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Property Tax

By BayArea   2012 Oct 7, 12:49pm   3 links   12,733 views   44 comments   watch (2)   quote      

I'm looking at my most recent tax bill and see the following:

- Mosquito Abatement
- CSA Paramedic
- CSA Vector Control
- City Emergency Medical
- City Paramedic SRV
- School Measure G
- Oak Fire Prev Dist
- BART/AC Transit (public transportation)
- City library service
- EBMUD (water)
- East Bay trail
- Flood benefit
- Park safety
- City landscape
- Underground utility
- Land & Improvements

Comes out to a total of 1.4112% in Alameda County (I know, unbelievable!).

Anyway, buyers typically just accept that 1.X% of the home price will be going towards property tax. It's just the way it is, right? Well wait a minute. When it comes to mosquitos, schools, paramedics, public transportation, land, park safety, fire, etc, wtf difference does it make if I've lived in my house for 15 years or 1 year? Why does the old retired couple who bought 30yrs ago pay less in property tax than their young neighbors who just moved in and are starting a new family? Is one less likely to need the fire department? Is one less likely to experience flood? Is one less likely to need a city paramedic? You can probably argue that the young couple may benefit from the schools more so than the older couple, but I don't see anything else on the list above that clearly favors one over the other.

When it comes to land value, if both parties above have the same amount of land in the same location, the valuation of that land should be identical.

I can understand price being locked. Whatever you paid for your house is what you paid. But conceptually why are we all using the items listed above yet paying so differently for them?

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5   rootvg   2012 Oct 7, 1:17pm     ↑ like   ↓ dislike   quote    

FortWayne says

Oh you kids just never see anything beyond your own situation. Think of others for a moment here.

It is this way because old people live on fixed income they can't afford increases in taxes. Increase taxes and you'll throw millions of old people overboard. That is inhumane and WRONG to do. That is what propelled prop 13 in the first place, money hungry government kept on spiking pensions and salaries and demanded more property taxes always. That was hurting old folks.

I do think property taxes should be lower, but I can live with 1% of the purchase price being fixed.

We should not throw old folks overboard.

Freedom 1789-2012

Fort Wayne, do you work on imports?

6   lostand confused   2012 Oct 7, 1:18pm     ↑ like (1)   ↓ dislike   quote    

B.A.C.A.H. says

Unless you wanna make big outta state political donations like the Prop-8 backers did.

That seems to be the norm. Charles Munger , son of Munger -next in line to Warren Buffett gave 10 million dollars to back Prop 32 in CA.

Oh the irony -somebody donating 10 million dollars to limit another group's campaign contributions. LOL!!

Modern politics has become a charade.

7   rootvg   2012 Oct 7, 1:24pm     ↑ like   ↓ dislike   quote    

lostand confused says

B.A.C.A.H. says

Unless you wanna make big outta state political donations like the Prop-8 backers did.

That seems to be the norm. Charles Munger , son of Munger -next in line to Warren Buffett gave 10 million dollars to back Prop 32 in CA.

Oh the irony -somebody donating 10 million dollars to limit another group's campaign contributions. LOL!!

Modern politics has become a charade.

Charles and Molly Munger are sister and brother and could not be further apart ideologically. I asked Tom Del Beccaro if she was dropped on her head or taken off the hootie too soon or maybe all the kids made fun of her in school and she's' compensating. Funny stuff.

8   BayArea   2012 Oct 7, 1:27pm     ↑ like (1)   ↓ dislike   quote    

B.A.C.A.H. says

BayArea,

You knew the rules when you bought here. SInce you knew the rules when you bought here, what are you complaining about?

You are correct in that I knew the rules when I bought. At the same time there is nothing wrong with revisiting those rules and having a friendly discussion on their reasoning. For the record, I have posted questions/opinions in the past and been swayed in an opposite direction than I originally started with. I'm open minded and eager to be convinced that prop-13 is right for America and we should all be paying different property tax amounts for the same thing.

