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Would you believe that this $9m mansion in ritzy Presidio Heights pays the same tax as a $300k starter home in Richmond?


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2020 Dec 21, 6:24pm   4,446 views  116 comments

by Patrick   ➕follow (55)   💰tip   ignore  

https://www.taxfairnessproject.org/

How is it that one of the cheapest homes for sale in the entire Bay Area pays the same tax as one of the most expensive?

You might think this is some kind of weird exception, but it turns out it is the norm. Multimillion dollar homes all over the state are being massively subsidized. And, it turns out, that the wealthier the area ... the higher the subsidies.

Mapping geographic inequity

We've created a map to examine the geographic inequities of how property taxes are subsidized in California - due to a law known as Proposition 13.

First, let's take a look at how this law impacts two neighboring cities with a notable wealth divide:
+ Palo Alto - the epicenter of Silicon Valley - is one of the wealthiest neighborhoods in the country.
+ East Palo Alto, on the other hand, has been historically disadvantaged through policies such as redlining.
(Read more on East Palo Alto here)

Median income drops $100k the second you cross the Bayshore Freeway. And along with it the subsidies...

Every state in the US (that has a property tax) does it one way. California does it a different way.



How it works everywhere else: Your home is reassessed every so often -- usually 1-4 years. If it has gone up in value, congrats! You are now wealthier. But your taxes go up too to compensate.

How it works in California: Your home's assessed value is frozen at the moment of purchase. Even if it skyrockets in value, it will not get reassessed as long as you own it.

The upshot: The houses that have grown in value the most - making their owners millionaires just by the virtue of happening to buy a home in the right neighborhood - also get the largest subsidies. People trying to buy their first homes, laden with large mortgages, get no subsidy.



PAID FOR BY YOUR KID'S EDUCATION
Why does this matter? Property tax pays for one very important thing: K-12 education. In most jurisdictions a minimum of 40% goes toward education.

In other words: This subsidy, primarily benefiting wealthy homeowners, is paid for with lower teacher salaries, larger classroom sizes, and deteriorating facilities.

(Read more on Prop 13's impact on education)



REFORM IS ON ITS WAY
The good news is that after 4 decades momentum is building to overturn Proposition 13.

Prop 15 is an important first step to reforming property taxation in California. It essentially unravels the subsidies for large commercial properties. You should vote "Yes" on Prop 15.

(Read about Proposition 15 here)

But commercial property is only a fraction of the story. Most of the property wealth, and therefore most of the subsidies, sit on the residential side.

We must continue to fight for a more progressive California.



WHAT DOES REFORM MEAN? WILL PEOPLE LOSE THEIR HOMES?
Californians are justifiably concerned that any Prop 13 reform will cause people to lose their homes. Not everyone can pay for a sudden increase in property taxes overnight, particularly elderly on fixed incomes.

Reform does not necessarily mean that taxes go up to market value immediately. There are a number of ways to reform Prop 13 that also keep people in their homes, while still ending large subsidies for the wealthiest individuals in the state. Potential approaches include the ability to defer tax until the natural sale of a home (which, for anyone with a large subsidy will also mean a large profit on sale). Other states have employed this approach successfully.


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1   Ceffer   2020 Dec 21, 7:04pm  

The more expensive home has probably been in some kind of family trust forever.
2   EBGuy   2020 Dec 21, 8:14pm  

The Presidio Heights home was owned by San Francisco’s James Flood, descendant of Silver King.
Flood, known as Jim, was the great-grandson of 19th century silver baron James Clair Flood, died Tuesday in a Jackson Hole, Wyo., hospital of a heart attack after a day of downhill skiing at a nearby ski resort. He was 80...
He is survived by his wife of 54 years, Astrid Sommer Flood of San Francisco, and by daughters Karin of San Francisco, Christina Flood Kane of San Francisco and Lisa Flood of Wilson, Wyo., and seven grandchildren.
3   clambo   2020 Dec 21, 8:15pm  

There was a map someone made showing the various property taxes in Capitola and Santa Cruz.
It was amazing to see the places at Pleasure Point paying $45,000-55,000.
A couple of blocks away others paid $8,000-$11,000, etc.
I wonder if they should just figure out how many square feet of houses exist in the town, and figure out how much money they need and divide by the square feet. Then, charge each house per square foot; bigger house pays more than small house, etc.
Correction maybe can be made for having ocean views, etc.
4   RWSGFY   2020 Dec 21, 8:30pm  

Patrick says
How it works everywhere else: Your home is reassessed every so often -- usually 1-4 years.


