Reform Proposition 13 (Barphus MaXimus Alert)

SFGate.com ^ | 6/6/03 | San Francisco Chronicle

[NormsRevenge]

TODAY IS the 25th anniversary of a voter revolt that has permanently altered California's political and economic landscape.

On June 6, 1978, voters overwhelmingly approved Proposition 13, spurring a tax revolt that spread far beyond California borders. The initiative helped stoke the conservative populism that contributed to Ronald Reagan's election as president two years later. It remains a potent influence behind the Republican tax-cutting strategies in both Sacramento and Washington.

[Puppage]

An additional problem is that the Legislature passed a law

If ya don't like it...VOTE the people out of office.

Geez, QUIT YOUR WHINING!!

[NormsRevenge]

Ping

[NormsRevenge]

Do you even have a clue what this forum is about?

[Dr. Frank fan]

Immediately following Proposition 13's passage, property tax revenues plummeted $7 billion, according to Peter Schrag in his book "Paradise Lost" (UC Press, 1999). That was equal to 27 percent of revenues to cities, 40 percent of county revenues and more than 50 percent of school district revenues. Local services have never regained their former levels of excellence.

Notice by "excellence" the author means "budget". He seems to equate having an excellent program with a program that is getting lots of money thrown at it.

I mean, after all, everyone knows that the way to make good schools is simply to throw lots of money at them, right? /sarcasm

Most notably, writes Schrag, "California public schools, which had been among the most generously funded in the nation, began a path of decline from which they have never fully recovered."

decline.... in funding.

I went to (public) HS in California, post Prop 13, and my HS was always getting awards for being one of the top x% in the nation or whatever. How is that possible??

By stripping local government of control over property taxes, it gave the state authority to distribute the revenues between cities and counties. That in turn made local entities more reliant on state government. It's a trade-off that during lean economic times has often translated into chaos.

There is a good point lying somewhere in here. Local control is a good thing. But I'm not sure (and author certainly hasn't made the case) that repealing Prop 13 is the way to resolve it.

Because homes aren't assessed at market value until they change hands, longtime homeowners get sizable tax relief, while the tax burden increasingly falls to newer, and younger, homebuyers.

Cool, so the author is in favor of lowering property taxes for new homebuyers, correct?

Another consequence is that the share of state revenue from residential property taxes has steadily increased, while the proportion from commercial properties has steadily declined. The reason is that ...

Wait! Hold on! He has just said the "share of state revenue from residential property taxes has steadily increased"! This despite Prop 13! How is that possible? Remember earlier on in the article when he made it seem as though Prop 13 has starved the state of revenue (because property tax revenues plummeted $7 billion...)? And yet here what he's telling us is that the state gov't has increase the percentage of its revenue it gets from property tax regardless? So what's the problem? this guy wants to increase that share more?

An additional problem is that the Legislature passed a law specifying that commercial property can only be reassessed when ownership changes by 50 percent or more. Some commercial owners have been able to use loopholes in the law so that even when a property effectively changes hands, it does not trigger the 50 percent "change in ownership" provision.

Another problem for which the solution would be to lower taxes so that this "loophole" no longer is needed for commercial property owners in the first place.

One approach would be to place an initiative on the ballot to reassess commercial properties at their market values. Such a change could generate an additional $3.2 billion in property taxes each year, according to a study by the Center for State and Local Taxation at UC Davis. Another would be to close the loopholes that help owners avoid triggering the change of ownership provisions.

Yes that's right, let's discourage business even further. Scare still more businesses (and jobs) out of the state. That's the way to increase revenue all right!

(can't just cut spending or anything. no, spending=votes!)

As long as Proposition 13 is viewed as the third rail of California politics, we can look forward to years of dysfunction in Sacramento,

Could just as easily have written: "As long as spending cuts are viewed as the third rail of California politics, we can look forward to years of dysfunction in Sacramento". Of course that would presuppose a bias which actually liked spending cuts, instead of the opposite bias.

[Puppage]

Yes, of course.

However, I have an extremely low tolerance today for whiners....of ANY kind. Is that ok with you?

[Ernest_at_the_Beach]

Put him on ignore!

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[NormsRevenge]

Sorry for your down day.

Just a reminder, this is a 7x24 shop

Free Republic is an online gathering place for independent, grass-roots conservatism on the web. We're working to roll back decades of governmental largesse, to root out political fraud and corruption, and to champion causes which further conservatism in America.

We never stop and won;t as long as the enemies of this state and nation work their evil agendas. Have a nice day, go take a walk on the beach .. Or is it raining again? ;-)

[Puppage]

Actually, it's quite nice (finally) today & I'm stuck in the office. That may be wherein my problem lies.

Perhaps, I'll heed your advice & take a bit of a stroll......

[NormsRevenge]

Ahhhhh.. I feeel yur pain! cubically challenged .. LOL

[You Dirty Rats]

The author's point on the share of revenue from residential properties has risen compared to commercial, because ownership changes in commercial property don't happen as often.