9   bmwman91   2012 Oct 7, 2:01pm     ↑ like (2)   ↓ dislike   quote    

Prop 13 would be a lot less of an issue if if actually did what the campaigners said it was going to do. "Keep grandma in her home." If it was a rule that allowed property taxes to be fixed upon an owner's retirement, then I would not have much issue with it. What we got instead was a giant abomination that applied to commercial RE along with residential, and that paved the way for messing up the school funding system.

10   FortWayne   2012 Oct 7, 3:04pm     ↑ like (2)   ↓ dislike   quote    

BayArea says

Wait, so those are "old people on fixed incomes" and not "wealthy long-time owners who bought for next to nothing?"

And ya, prop-13, pfft.

So what are you saying, that poor folk don't exist? That seniors on fixed income don't exist? That old folks were not economically exiled out of the state and kicked to the curb through high taxation prior to Prop 13?

You increase taxes on everyone and you'll see millions of people thrown overboard. And, and there is NOTHING wrong with someone being a wealthy long term owner. We shouldn't tax the life out of someone just because they are succesful. Equalizing poverty is not a way to make a country great. If you disagree, try living in Cuba with your fellow socialist in poverty together.

11   FortWayne   2012 Oct 7, 3:10pm     ↑ like   ↓ dislike   quote    

rootvg says

Fort Wayne, do you work on imports?

I am not certified, but I can.

12   bighorse   2012 Oct 7, 5:49pm     ↑ like (3)   ↓ dislike   quote    

Sorry to break it to you. Prop 13 only protects the property tax. You are complaining about Special Assessments. Your old neighbor's special assessments are identical to yours.

Have a nice day.

13   william12345   2012 Oct 7, 6:25pm     ↑ like (1)   ↓ dislike   quote    

my sister bought a house for 89k in St Louis few months ago....property tax is $2,400. Nearly 2.7%!! I suggested she go to the Assessor's Office. They told her she would have to wait til 2014 to file an appeal....Anyone know if she has some recourse?

14   grendel   2012 Oct 7, 8:33pm     ↑ like (3)   ↓ dislike   quote    

Meh, I pay quite a bit in property taxes up here in Washington, but I see the good roads, the police presence, my neighbors talking about crime have only two known crimes in 25 years to report, the air is clear, the nights are quiet, the utilities work smoothly, the schools are good...

If you're smart voters, you get what you pay for. Unfortunately for those living in California, Prop 13 didn't just protect grandma from getting kicked out of her house, it locked in property taxes for everyone, and unique among these sorts of property tax freezes, it also locked in property taxes for corporate real estate.

Property taxes are also interesting in that assessments have reliable revenue streams. If the assessment is for $4M, there's a good chance that the city/county/state will actually get $4M at the end of the year. Income taxes are much more chaotic in that they decline when the economy is rough and rise up when the economy is strong. So by pushing the state of California away from property taxes and to income taxes, Prop 13 basically guaranteed budget chaos during any severe downturn. The state spends the full budget during the boom times, then the economy tips and public assistance costs go up while revenues are declining. Take a look at states that don't have an income tax (but which have higher property taxes). They're also having trouble balancing the books, but not nearly as badly as California.

Prop 13 was good for the corporate vote buyers who weren't looking long term, but bad for everyone else. Those who are still in California will be bearing the burden of the terrible decision making process behind Prop 13 for a very long time.

15   C Boy   2012 Oct 8, 1:34am     ↑ like   ↓ dislike   quote    

In Texas, the avg property tax is 2.2%.

Luckily, the insurance is tops in the nation as well.

16   pkennedy   2012 Oct 8, 2:46am     ↑ like   ↓ dislike   quote    

All those extra taxes are charged to everyone. The base rate is what prop13 protects.

A house follows standard inflation for an area, what prop13 was designed to protect is people who bought long ago, and then cities enveloped them, including a change in local inflation they weren't prepared for.

prop13 is of course a great boon to those living in cities, because it's based off a nominal amount of inflation, where cities have far greater inflation rates. Decent idea, but too simple.

