patrick.net

The good feature in Prop 13 was putting a cap on the tax rate. Government spending was ballooning out of control and people were literally being taxed out of their homes at the time that prop 13 was passed. It put an end to those unbridled tax increases.

The bad feature was putting a cap on the assessed value. This cap on value (subject to 2% inflation) is what has long-time owners paying ridiculously low taxes compared to new owners. This is not equitable, and it leaves local governments underfunded.

Like many extreme problems, this one was overcorrected by prop 13.

It should be noted that prior to prop 13 the taxes were also not equitably distributed as well. This was because the assessment process was a combination of random assessments and rotational assements. Your home could get reassessed while your neighbors stayed at a lower assessment. So uneven taxation existed in the pre-prop 13 world.

To be equitable, assessments should be done on all homes in the same year, so that everyone is assessed under the same market conditions and relative value levels. Many communities do it precisely this way.

Surfer-X:

I am pretty sure that Larry Stone will lower the property tax as the value declines. Check out this article from 2003: http://tinyurl.com/fzc9x

Property values dropped a few years ago and it was hardly noticed. I was just like most of you renters for over 13 years here in BA. My income finally rose to the point where I could afford a traditional 30-yr fixed with 10% down. I'm in it for the long haul. It is not without risk, but I got what I wanted and I'm not hurting. This whole blog just shows me that there is still plenty of pent up demand in RE. You have to accept that our parents struggled to buy a house. It isn't easy. The current market is out of control, but it won't go down as much as many here hope.

very nice blog.

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