patrick.net

I thought the lottery paid for schools in CA :P

Also If I don't have kids why should I pay for yours to go to school?

Katy Perry says

I thought the lottery paid for schools in CA :P
Also If I don't have kids why should I pay for yours to go to school?

Yep!

This one is easy, get prices to fall back to acceptable levels and everyone ask for re-assessment. Sure the Old Fogies will still have lower property taxes, but those that purchased from 1994-on will get back to a reasonable assessment base value.

Agreed on the fact that it benefits commercial and landlords which winds up discouraging home purchases. But that also, (for those landlords who are not slumlords and who have scruples) allows landlords to choose a lower rent for their tenants, which can be a good thing for those of us trying to save cash to finance as little as possible.

The main problem emanates from the so called "Need" for these property taxes and parcel taxes. The reason these taxes are here has been overstated, we need to cut back in some of these areas to allow the $$'s taken from the public to be reduced, and the property tax collection process to be re-evaluated such that it doesn't favor a group based upon when they bought (and at what price). Make it so the "Need" for these dollars can be voted on and approved by the taxpayers.

This will further depress / dis-incentivize home valuation increases as was stated before (as everyone will have parity in responsibility)+, if a system was in place that did not account for a fixed base amount, but allowed taxpayers to vote on what are reasonable expenditures (don't let the legislators tell you what you need, you're not their puppets, they should be yours to follow within the guidelines of the constitution.)

edvard2 says

Precisely. That was my point. Prop 13 is actually a significant factor to the inflation of real estate in California.

That's definitely true. Because there are fewer transactions due to Prop 13, prices tend to be higher.

I've written about Prop 13 and its failings several times before, and need not completely repeat myself:

http://patrick.net/?p=981019#comment-761303
http://patrick.net/?p=950699#comment-758881
http://patrick.net/?p=1048743#comment-766924

Defenders of Prop 13 usually say two things:
1) it keeps grandma in her house -- but there are better ways to do that, such as the way other states have tax deferral until sale for senior citizens -- Prop 13 is a terrible way to do this because it's overbroad and has lots of bad conseuqences;
2) that is constrains the size of government -- which is bullshit. First of all, there are far better ways to constrain the size of government without doing something overly distortive like Prop 13. Prop 13 constrains local government from doing things local government should be doing. Instead, it aggrandizes state government and gives state government more control over local matters. State government is more corrupt and less accountable than local government, so the net result is a clusterfuck. And local governments raise sales taxes to compensate, but are still not doing what they need to be doing.

edvard2 says

But the bottom line is that there are many more clever ways to prevent older folks from losing their houses. Prop 13 was not exactly well thought out. That said, I have no doubt it will never get repealed, especially as the state's average age continues to climb as more and more younger professionals head for the exits. High home prices are a legacy of prop 13 and created a sort of weird economic situation where the most productive, professional younger adults are priced out of houses while older residents who probably had jobs that paid a lot less get to stay. That makes zero sense.

Yes, this is a great example of a huge failing of Prop 13. I also doubt it will get repealed, although maybe people will see the light as budget deficits keep getting worse and sales tax keeps rising.

Katy Perry says

Also If I don't have kids why should I pay for yours to go to school?

Because it's good for society not to have uneducated cretins running around? It raises your property values and keeps your neighborhood safe? It's good for our economy?

All of these geezers who complain about parcel taxes and similar school-funding measures such as bond measures (think Measure O in San Mateo County http://www.smartvoter.org/2010/11/02/ca/sm/meas/O/ ) also aren't realizing when they oppose these things that it means their neighborhood is less desirable and their property values will tend to drop as a result.

corntrollio says

Defenders of Prop 13 usually say two things:

you forgot to add.. since the topic is it inflates prices...

it has not prevented prices from falling back to its long term mean. We saw prices fall before in the 90s we are seeing prices fall today.

Where is prop 13 in all of this ?

corntrollio says

Because it's good for society not to have uneducated cretins running around? It raises your property values and keeps your neighborhood safe? It's good for our economy?

And as a consquence created a bunch uneducated cretins red-necks like me and many others over the decades... who fueled Silicon Valley in its hey days... Kinda of incredible isnt it.

No this isnt Boston, Mass or Harford, Conn.

thomas.wong1986 says

it has not prevented prices from falling back to its long term mean. We saw prices fall before in the 90s we are seeing prices fall today.

Well, 1) prices haven't fallen back to long-term mean as far as I know. When I calculated Marin County, prices were still 20% now above the 1997 trough.