... but you pay no state income tax. In California you shell out draconian 9-13%. The fact always conveniently omitted by all the anti-Prop13 propaganda.
5   Allin   2020 Dec 21, 9:19pm  

Owning or paying the bank rent on a $1M home does not make you a millionaire. Owning an valuable asset does not make you wealthy.
6   Patrick   2020 Dec 21, 9:28pm  

TrumpingTits says
it devastates people in fixed incomes, like retired people


Not if the tax is deferred until they die or sell.
7   Dholliday126   2020 Dec 21, 9:34pm  

This is why I voted for Prop 19 and Prop 15 this year, the tax basis of a home should not be inheritable. Properties should automatically be reassessed upon transfer or death. Prop 13 has led to zombie homes and wealthy loop holes.
8   mell   2020 Dec 21, 10:03pm  

Dholliday126 says
This is why I voted for Prop 19 and Prop 15 this year, the tax basis of a home should not be inheritable. Properties should automatically be reassessed upon transfer or death. Prop 13 has led to zombie homes and wealthy loop holes.


Agreed - time to repeal this bs. Lower (property) taxes overall instead. Doing and paying taxes should be as simple as sending a postcard with a check attached. (Low) flat tax on everything, NO loopholes or exemptions.
9   Bitcoin   2020 Dec 21, 10:13pm  

I dont like paying property taxes, and I def. dont want to pay even more. If I buy a rental investment (say a condo), I pay more property taxes than someone who inherited a mansion and the associated prop13 taxes (Not in all cases obviously). On the other hand, my property taxes wont go up by more than 2% a year and in a few decades those taxes are "absorbed" by inflation. I most likely will inherit CA property and would be happy to inherit the prop13 taxes along with the inherited house but I dont think that's right....it should be changed and I like Patrick's ideas. Its a very touchy subject....those who are locked in with low Prop13 taxes would kill in order to keep that benefit.
10   Allin   2020 Dec 21, 11:02pm  

Does anyone really believe that amending or repealing Prop. 13 will reduce anyone's taxes? The scum that run the governments in CA believe they are entitled to taxes. Any perceived inequality is interpreted as being cheated out of the taxes to which they are entitled. And they will exploit any emotion they can (unfairness) to convince everyone that everyone needs to pair their "fair sure." In reality, "fair share" is just a euphemism for pay more taxes.

That said, I do believe that inheriting a house with a low tax basis just so that one can rent it out at inflated rates is unjust. Just because a family inherits a house that is assessed at some ridiculous value does not mean that they have the means to pay property taxes on these fictitious property values. It is entirely possible that a family of modest means inherit a home from an equally modest but frugal parent.
11   Blue   2020 Dec 22, 1:44am  

Prop 13 is a ponzi scheme "fix" which is worst than the decease. This is meant for only rich and upper middle classes to continuous loot from middle and poor. All they have to do is just blame the government to keep looting.
There is a similar app: https://www.officialdata.org/ca-property-tax/
12   Eric Holder   2020 Dec 22, 9:32am  

TrumpingTits says
This whole article manipulates words to pitch analogies that do not exist. Or flat out ignores WHY Prop 13 existed in the first place.


Prop13 is a TAX REVOLT, pure and simple. Is it perfect? No. But you better believe that our tax situation overall will not improve if it's repealed. Au contraire - it will get MUCH worse.
13   RC2006   2020 Dec 22, 9:56am  

Eric Holder says
TrumpingTits says
This whole article manipulates words to pitch analogies that do not exist. Or flat out ignores WHY Prop 13 existed in the first place.


Prop13 is a TAX REVOLT, pure and simple. Is it perfect? No. But you better believe that our tax situation overall will not improve if it's repealed. Au contraire - it will get MUCH worse.


Exactly, even with its flaws its better than the looting liberals getting their hands on more tax dollars. At this point if they could repeal it how would that even work at this point without causing a complete melt down since its been baked into peoples budgets over the last 30 plus years?
14   Ceffer   2020 Dec 22, 10:48am  

The rich people and corporations that pay most of the tax are moving out. So, who gets fingered for the tax deficits after that? It's a shit spiral so a few apparatchiks can stay on the gravy train.
15   Bitcoin   2020 Dec 22, 10:55am  

Allin says
Does anyone really believe that amending or repealing Prop. 13 will reduce anyone's taxes? The scum that run the governments in CA believe they are entitled to taxes. Any perceived inequality is interpreted as being cheated out of the taxes to which they are entitled. And they will exploit any emotion they can (unfairness) to convince everyone that everyone needs to pair their "fair sure." In reality, "fair share" is just a euphemism for pay more taxes.



yep. I dont believe for a second that any change to prop13 will lower my taxes.

