California's proposition 13

[bobola]

Time to repeal it...??

"...Proposition 13 (officially titled the People's Initiative to Limit Property Taxation) was an amendment of the Constitution of California enacted in 1978, by means of the initiative process. It was approved by California voters on June 6, 1978. It was upheld as constitutional by the United States Supreme Court in the case of Nordlinger v. Hahn, 505 U.S. 1 (1992). Proposition 13 is embodied in Article 13A of the Constitution of the State of California.

The most significant portion of the act is the first paragraph, which capped real estate taxes: 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's passage resulted in a cap on property tax rates in the state, reducing them by an average of 57%. In addition to lowering property taxes, the initiative also contained language requiring a two-thirds majority in both legislative houses for future increases in all state tax rates or amounts of revenue collected, including income tax rates. It also requires two-thirds vote majority in local elections for local governments wishing to raise special taxes. Proposition 13 received an enormous amount of publicity, not only in California, but throughout the United States.

Passage of the initiative presaged a "taxpayer revolt" throughout the country that is sometimes thought to have contributed to the election of Ronald Reagan to the presidency in 1980. However, of 30 anti-tax ballot measures that year, only 13 passed.

A large contributor to Proposition 13 was the sentiment that older Californians should not be priced out of their homes through high taxes. The proposition has been called the "third rail" (meaning "untouchable subject") of California politics and it is not politically popular for Sacramento lawmakers to attempt to change it..."

http://en.wikipedia.org/wiki/Califor...ition_13_(1978)

[we_are_toast]

Re: California's proposition 13

Anyone with any common sense knew this would crush California over time.

[Master Shake]

Re: California's proposition 13

Time to repeal it...??

"...Proposition 13 (officially titled the People's Initiative to Limit Property Taxation) was an amendment of the Constitution of California enacted in 1978, by means of the initiative process. It was approved by California voters on June 6, 1978. It was upheld as constitutional by the United States Supreme Court in the case of Nordlinger v. Hahn, 505 U.S. 1 (1992). Proposition 13 is embodied in Article 13A of the Constitution of the State of California.

The most significant portion of the act is the first paragraph, which capped real estate taxes: 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's passage resulted in a cap on property tax rates in the state, reducing them by an average of 57%. In addition to lowering property taxes, the initiative also contained language requiring a two-thirds majority in both legislative houses for future increases in all state tax rates or amounts of revenue collected, including income tax rates. It also requires two-thirds vote majority in local elections for local governments wishing to raise special taxes. Proposition 13 received an enormous amount of publicity, not only in California, but throughout the United States.

Passage of the initiative presaged a "taxpayer revolt" throughout the country that is sometimes thought to have contributed to the election of Ronald Reagan to the presidency in 1980. However, of 30 anti-tax ballot measures that year, only 13 passed.

A large contributor to Proposition 13 was the sentiment that older Californians should not be priced out of their homes through high taxes. The proposition has been called the "third rail" (meaning "untouchable subject") of California politics and it is not politically popular for Sacramento lawmakers to attempt to change it..."

http://en.wikipedia.org/wiki/Califor...tion_13_(1978)

Instead of repealing Prop 13, how about not providing government services to illegal immigrants, reducing the size of state government, selling state-owned property, and drilling for oil off the coast?

[tombat1913]

Re: California's proposition 13

No, not time to repeal it. This massively beaureucratic state needs to cut some serious fat off before considering raising any more taxes than it already has. My damn car registration went up by almost half this year. I got a $450 ticket for walking a dog on the wrong beach, in between two dog beaches (no signs posted). $40 for a fix it ticket, AFTER THE PROBLEM IS FIXED! $173 if it's not fixed. Taxes on everything! Tax for having my damn sandwhich toasted at Subway, I'm not joking. The only thing keeping my rent cheap ($1225/mo) is Prop 13. If they repeal this even more people will be pushed over the threshold and into tent cities.

[sn1p3r]

Re: California's proposition 13

No, not time to repeal it. This massively beaureucratic state needs to cut some serious fat off before considering raising any more taxes than it already has. My damn car registration went up by almost half this year. I got a $450 ticket for walking a dog on the wrong beach, in between two dog beaches (no signs posted). $40 for a fix it ticket, AFTER THE PROBLEM IS FIXED! $173 if it's not fixed. Taxes on everything! Tax for having my damn sandwhich toasted at Subway, I'm not joking. The only thing keeping my rent cheap ($1225/mo) is Prop 13. If they repeal this even more people will be pushed over the threshold and into tent cities.

http://www.uhaul.com/

[bobola]

Re: California's proposition 13

If nothing else, they probably need to change this;

"...a two-thirds majority in both legislative houses for future increases in all state tax rates or amounts of revenue collected, including income tax rates..."

I don't see a problem with a 51% majority vote...

[goodrich4bk]

Re: California's proposition 13

[QUOTE=bobola;142586]Time to repeal it...??