2) Even if what you say is true, prop 13 is still causing distortions in price and taxation -- prices should be even lower now. Typically in a bust, prices fall below trendline first before recovery.

Look, it doesn't take much thought to show that Prop 13 inflates prices. Prop 13 tends to constrain supply and makes the property market more illiquid. This means higher prices than there otherwise would be.

SFace says

In San Francisco, parcel tax is 285 a year, with 208 supporting teacher pay raise which was voted on just a couple of years ago. I will support parcel tax for the right reasons. In Hercules, parcel tax alone is 1,300 a year. It is too much already and personally will not support any new parcel tax.

I wonder why the stuff we DO want, (cops and teachers) are always at the bottom of the list, needing an additional revenue stream? Especially since the voter would likely put those atop the list, they should be paid first.

If they had to have a parcel tax for the ugly parts of Government, or subsidies to corporations, or even the arts they'd probably reject them. (Except renters, who would probably vote for any parcel tax since it doesn't affect them and the cause feels good).

I was also curious, as was referenced above, if it also added to the inflation of home values. There is obviously some hazard involved in having a popular vote for taxing the "other". There is also the matter of distorted prices causing distorted revenues.

Should they be banned? Or maybe have a "flat property tax" of x amount of dollars?

CL says

I wonder why the stuff we DO want, (cops and teachers) are always at the bottom of the list, needing an additional revenue stream? Especially since the voter would likely put those atop the list, they should be paid first.

That's because the government would not be able to control us as easily if other "agencies" weren't paid out of pocket first. You better believe that voters wanting more cops because they will be "safer" is hugely perpetuated by a fear mongering group that directly benefits from Law Enforcement proceeds / tax revenue.

CL says

If they had to have a parcel tax for the ugly parts of Government, or subsidies to corporations, or even the arts they'd probably reject them. (Except renters, who would probably vote for any parcel tax since it doesn't affect them and the cause feels good).

Renters don't feel parcel tax adjustments? Right, get F'n real. Landlords do the ole' pass through to renters just like any other business. IF not, make it a law that Landlords cannot pass through ANY parcel tax, and that Renters cannot vote on measures / legislation that will be payed with Parcel Tax revenues.

corntrollio says

Well, 1) prices haven't fallen back to long-term mean as far as I know. When I calculated Marin County, prices were still 20% now above the 1997 trough.

All in good time..the ongoing correction will continue.

There is layer upon layer of insanity when it comes to Prop 13.

Does anyone here want corporations to be exempt from market-value taxation?

Does anyone here want corporations to avoid market-value taxation when acquiring property by structuring the deal in a way that obfuscates who is buying it? That's fairly routine now, adding to low property valuations by new business ownership.

Does anyone here want commercial property exempt from market value taxation? How about commercial property bequeathed to children of the original owner; should that also keep a low valuation? How about commercial property owned by out-of-staters?

Do you agree that children should inherit their parents' Prop 13 valuations? Grandchildren? Should it be portable (sell one low-valuation property and move it to another one)?

There are all kinds of problems that are well beyond the "Let's not tax grandma out of her house" bogus argument that sold this pile of stinking turds.

Going back to the OP comment on parcel taxes: it was Prop 13 that made the 2/3 requirement to pass them in the first place. They used to only require a majority vote. The result is now only "Fortress" type areas that value their "good" schools can pass a parcel tax. Middling quality areas cannot, because the schools aren't enough to make people want to "invest" in them. Meanwhile you can see a place like Palo Alto pass a $600 annual parcel tax, or over a thousand in Piedmont. Both the above have Unified School Districts, as opposed to Cupertino, which has separate parcel taxes for the K-8 and high school districts.

We'll be hitting Prop 13 tomorrow (Sunday October 23) on Burbed. Bring your snide arguments, pro, con, and totally off topic.

madhaus says

We'll be hitting Prop 13 tomorrow (Sunday October 23) on Burbed. Bring your snide arguments, pro, con, and totally off topic.

All the attention that prop 13 gets here and on other sites is a waste of time and energy. I agree with you about some of the silly rules that were written into prop 13 such as the commercial property and handing the property tax basis down to the kids, but prop 13 isn't going anywhere. I voted against it in 1978, but very few homeowners will vote to tinker with it, and the majority of homeowners vote. We all know that once a politician gets a foot in the door they will screw it up. As bad as prop 13 is, it's still better than letting politicians get their hooks in it.

lurking says

As bad as prop 13 is, it's still better than letting politicians get their hooks in it.