17   rfsanders   2012 Oct 8, 4:08am     ↑ like (1)   ↓ dislike   quote    

Not as bad as Simcity (the game) ... where I charge residents 7%.

Of course, that pays for EVERYTHING ...

18   Michael Cooke   2012 Oct 8, 5:08am     ↑ like   ↓ dislike   quote    

1% is 'fine' compared to most rates. But isn't property tax proof you ultimately don't own your home?

19   EBGuy   2012 Oct 8, 5:21am     ↑ like   ↓ dislike   quote    

And here's the punchline... last year the CA Francise Tax Board was going to enforce the fact that technically, you can only deduct the ad valorem (percent based on prop. values) property taxes, not the special assessments based on square footage. They ended up backing off on this position as EVERYONE deducts everything.

20   freak80   2012 Oct 8, 5:23am     ↑ like (1)   ↓ dislike   quote    

rfsanders says

Not as bad as Simcity (the game) ... where I charge residents 7%.
Of course, that pays for EVERYTHING ...

Reticulating Splines...

21   BayArea   2012 Oct 8, 5:25am     ↑ like   ↓ dislike   quote    

Here is another question.

Take a look at the list above in my original post. Note things like public transportation, paramedic, fire, fire, flood, schools, library, etc...

Now tell me why renters don't pay property tax? Something beyond, "cause they don't own property, duh" would be appreciated.

22   BayArea   2012 Oct 8, 5:28am     ↑ like   ↓ dislike   quote    

FortWayne says

So what are you saying, that poor folk don't exist?

No I am not questioning whether the poor folks exist. I'm questioning whether the young family who just recently bought their house should take the grunt of the property tax bill.

23   bob2356   2012 Oct 8, 5:33am     ↑ like (3)   ↓ dislike   quote    

BayArea says

Now tell me why renters don't pay property tax? Something beyond, "cause they don't own property, duh" would be appreciated.

Renters do pay property tax. It's part of the rent. Who do you thinks pays it, the tooth fairy?

24   BayArea   2012 Oct 8, 5:42am     ↑ like   ↓ dislike (1)   quote    

You are right that the rental amount covers property tax, of course.

I suppose in the end it probably would make little difference if this were broken up between renters and owners who occupy other than generating more paperwork... but collecting from the owners is a more reliable way for the gov to get their annual dough.

25   curious2   2012 Oct 8, 5:45am     ↑ like   ↓ dislike   quote    

BayArea says

conceptually why are we all using the items listed above yet paying so differently for them?

One reason is intrinsic: pricing and taxing can never exactly match the utility conferred. We pay differently for identical airline seats, we pay the same for public schools and movie tickets even though we get different benefits.

Two more specific reasons are a mix of cynical and practical. The cynical reason is because fundamentally the process is about constituencies and provider lobbyists organizing to collect as much $ (which is a metaphor for labor) and power for themselves as possible. All government spending involves a mix of legitimate needs and waste, and all $ is fungible. The stated purposes are mere verbiage, whatever the voters will approve, although as a practical matter legitimate necessities must be paid somehow.

Conceptually, limiting property taxes to something the taxpayer can control directly (e.g. purchase price) has many advantages. For example, if it allays the fear of confiscatory tax increases, it can encourage investment: if you are considering building a house or factory, and one town offers a guaranteed tax rate for the life of that investment, while the other says "we'll change your taxes whenever we decide based on factors beyond your control," probably you would prefer to build in the town where you can predict what your tax rate will be. Likewise if a property tax increase forces elderly people on a fixed income to move into a nursing home, it can backfire in all sorts of ways, e.g. the cost of the nursing home may need taxpayer subsidy and the new buyers may put more kids through public school. Some people blame Prop 13 for all of California's troubles since 1978, usually without giving it any credit for California's successes since then, and sometimes without even considering the problems it was intended to address.