Allin says
That said, I do believe that inheriting a house with a low tax basis just so that one can rent it out at inflated rates is unjust.


yep, I will inherit at least one property. Why should I get a house AND low prop13 taxes. I will most likely rent out the house and make a big profit with or without taxes.
16   mell   2020 Dec 22, 10:57am  

RC2006 says
Eric Holder says
TrumpingTits says
This whole article manipulates words to pitch analogies that do not exist. Or flat out ignores WHY Prop 13 existed in the first place.


Prop13 is a TAX REVOLT, pure and simple. Is it perfect? No. But you better believe that our tax situation overall will not improve if it's repealed. Au contraire - it will get MUCH worse.


Exactly, even with its flaws its better than the looting liberals getting their hands on more tax dollars. At this point if they could repeal it how would that even work at this point without causing a complete melt down since its been baked into peoples budgets over the last 30 plus years?


They will get their needed tax revenue due to the leftoid bullshit covid lockdown shortfall and paying for all the illegals and hobos one way or the other, why not start with the loopholes/exemptions? People will get taxed more either way and will have to adjust their budget.
17   Bd6r   2020 Dec 22, 11:07am  

Holy shit...shack that has a price of 331K has >5K property taxes. That is unbelievable.
18   just_passing_through   2020 Dec 22, 11:45am  

A repeal will only make things worse in my opinion and helped me make my mind up: Despite having over 500K to put down on a house in CA I'm not going to buy here. I'm just investing it now until I GTFO of this fucked up state sometime in the next 1-5 years.

Now if prices crater maybe 50% I may change my mind but for now I'm just going to stay a renter.

I think it'll get repealed. Soon white people will have to pay higher taxes here too just for being white.
19   SunnyvaleCA   2020 Dec 22, 11:48am  

For the shacks on my street, the property tax ranges from $1k to over $20k. But the ability to inherit Prop 13 tax privilege is the poster child for California's promotion of wealth disparity.
20   SunnyvaleCA   2020 Dec 22, 11:57am  

TrumpingTits says
Why? I seriously doubt it will mention how California pays a huge amount per student in taxpayer money but has shit to show for it. It pays far more than South Korea or Finland do, yet their educational system produces far superior results. All of which has NOTHING to do with how the funding in those countries is provided and everything to do with corrupt teachers unions and their political allies.
California also encourages an enormous inflow of parents who have no education and also don't even speak English. That puts their kids at a disadvantage to learning before they even get to their first day of classes. It also puts an additional strain on school resources.
21   SunnyvaleCA   2020 Dec 22, 12:05pm  

+ Palo Alto - the epicenter of Silicon Valley - is one of the wealthiest neighborhoods in the country.
+ East Palo Alto, on the other hand, has been historically disadvantaged through policies such as redlining.

The article has this exactly backwards. Kids living in Palo Alto are not 5x more costly to educate than those in EPA, so why should people in Palo Alto be paying 5x more money? And, for that matter, why should people who don't have any kids be paying for any of this?

Also, EPA's problems aren't related to "redlining" (banks not writing mortgages). EPA has a long history of rent control and a long history of crappy citizens. If redlining were the problem, then I'd sell my shack today and buy 2 or 3 shacks in EPA with the proceeds. Redlining would be irrelevant because I don't need a loan; I'd just pay in cash.
22   WookieMan   2020 Dec 22, 12:46pm  

just_passing_through says
A repeal will only make things worse in my opinion and helped me make my mind up: Despite having over 500K to put down on a house in CA I'm not going to buy here. I'm just investing it now until I GTFO of this fucked up state sometime in the next 1-5 years.

I wouldn't plant any roots in CA with regards to owning a home for the foreseeable future. It's only going to get worse out there after Covid. The only hope is Biden doing more printing to bail out the poor decisions. IL is bad. CA is worse. Your taxes are going to go up. Question is how much?

When you have low tax states like FL, NV, TX, etc. why would you live in CA? Huge gas taxes, shit infrastructure and traffic, no water, fires, smoke, obscene home values for shitty homes, insane income taxes, homeless, poop, needles, below average beaches if you don't surf, and a gov. that shuts everything down over a flu bug that's not even that deadly in CA. Not worth it for weather and scenery if you have a job.