I'm a California native. I didn't vote for Prop 13, but in retrospect it was and remains a good law. Our state did just fine with 1% tax rates long before Prop 13. For example, in the 1950's my parents' home cost $8k and their taxes at 1% would have been $80/yr. With that government revenue, their generation built 9 University of California campuses, which today are among the best public universities in the world.

Today, that same home sells for $150k. The taxes are now $1500 a year, a MUCH greater increase than inflation. My generation has built ONE U.C. campus.

Clearly, the problem isn't lack of revenue, it's the nature of the spending. My parents' taxes didn't pay for the services we now provide. I say cut the services, not raise the taxes. Some say do both, but I've never actually seen that happen. When taxes are raised, they become a new floor. That is the beauty of Prop 13: it is a ceiling, not a floor. And damn the politician who dares change it so he/she can provide a more "services" to campaign supporters!

[Raz]

Re: California's proposition 13

Anyone with any common sense knew this would crush California over time.

The power to tax is the power to destroy. Common sense tells us all that this is true.

What's wrong with taking away an addict's Heroin? Or an alcoholic's whiskey?
SPENDING is the problem - always has been where politicians are concerned.

You're an intelligent fellow, Toast; you don't really believe that low taxes destroyed California?:confused:

[c1ue]

Re: California's proposition 13

Once again, I point out that Dr. Michael Hudson's analysis:

low property taxes were the way for banks to divert more housing cashing flow from government revenue to mortgage servicing revenue.

The government then raised income and sales taxes to compensate.

Once again, I point out that if you look at the 50 States - there is a direct inverse correlation between the average percentage of property tax and the median house price.

The point Dr. Hudson makes is that low property taxes seem nice; saving Granny from having to sell her home to meet the property tax burden seems nice; having low property taxes for your home (assuming you've owned it for a while) seems nice - but ultimately someone pays.

Either you pay via higher income/sales taxes or your kids pay in the form of unaffordable property prices.

A glance also at the rent vs. buy differential also shows a huge disparity; rents are ridiculously low vs. mortgage payments.

While of course those with the low assessments are happy now - as the entire CA state fiscal structure crumbles - it is debatable how long this joy will hold true.

So the real issue is: would you rather have lower house prices across the board or would you prefer to subsidize the older generation but penalize the future generations?

[Raz]

Re: California's proposition 13

Once again, I point out that Dr. Michael Hudson's analysis:

low property taxes were the way for banks to divert more housing cashing flow from government revenue to mortgage servicing revenue.

The government then raised income and sales taxes to compensate.

Once again, I point out that if you look at the 50 States - there is a direct inverse correlation between the average percentage of property tax and the median house price.

The point Dr. Hudson makes is that low property taxes seem nice; saving Granny from having to sell her home to meet the property tax burden seems nice; having low property taxes for your home (assuming you've owned it for a while) seems nice - but ultimately someone pays.

Either you pay via higher income/sales taxes or your kids pay in the form of unaffordable property prices.

A glance also at the rent vs. buy differential also shows a huge disparity; rents are ridiculously low vs. mortgage payments.

While of course those with the low assessments are happy now - as the entire CA state fiscal structure crumbles - it is debatable how long this joy will hold true.

So the real issue is: would you rather have lower house prices across the board or would you prefer to subsidize the older generation but penalize the future generations?

Good points, clue1 - but not germain to my point.

Prop 13 didn't just limit property taxes but made a real attempt to limit ALL taxation by requiring 2/3rds majorities.
When have politicians ever spent within revenues if they had the chance to exceed that level in order to buy votes?
California wouldn't be in this mess if they had a limit on spending and borrowing enshrined into their constitution.

They could double tax rates on everything, see revenues rise by 70%, and they would still outspend revenues.
They would then authorize additional bond sales ... and the beat goes on.

[we_are_toast]

Re: California's proposition 13

Good points, clue1 - but not germain to my point.

Prop 13 didn't just limit property taxes but made a real attempt to limit ALL taxation by requiring 2/3rds majorities.
When have politicians ever spent within revenues if they had the chance to exceed that level in order to buy votes?
California wouldn't be in this mess if they had a limit on spending and borrowing enshrined into their constitution.

They could double tax rates on everything, see revenues rise by 70%, and they would still outspend revenues.
They would then authorize additional bond sales ... and the beat goes on.

People demand the same services, but they don't want their taxes raised to pay for those services. Yes, Prop 13 did a great job to limit taxes, but it did nothing to ask the people what services they wanted to get rid of. Well, now California is a failed state that, without a bailout, will send a massive amount of refugees across the country to overwhelm the services of other states.

The U.S. doesn't have a Prop 13, but it has a Prop fear. Politicians are now so scared to raise the taxes needed to pay for the services people demand, that we are inevitably following in the footsteps of California. As I've stated before, rather than comparing the consequences of the U.S fiscal problems to Argentina or Japan, maybe California will be the looking glass where we can see our future.