With that attitude of futility we had might as well not try to fix anything. Meanwhile, the state of California is bleeding to death because of Prop 13. It's time to do SOMETHING. The best start would be to remove commercial and industrial property from assessment limitations.

madhaus says

the state of California is bleeding to death because of Prop 13

No its not.

The state is not bleeding to death.
Just the state government. And the state gov't is not bleeding to death because of Prop-13. It's bleeding to death because of commitments to state employees like college professors (who may even post here) and other "civil servants".

You may be right.

No! The problem is our education administrators don't know how to spend the money. Our school district got a nice $60M bond passed by voters 3 years ago. Guess what? They blew away all of them by renovating all the schools and now they want to sell few of the school facilities to come out of their budget woes.

Katy Perry asked why people without kids should have to pay for schools.

I pay for schools I don't use, and I am happy to do it. Why?

1) Someone paid for my education already, and now it is my turn. If you were lucky enough to attend a private school, chances are one or your parents or grandparents benefited from public education.

2) It is better to live within a population that is educated to some basic level. When I drive, I hope that the other drivers can read well enough to understand signs at speed and well enough to have read the rules of the road. If my stove breaks, I want the repairman to be literate enough to read specs and directions and to order parts. If I am in a hospital, I hope that all of the people who work with me are able to do the basic math necessary to calculate dosages and deliver my meds to me without killing me. Beyond that, I like living in a world where skilled engineers can design clever, useful devices and gifted storytellers are able to write books for me to enjoy. I like civilization, and education is key to civilization.

That said, we should not need parcel taxes in order to pay for schools. We need to address core money management issues.

If the funding of education is so important to all residents of the state why is it only funded by property owners. I think a more equitable solution is to increase the sales tax by one percent or so and/or increase the income tax by one percent. This way it hits all residents and any increases are more direct and the next time a referendum comes up to increase the rate more voters will question the need for additional funds.

When I lived in California as a renter I never automatically voted for additional taxes on property owners as it made no sense that they were the only ones tapped for more money. When I owned my own house I also had the reaction, I think it's past time to mainly get the funding from one source and we must consider a different way.

madhaus says

Does anyone here want corporations to be exempt from market-value taxation?

I can excuse a civilian for not understanding the basics (being ignorant!), but if your a registered as a corp, partnership, small business, etc, than you are not exempt from property tax. I have seen plenty of corp prop tax bills from $25-250K in my career. It can run $50-200 per employee every year.

Not only are you on the hook for real property tax (owner or pass through by landlord), you will be directly liabable for personal property tax every year based on your purchase price. Leashold Improvements, Equipment purchases, and other tangible property.
See form 571-L

Take for example your coffee house, doctor, or dentist, they also pay heft prop tax, personal on their equipement and real prop on building they lease or own. Fact is larger corporations like Apple, Intel, HP pay well over million in property tax each fucking year in year out. Not to mention your chain grocery stores (safeway), and mega mall (westfield) owners who pay up up millions $$$ on non-inventory property to the small retailers.

Not only do we get hefty tax bill, many registered corporations get audited on a rotation every 3-4 years by the county and they dont give out refunds!

If your a California company, and have business facilities in other states Texas, Michigan, Washington.. you pay Property Tax to other states revenue. Again, they have Tax agents representing their state in CA to do audits for Prop and Sales Tax.

Fact is corporations pay a hefty amount in prop tax. You can be informed or stay ignorant of the facts.

When SV was booming with jobs and building new facilities for mfg and r&d, revenue from property tax increased with our growth rate. Yes, all those mega Billion dollar plants certainly helped police and schools.

Today, we have less than half as many corporations compared to 10-15 years ago, therefore property tax revenue has dropped. We are not expanding facilites nor buying up mfg equipment which like in the past gets taxed.

Maybe, just maybe, your question should be
"how do we attract more corporations in SV and grow facilities (along with jobs) which will increase property tax revenue".

Think you handle that ?

Burbed piece on Prop 13 is up.

http://www.burbed.com/2011/10/23/prop-13-insidious-budget-cancer-or-fiscal-terrorist-threat/

thomas.wong1986 says

if your a registered as a corp, partnership, small business, etc, than you are not exempt from property tax.

I didn't say that corporations, landlords, and the very rich pay nothing, I said that they pay an unfairly small amount of property tax.

They force the rest of us to pay the rest of their taxes for them.

Section 1. (a) The maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.

The proposition decreased property taxes by assessing property values at their 1975 value and restricted annual increases of assessed value of real property to an inflation factor, not to exceed 2% per year. It also prohibited reassessment of a new base year value except for (a) change in ownership or (b) completion of new construction.