The proper level of taxation is of course a critical issue, but Proposition 13 is not primarily about the overall tax rate -- it is about freezing value for some taxpayers, not all. For example, if Sears has been at a corner for 50 years, the value of their property is assessed at the old, unadjusted rate. If Wal-Mart builds next door, they pay a much higher rate. That discourages new investment and has an effect similar to rent control, which has done such wonders in NYC.

Protecting the old tax base and punishing new arrivals is about a suicidal a strategy as a state could pursue. Since, in real terms, the existing tax base declines every year, the state has to raise rates or perpetually cut services. Both of the latter options penalize new investment.

I'm not saying that taxes in California weren't too high in 1979 -- clearly they were. The rates should have been lowered. Prop 13 was a huge mistake that, over time, will become more and more unfair.

Regardless of what the tax rate is, it should be applied fairly.

[Dr. Frank fan]

The author's point on the share of revenue from residential properties has risen compared to commercial, because ownership changes in commercial property don't happen as often.

That seems to be what his subsequent statements prove, of course. But his initial statement "the share of state revenue from residential property taxes has steadily increased" cannot be read that way, and if you're right, is highly misleading. He should have written "the share of property taxes coming from residential properties has steadily increased", or something like that.

For example, if Sears has been at a corner for 50 years, the value of their property is assessed at the old, unadjusted rate. If Wal-Mart builds next door, they pay a much higher rate. That discourages new investment and has an effect similar to rent control, which has done such wonders in NYC.

I agree, but (as is usually subtly ignored), there are TWO solutions to this problem. One is to roll back Prop 13. Another is to "freeze" (or do the equivalent) the prop. taxes for the new guys too. Just as when leftists pretend that the only solution to deficits is to increases taxes (not increase taxes and/or decrease spending), the situation here is symmetric and neither solution has a higher footing than the other. This argument works just as well if used to try to support keeping all property taxes down, just, in a more equal way.

Regardless of what the tax rate is, it should be applied fairly.

I agree. Taxes should be lowered where appropriate so as to make it more fair.

[CdMGuy]

I firmly agree that we need to reform Prop 13. It is obvious to anyone who owns real estate in CA that this ancient and outdated proposition is in dire need of reform. Yes, no doubt about it. We need a new Prop 13 that reduces the property tax rate from 1% of the purchase price to 1/2% of the purchase price.

Cut everybody's property tax in half. Cut the sales tax by 1%. Cut the income tax rates by 20%, and lastly cut Joe Davis out of Sacramento. SIGN THE JOE DAVIS RECALL PETITION TODAY!!!!

[CA Conservative]

Regardless of what the tax rate is, it should be applied fairly.

Actually, the issue is not about the tax rate; that is set at 1% of the property value at the time of assessment. In other words, the tax rate is the same for everyone, which is fair. The problem is that the property can only be re-assessed when it changes hands. So someone who bought a house for $40k in the early 70's would be paying $400.00 a year in property taxes, while someone who buys the house next door this year for $300k will pay $3000.00/year in property taxes.

Don't get me wrong, I am in favor of Prop. 13 in general (being a California homeowner), but perhaps a tweak would be helpful. I would be in favor of amending it to allow the assessed value of a propery go up by the annual inflation rate each year, not to exceed 5% per year. (Right now it is limited to 2% per year.) This way the tax revenues would keep up with inflation.

I would only support this if there was a clause that stated that once both spouses (if married) reach retirement age, the property tax is cut in half and cannot increase anymore as long as they own the property, and that property cannot be sold to recover unpaid property taxes until after the death of the owner. Also, the funds generated should be given directly to the local governments, instead of to the state.

[Cyber Ninja]

I'm a California native and home owner. Prop 13 is only imperfect in that it sets the rate at 1%. It should have beem 0.5%. The very last thing that should be taxed is the American Dream. If not for Prop 13, my Mother would not be able to stay in the little house my folks worked so hard to pay for with years of hard work. Please leave well enough alone. CB^)

[Dr. Frank fan]

[Regardless of what the tax rate is, it should be applied fairly.] Actually, the issue is not about the tax rate ...

Well ok, sure. You should tell "You Dirty Rats" though, cuz that's who actually wrote that sentence.

I would only support this if there was a clause that stated that once both spouses (if married) reach retirement age, the property tax is cut in half and cannot increase anymore as long as they own the property, and that property cannot be sold to recover unpaid property taxes until after the death of the owner.

Hmmm. This sure sounds like an awful lot of specific, jury-rigged rules. Rules based on which Type Of People are living in this house, and what their situation is. The net result of which is that (a certain portion of) long-time owners pay far less in tax than their neighbors do.

Uh, isn't that what the complainers are complaining about, that they are calling "unfair", to begin with?

[fifteendogs]

Why do we continue to reward incompetent lawmakers with the ability to cover their mistakes by letting them raise taxes rather then to admit that they have made mistakes in their social gerrymandering.

[NormsRevenge]

Why do we continue to reward incompetent lawmakers with the ability to cover their mistakes by letting them raise taxes rather then to admit that they have made mistakes in their social gerrymandering.

2 words .. Voter apathy .. or should I say citizen stupidity

[fifteendogs]

If you were a Californian I would be willing to listen to you. You aren't, I am, sit down and shut up.

[fifteendogs]

Who is JOE DAVIS