On the other hand, Patrick's "Essential reading" page includes a very persuasive argument for a Land Value Tax: http://patrick.net/change.php
There is a lot to be said for reforming Prop 13 to say property tax will reset after a fixed period based on changes in land value. So, if you build a factory, office building, or house, you get the Prop 13 protection for the expected useful life of that asset, then your tax adjusts based on land value. (The useful life of a factory might be 20 years, an office building might be 40 years, and a house might be 60.) There are no perfect tax policies, but the Land Value Tax has better arguments than most, and might cause fewer distortions than the current system.

26   B.A.C.A.H.   2012 Oct 8, 12:36pm     ↑ like   ↓ dislike   quote    

BayArea says

I'm questioning whether the young family who just recently bought their house should take the grunt of the property tax bill.

because they chose to do so when they chose to buy the house.

27   B.A.C.A.H.   2012 Oct 8, 12:37pm     ↑ like   ↓ dislike   quote    

curious you might have some good points but your post is too long to find out.

28   thomaswong.1986   2012 Oct 8, 1:08pm     ↑ like   ↓ dislike   quote    

BayArea says

When it comes to land value, if both parties above have the same amount of land in the same location, the valuation of that land should be identical.

If you bought a home in a given area pre-bubble, and someone else pays 3x as much during bubble years.. Is it true your home is now identical to theirs... what happens when it corrects.

Worse yet what if the Govt increases your property tax bill 3-4x higher during the bubble and obligates itself into higher long term debt and contracts ?

Now what ! You gonna get the money back from being overbilled, ripped off due to a bubble...govt going to renegotiate itself from higher "bubble driven" debt ?

29   E-man   2012 Oct 8, 2:01pm     ↑ like (1)   ↓ dislike   quote    

Prop 13 should stay.

Prop 58 should be repealed. There is no reason the basis of the property value should be allowed to transfer from grand parents/parents to children.

30   B.A.C.A.H.   2012 Oct 8, 3:53pm     ↑ like   ↓ dislike (1)   quote    

I think you meantE-man says

Prop 13 should stay.

Prop 58 should be repealed.

31   thomaswong.1986   2012 Oct 8, 4:10pm     ↑ like   ↓ dislike   quote    

E-man says

Prop 58 should be repealed. There is no reason the basis of the property value should be allowed to transfer from grand parents/parents to children.

what is yours and your families is the same. Its a related party transfer and basis can transfer, as is the case with IRS rules.

32   033   2012 Oct 8, 5:37pm     ↑ like   ↓ dislike   quote    

OP, Bay Area
Maybe someday someone will begrudge me my Prop 13. It might be your kids who hate me for buying a "house next to nothing" and taking from "young families."





This week I paid my property tax bill. Two parcel taxes for elementary schools, another for the local CCD. A couple mid-2000s bond issues for schools. Plus the 45 percent of the regular property tax that's designated for schools. Then there's that whole Prop-30-something that's on the ballot...for schools and for the children, again. We are all for the children, but we are all struggling.
I bought my house last year. Four fifths of my property tax went to take care of "the future." In the future, I expect the future to take care of me.



I wish I felt better about The Future. The public school a mile down in a poorer neighborhood has an API of 8. That school got Lowellized. The runoff consisting of all those who can't afford Catholic school or lunch went to the school nearest me. That school has an API of 2, a free lunch rate of 70 percent, and spends 30 percent more per year than the 8 API school.


On what The Future owes me shall probably differ. However, let us agree in The Present that it was never to your benefit nor mine to be forced to subsidize people who had children knowing that the those who had them had less hope of paying for their kids than for their 2005 no verification loan. The ones who have been living mortgage-free since 2008.

33   E-man   2012 Oct 8, 5:58pm     ↑ like   ↓ dislike   quote    

thomaswong.1986 says

E-man says

Prop 58 should be repealed. There is no reason the basis of the property value should be allowed to transfer from grand parents/parents to children.

what is yours and your families is the same. Its a related party transfer and basis can transfer, as is the case with IRS rules.