Having visited all the lower 48 to some extent or another, CA is beautiful, but not worth it at all. And it's showing with the likes of Rogan and Musk getting the fuck out. They can make the same in Texas and not piss away almost 12-13% since they make so much. You're talking $8-12M in the case of Rogan. Probably much more for Musk.
23   Bitcoin   2020 Dec 22, 12:52pm  

WookieMan says
IL is bad. Your taxes are going to go up.

why would you live in CA?


CA is beautiful. Not just the weather but the nature (you can snowboard, enjoy the beach, hike/bike the mountains or go to the desert......all within a few hours)
If it would be cheaper to live here it would be even more crowded. My goal is not to find the cheapest place to live but the nicest. Not everyone can afford to live here. Life isn't fair but jealousy wont get you far in life.
24   just_passing_through   2020 Dec 22, 1:19pm  

WookieMan says
I wouldn't plant any roots in CA


I've pretty much felt that way the entire 25 years I've spent here after moving back. Thus the, just passing through moniker. At first it was just the expense and the fact that I was young and thought the schools and kids around were crap. Not a good place to raise kids.

Then it just started going down hill fast. Down, down, lower, lower, yeah.
25   SunnyvaleCA   2020 Dec 22, 1:54pm  

G36 says
yep, I will inherit at least one property. Why should I get a house AND low prop13 taxes. I will most likely rent out the house and make a big profit with or without taxes

I'd say that inheriting the house is the windfall. Renting it out is just your way of choosing how to collect that windfall. If that house is in my neighborhood, you'd probably be better off selling the house (with tax basis adjusted to market value at time of inheritance!) and running. Yearly rents around me are about 2.5% of the price of the house.
26   WookieMan   2020 Dec 22, 2:20pm  

G36 says
CA is beautiful.

Not the last few times I've been. A mountain, ski hill or bike path don't make a place great. It's the people. Fuck ton of illegals and homeless wandering all over the place shitting, pissing, needles and taking government handouts. That sounds like hell and most users here have bitched about it. I guess you like living in filth though.

Go visit a beautiful, pristine place. Break out of your shell. You have a one track mind when it comes to where you live and what you invest in. You're losing out on a ton that life has to offer being so closed minded. Not a life I'd want to live in a high cost of living area, poor, with a bunch of shitheads around. Joe Rogan thought the same thing. He must be stupid and wealthy.
27   RC2006   2020 Dec 22, 2:56pm  

just_passing_through says
Soon white people will have to pay higher taxes here too just for being white.


You do pay white tax. Just to be able to live with others of your own kind in safety with schools that are safe for your white kids you have to pay much more.
28   Bitcoin   2020 Dec 22, 2:58pm  

WookieMan says
G36 says
CA is beautiful.

Not the last few times I've been.


ROFL. Better you stay away then.
29   RC2006   2020 Dec 22, 3:02pm  

G36 says
WookieMan says
G36 says
CA is beautiful.

Not the last few times I've been.


ROFL. Better you stay away then.


Once you hike a mile past trailhead the diapers, tortilla wrappers, and graffiti start to taper off.
30   Blue   2020 Dec 22, 3:04pm  

RC2006 says
just_passing_through says
Soon white people will have to pay higher taxes here too just for being white.


You do pay white tax. Just to be able to live with others of your own kind in safety with schools that are safe for your white kids you have to pay much more.

That depends on the place. Non whites pay much higher in my neighborhood.
31   SunnyvaleCA   2020 Dec 22, 3:19pm  

TrumpingTits says
Patrick says
Not if the tax is deferred until they die or sell.

Then why bother selling. Put the house into a trust or LLC where it can't be sold but simply transferred by selling the LLC.

Not if the tax is deferred until they die, sell, or transfer.
FIFY
32   SunnyvaleCA   2020 Dec 22, 3:21pm  

Blue says
RC2006 says
just_passing_through says
Soon white people will have to pay higher taxes here too just for being white.


You do pay white tax. Just to be able to live with others of your own kind in safety with schools that are safe for your white kids you have to pay much more.

That depends on the place. Non whites pay much higher in my neighborhood.
Well, at the rate this country is going, we'll be paying the Jizya soon enough.
33   Blue   2020 Dec 22, 5:01pm  

SunnyvaleCA says
Blue says
RC2006 says
just_passing_through says
Soon white people will have to pay higher taxes here too just for being white.


You do pay white tax. Just to be able to live with others of your own kind in safety with schools that are safe for your white kids you have to pay much more.

