoted with almost no evidence:

> [The city] grant[s] de facto immunity to homeless people committing petty crime, stop all police enforcement of drug laws, and shame everyone who dares to complain.

This isn't an argument, and has no sources other than a vague 'feeling' by the poster. It even includes a bit of a cut at the left ("shame anyone who dares to complain").

I'm not really complaining about that individual comment, but it's also upvoted and contains no argument or substantive discussion. Similar comments I've made are always deeply downvoted.

This has a chilling effect on discourse from leftists, where it feels like it's not worthwhile to write a substantive comment only to have it downvoted with nothing other than pithy right-libertarian ideological comments in return.

So I haven't really bothered with this account, hence spewing ideology.


How do you tell that a comment was upvoted? "Not downvoted" is the most that you can tell (unless you know something I don't).

> So I haven't really bothered with this account, hence spewing ideology.

You just told us to ignore anything you say.


If home taxes keep go up as your incomes goes down for people 65+ it has a very negative effect. It makes sense to me that taxes on property stay low and fixed.




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