Are you sure you don't want to give iwog a hard time? After all, he's your favorite pal here. ;)

34   BobMSN   2012 Oct 8, 6:11pm     ↑ like   ↓ dislike   quote    

Both Prop 18 and 58 should be repealed. They are actually stealing and rubling between neighbours. Why anyone have to pay the service for your neighbours?

35   033   2012 Oct 8, 6:20pm     ↑ like (1)   ↓ dislike   quote    

That there are vultures counting on your death to bring them money is disconcerting.
Make your own way without counting on someone dying.

36   E-man   2012 Oct 9, 1:07am     ↑ like   ↓ dislike   quote    

SFace says

Here is how my neighbor sums up her property tax bill. "Look sunny, I have been paying property tax for 40 consecutive years. I already pay enough." She's right. Home ownership is painful in the beginning but awesome in the end. I have no problem carrying the burden when you are young and strong but get protection when you get old and weak.

I agree with you there. Well said.

37   E-man   2012 Oct 9, 1:08am     ↑ like   ↓ dislike   quote    

033 says

That there are vultures counting on your death to bring them money is disconcerting.

Make your own way without counting on someone dying.

You mean government employees? :)

38   E-man   2012 Oct 9, 1:10am     ↑ like   ↓ dislike   quote    

BayArea says

but collecting from the owners is a more reliable way for the gov to get their annual dough.

:)

39   C Boy   2012 Oct 9, 1:22am     ↑ like (1)   ↓ dislike   quote    

E-man says

SFace says

Here is how my neighbor sums up her property tax bill. "Look sunny, I have been paying property tax for 40 consecutive years. I already pay enough." She's right. Home ownership is painful in the beginning but awesome in the end. I have no problem carrying the burden when you are young and strong but get protection when you get old and weak.

I agree with you there. Well said.

Yeah, the old 'I paid taxes at a lower rate, but now that I am old I want more services and you young people owe it to me'.

Gotta love the elderly.

40   rootvg   2012 Oct 9, 1:31am     ↑ like   ↓ dislike   quote    

C Boy says

E-man says

SFace says

Here is how my neighbor sums up her property tax bill. "Look sunny, I have been paying property tax for 40 consecutive years. I already pay enough." She's right. Home ownership is painful in the beginning but awesome in the end. I have no problem carrying the burden when you are young and strong but get protection when you get old and weak.

I agree with you there. Well said.

Yeah, the old 'I paid taxes at a lower rate, but now that I am old I want more services and you young people owe it to me'.

Gotta love the elderly.

That's how it is, worse in Europe.

Old folks are basically royalty in Germany. It's a cultural thing.

41   Philistine   2012 Oct 9, 1:39am     ↑ like   ↓ dislike   quote    

bob2356 says

Renters do pay property tax. It's part of the rent. Who do you thinks pays it, the tooth fairy?

Rent *may* pay property taxes, but that is not what ultimately determines the rate of rent. Our rent works out to $2000/mo cheaper than a comparable mortgage, part of which would be property taxes.

42   freak80   2012 Oct 9, 1:54am     ↑ like   ↓ dislike   quote    

C Boy says

Yeah, the old 'I paid taxes at a lower rate, but now that I am old I want more services and you young people owe it to me'.
Gotta love the elderly.

And they're laughing all the way to the nursing home, since they vote in large numbers and the youth do not.

How do you think we got socialized medicine...oops...I mean Medicare D under a Republican president?

43   FortWayne   2012 Oct 9, 2:16am     ↑ like   ↓ dislike   quote    

E-man says

Prop 13 should stay.

Prop 58 should be repealed. There is no reason the basis of the property value should be allowed to transfer from grand parents/parents to children.

That I do agree with. Prop 58 just creates a pyramid scheme. I understand if a spouse would be included, but children... that's just creating an incumbency of wealth.

44   EBGuy   2012 Oct 9, 11:55am     ↑ like   ↓ dislike   quote    

I have no problem carrying the burden when you are young and strong but get protection when you get old and weak.
SFace, How many bedrooms does her house have -- and how many people are currently living with her?

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