That depends on the place. Non whites pay much higher in my neighborhood.
Well, at the rate this country is going, we'll be paying the Jizya soon enough.


That sounds familiar back in Islamic country India where Muslims are still on the way to become majority yet they enforced everyone else pay Jizya right after colonials left.
Once it is set, it is one-way street to the hell.
34   Blue   2020 Dec 22, 6:03pm  

TrumpingTits says
The heirs will simply walk away.


at least they would know that shack is not an ATM.
35   Eric Holder   2020 Dec 22, 6:05pm  

TrumpingTits says
So who is going to pay that accumulated tax then? The heirs? No. Because in most cases the tax arrears will be more than they can get out of the house. House prices will plunge, remember?

The heirs will simply walk away. That leaves the city or county being stuck with the property and they will sell it at an auction...for whatever they can get for it.


Hellooooo Detroooooooit!
36   Patrick   2020 Dec 22, 7:56pm  

RC2006 says
So who is going to pay that accumulated tax then? The heirs? No. Because in most cases the tax arrears will be more than they can get out of the house.


That seems unlikely. How much is property tax? 1.5% of purchase price? How many years is someone going to be retired? Maybe 20 or 30 years.

So at most, if you defer the property tax during all of 30 years, you'd pay 45% of the value of the house. In the worst case, like a big real estate crash and rising property tax, the tax can be capped at what the house is eventually sold for.

The tax may go up, but the value of the house is likely to go up about the same percentage.

I think deferring property tax is the right answer.

Forcing others to subsidize your property tax seems like the wrong answer.
37   FortwayeAsFuckJoeBiden   2020 Dec 22, 7:59pm  

I think they should lower taxes for everyone to neighborhood average.

All this ever turns into more taxes, higher pay for useless government drones, and no better results for everyone else. Government fairness is taking all our money.
38   FortwayeAsFuckJoeBiden   2020 Dec 22, 8:02pm  

Not unbelievable. My neighbor pays 600, I pay 10x what he pays. But he’s very old and would be homeless if taxes were raised on him. His kids are gonna sell his house when he passes.
39   Reality   2020 Dec 22, 8:31pm  

IMHO, there are a couple issues that are being ignored here:

1. Government spending is not based on tax revenue but on borrowing. e.g. when your town/city builds a new school, it is able to borrow hundreds of millions of dollars based on tax revenue. In other words, the more your neighbors pay in taxes (the bigger the tax base is now), the more you will be paying in the future (to pay the interest on the borrowed "government debt" borrowed in your name); the total amount of interest and principle paid for building a school will be multiple times the already grossly inflated building cost of the public school. The essence of "government" is waste and coercion. Never believe a bunch of monopolistic bureaucrats can deliver any service more efficiently in the long run than two or more competing "landlords"/service-providers; if possible, governments should be divided into units no bigger than each building, and the "governor" of the building being personally held responsible for running the building . . . i.e. what private ownership achieves. Then the end consumer/citizen can vote with their feet case by case.

2. The primary beneficiary of Prop-13 are actually renters: the corporations and long term property owners that own rental properties are paying lower property tax, and due to competitive pressure they have to pass along that savings to renters. It's the same logic as the US army charging only $5 registration fee for land grab in Oklahoma in the 19th century so that people back in the east could benefit from cheaper food . . . instead of the full price auctioning of cellular spectrums over a century later that would result in high fees for consumers.

BTW, a deferred tax lien would force people into assigning property to corporations (family trusts) that do not die, and/or forcing people taking on reverse mortgages that would leave little net equity behind.
40   WookieMan   2020 Dec 22, 8:40pm  

RC2006 says
Once you hike a mile past trailhead the diapers, tortilla wrappers, and graffiti start to taper off.

He doesn't live in CA anyway. But what you say is true from my experience. CA has been in decline for 2-3 decades as most blue states have been including mine, though not to the degree of CA.

That's not a knock on the people that actually live there. Hard to stop the lefties. It still has scenery and beauty, but urban areas were shit holes when I first visited 25 years ago as a kid. My last few visits show it's not getting better. Still like it, but I'll be giving states like FL, AZ, CO, MT, WY, AL and maybe TX my tourism dollars domestically. I prefer the Caribbean myself.

SW points to San Diego from Chicago were 2,2XX one way. I passed on 5 tickets to SD for $55 in fees because I don't want to go if that says anything. That's $100/RT per person from Chicago, 2 checked bags. That's what the demand is for CA tourism. Your gov. is fucking you and the leftie policies.

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