[thriftyandboringinohio]

Re: California's proposition 13

When have politicians ever spent within revenues if they had the chance to exceed that level in order to buy votes?
California wouldn't be in this mess if they had a limit on spending and borrowing enshrined into their constitution.

Your point about politicians buying votes is spot-on, but it has been expanded to a new kind of pandering- pandering that somehow no tax is required for anything, even a ten-year land war or two.;)

Borrow-and-Spend has bought lots of votes in the past twenty years, cynical promises to cut taxes without cutting services or the military.

It seems like a deliberate strategy by Mssrs Norquist et al, one they call "starve the beast" or "drown it in the bath tub". I would hate to see these efforts succeed in pulling the whole house down around us. Just in case the no-tax crowd achieves their goals, I maintain a modest supply of guns, ammo, food, land and gold.

[MulaMan]

Re: California's proposition 13

Proposition 13 actually increases real estate prices in California so repealing it will LOWER real estate prices and hence LOWER the overall tax intake.

It sound counterintuitive at first but Prop 13 results in massively restricted home inventory because once you purcahse a home, it often does not make sense to EVER SELL IT in order to lock in the property taxes.

If Prop 13 is removed then there will be a huge number of new homes on the market and hence push down prices in general.

There are people living in places such as Beverly Hills paying crazy low property taxes and would never, ever be able to pay the "market value" property tax and so would need to sell.

Prop 13 is the primary reason California Real Estate is so expensive.

[grapejelly]

Re: California's proposition 13

Proposition 13 actually increases real estate prices in California so repealing it will LOWER real estate prices and hence LOWER the overall tax intake.

It sound counterintuitive at first but Prop 13 results in massively restricted home inventory because once you purcahse a home, it often does not make sense to EVER SELL IT in order to lock in the property taxes.

If Prop 13 is removed then there will be a huge number of new homes on the market and hence push down prices in general.

There are people living in places such as Beverly Hills paying crazy low property taxes and would never, ever be able to pay the "market value" property tax and so would need to sell.

Prop 13 is the primary reason California Real Estate is so expensive.

So Prop 13 keeps properties from being sold, thereby restricting supply?

So why is supply so high in California? Why have housing prices been dropping like a stone for several years?

I think this is a ridiculous argument. Prop 13 discourages long time homeowners from selling their house. That is true. But this only applies after someone has lived in a home for 10 or 15 years or more. Most folks don't stay anywhere that long.

Prop 13 moves taxes from the backs of property owners and onto taxpayers at large. It results in higher income taxes and lower property taxes in California than, say, Florida which has the other extreme.

It was supposed to throttle spending but it hasn't done that because legislators continually raise income taxes.

[skidder]

Re: California's proposition 13

People demand the same services, but they don't want their taxes raised to pay for those services. Yes, Prop 13 did a great job to limit taxes, but it did nothing to ask the people what services they wanted to get rid of. Well, now California is a failed state that, without a bailout, will send a massive amount of refugees across the country to overwhelm the services of other states.

The U.S. doesn't have a Prop 13, but it has a Prop fear. Politicians are now so scared to raise the taxes needed to pay for the services people demand, that we are inevitably following in the footsteps of California. As I've stated before, rather than comparing the consequences of the U.S fiscal problems to Argentina or Japan, maybe California will be the looking glass where we can see our future.

Can you give me an example (I'm sure there is one) where the citizens made a clear demand for more services while understanding the tax ramifications? Can you give any indication of how these "informed demands" scale against what has actually been implemented simply because of vote buying? My point is this, everyone wants something for nothing, it's human nature. Politicians know this and use it to buy votes. I find it a bit offensive for folks to assume that this is some sort of benign interaction between constituents and politicians.
RAZ is dead on, imo. It's frackin ridiculous to assume some certain level of spending is set in stone because "it's demanded by citizens". Most voters don't have any fricking idea what they a)voted for OR b) what the cost in increased taxes is for that program.
An actual responsible adult/politician would try to just budget within the means of current tax policy or at a minimum, assign a per capita cost for the program and PUBLISH IT so that voters understood what they were going to pay for it. Of course the second gambit is that they assign the tax to special interest groups so that the average voter doesn't think it will come back on him to pay.
I absolutely refuse to believe that low property taxes HAVE TO result in higher income taxes or any other kind of taxes (as opposed to what HAS happened). What HAS HAPPENED is that the motherfuckers running the gov't refused to make the hard choices and tell citizens the hard truth about their demands (if in fact they are in fact making "demands") and started jacking the other non-capped taxes. It's merely a bunch of self-serving pussies trying to keep their jobs instead of leading.
Cut the frickin spending, cut it to the bone. Start laying off the chiefs instead of the indians in the bureaucracy. Have the balls to take a stand that isn't popular and show some leadership. This whole hand-holding, kum-ba-ya nonsense does nothing other than make the "we can solve all of life's problems for you" politicians emboldened. All IMO, of course.