There are two HUGE problems with that.

1. Inflation means that the actual value of the small property taxes paid by corporations, landlords, and the very rich continues to shrink over time, until they pay essentially ZERO while benefitting from the public services that they force the rest of us to subsidize for them. Sure, new corporations get screwed if they buy land, because they start out at the maximum tax rate.

If you really want new corporations in California, you must kill Prop 13.

2. Corporations don't die. So there is no limit to how long the value of their actual taxes paid can shrink. A corporation that owns a piece of land should simply hold onto it forever and its property tax rate will continue to shrink forever, imposing a burden on the rest of us forever.

This also now applies to individuals who can pass on their tax rate to their children. It's so grossly unfair that it's getting to be very much like the French aristocracy right before the French Revolution.

The 1% owns more than the bottom 90%, pays an ever-decreasing share of total taxes (include sales tax and payroll taxes), and blocks everyone else from getting rich, by twisting the laws to entrench their own position.

This also now applies to individuals who can pass on their tax rate to their children. It's so grossly unfair that it's getting to be very much like the French aristocracy right before the French Revolution......If you really want new corporations in California, you must kill Prop 13.

What is Proposition 58?
Proposition 58, effective November 6, 1986, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property between parents and children. Proposition 58 is codified by section 63.1 of the Revenue and Taxation Code.

2.What is Proposition 193?
Proposition 193, effective March 27, 1996, is a constitutional amendment approved by the voters of California which excludes from reassessment transfers of real property from grandparents to grandchildren, providing that all the parents of the grandchildren who qualify as children of the grandparents are deceased as of the date of transfer. Proposition 193 is also codified by section 63.1 of the Revenue and Taxation Code.

Keep believing the left wing class warfare nonsense !

Steve Jobs to Obama...

"You're headed for a one-term presidency," Jobs said to Obama.

Jobs also said teachers' unions "crippled" the education system in the United States. Among his requests to Obama were an 11-month school schedule, school days that last until 6 p.m. and a merit-based system for employing and firing teachers.

Read more: http://articles.businessinsider.com/2011-10-20/tech/30301305_1_steve-jobs-president-obama-tim-cook#ixzz1beexAks6

I benefited personally from Prop 13, buying my San Jose house in 1981 and selling it in 2006....

I retired to Boise, and found out that Idaho's property tax system protects the "little old ladies" just fine. When people complain about Prop 13 they really need to propose an alternate property tax scheme. I submit that California would do a good thing by adopting the Idaho property tax scheme.

In Idaho, all property is assessed annually by the county assessor. All property is taxed at a mil rate of a little over 1% depending upon the county's needs (e.g. mosquito abatement).

HOWEVER all owner-occupied primary residences get an approximately $100,000 exemption right off the top of the assessed value. Since the average Idaho house is maybe $150K at most, this is a HUGE tax break for the middle class homeowner. I paid $1,050 last year for my large comfortable house here in Boise.

And if this tax break isn't enough, poor seniors may get further tax reductions based upon demonstrated NEED. Rich seniors on the golf course need not apply.

corntrollio says

It makes sense to raise money for schools since Prop 13 and the State of California aren't helping us enough to educate our kids.

Wouldn't it make more sense to increase class sizes and do away with the teacher's union.

DennisN says

In Idaho, all property is assessed annually by the county assessor. All property is taxed at a mil rate of a little over 1% depending upon the county's needs (e.g. mosquito abatement).

HOWEVER all owner-occupied primary residences get an approximately $100,000 exemption right off the top of the assessed value. Since the average Idaho house is maybe $150K at most, this is a HUGE tax break for the middle class homeowner. I paid $1,050 last year for my large comfortable house here in Boise.

Isn't that how it's done in most places? I'm pretty sure that's how it's done in Baltimore City, except the exemption is WAY lower than 100K (the average house here sells for less than that).

Thread title is misleading. It should say Property Taxes.

zzyzzx says

It should say Property Taxes.

Nah, all land is property but not all property is land.

Parcel taxes would be a great way to tax land value.

They could be abated for productive enterprise, but to the extent landlords are charging their tenants for the locational advantage, we should seek to capture this ground rent, since the landlord did absolutely nothing to create this locational value.

Same thing for desirable land in general. Coastal land would yield immense parcel taxes, without actually affecting the monthly cost of ownership.

That premium will be paid regardless, the parcel tax -- ie Land Value Tax -- just captures it.

It takes no entrepreneurial effort to profit from rising land value. Those who are profiting from mere land value should be taxed up the ass.

http://wealthandwant.com/themes/LVT.html

Why is it parasitical to own a house and rent it out? He's performing a service to the renter.

Why do people post that renting is so much better than owning (due to flexibility, don't have to do maintenance, etc) and then attack the very landlords who make it possible for someone to rent?

~ says

How is it fair that someone who has purchased his home and diligently made the payments over many years suddenly has his taxes raised 10 times because some idiot next door overpaid?

How is that fair? Why should MY taxes be completely dependent on what YOU do?

This is a silly rationale. If you sell your house, you would reap a huge windfall too. If you want to live in a good neighborhood, you have to take the consequences too. Otherwise sell your house and move to the ghetto -- guarantee you will pay less property tax.

zzyzzx says

Wouldn't it make more sense to increase class sizes

How large do you want to increase them? This has already happened many times in the past, and classes are already considered unmanageable in some cases.

No fan of the way teachers' unions operate, but smaller class sizes are better for education generally.

Thread title is misleading. It should say Property Taxes.
Note that CL said especially in California. And make that especially in the SF Bay Area. Parcel taxes are based on square footage of residential or commercial buildings. This is as opposed to ad valoreum taxes which are based on property value (and limited by Prop 13). Both are included in CA property tax bills. The parcel taxes require a 2/3 majority to pass.

Parcel taxes are not based on square footage. They are PER PARCEL. That means each assessed property (parcel) is taxed the same amount extra. The school district parcel taxes are added to your property tax bill, and it's the same amount for a condo, a house, or a 3000 unit apartment complex.

corntrollio says

zzyzzx says

Wouldn't it make more sense to increase class sizes

How large do you want to increase them? This has already happened many times in the past, and classes are already considered unmanageable in some cases.

No fan of the way teachers' unions operate, but smaller class sizes are better for education generally.

I just think class sizes should be increased to what they were when I went so school in the 70's.

madhaus says

Parcel taxes are not based on square footage

well that really blows. But not surprising of course. This state can't do anything right. Hell, nobody around here can.

SiO2 says

Why do people post that renting is so much better than owning (due to flexibility, don't have to do maintenance, etc) and then attack the very landlords who make it possible for someone to rent?

If we taxed land ownership more intelligently, land ownership wouldn't be the dominant expense in all our lives.

Landlordism is part of the problem, a trillion-dollar-plus suck from the working class to the investor wealthy.

This goes along with the trillion-dollar tap in health care, the $500B+ tap in energy, and the $2T+ tap with overcosted government services, but at least much of these parasitical draws result in middle-class jobs.

Rent-taking in land is just a pure tap. It is one of the most significant imbalances in the system because of this.

madhaus said: Parcel taxes are not based on square footage.
Sigh... you're giving out bad info. Here is an enumerated list of parcel tax items that you pay in the PRoB. Note that for all items you multiple sq.feet by the rate (either residential or commercial).
@Troy - The parcel tax items (based on square feet) are all local (county or city) items. State items and local bonds are ad valoreum (based on property value limited by Prop 13).

zzyzzx says

I just think class sizes should be increased to what they were when I went so school in the 70's.

And what are those class sizes?

Maybe we can go back to one-room schoolhouses? Those were awesome too.

In defense of madhaus, I did some checking and it looks like some cities do have a flat, fixed parcel tax to support schools (see Cupertino, Albany, and Palo Alto). Others have parcel taxes based a combination of land use and lot or building size (see Piedmont, Berkeley). The ones based on square footage do have some administrative overhead, but also tend of pass more easily as they have a 'tax the rich' bent to them. YMMV...

EBGuy, I didn't know there were any parcel (per property ) taxes that were size-based, due to my lack of news on non-South Bay and Peninsula practices. Every one of those tax measures was per property.

Thanks to patrick.net, I have learned something today.

Edit: The word parcel appears once in your link, in reference to lot square footage. None of the other taxes are called parcel taxes. If they are by building square feet, then they aren't parcel taxes. But it does show a parcel tax could tax by property size.

corntrollio says

And what are those class sizes?

It was around 50 in the SouthBay,,, but we also had more schools which were shut down by 1980.

Bellingham Bill says

They stopped making land millions of years ago.

In the Bay Area that would have been around mid 70s or so when Foster City was "created" by man.. dirt and all. About 100 years ago ,man actually made the land around San Francisco much bigger, where the Transamerica tower sits was actually a ship harbor.

Crazy stuff...