Posted by
Playful Walrus on Wednesday, January 09, 2008 3:22:39 PM
David Lazarus, in his
Consumer Confidential piece in the Los Angeles Times, adds to the constant drip of calls to do away with California’s original
Proposition 13.
Proposition 13 has overstayed its welcome.
I say this as my colleagues Marc Lifsher and Evan Halper bring word elsewhere in the paper today that Gov. Arnold Schwarzenegger wants to impose a fee on property insurance premiums as a way to help close the state's estimated $14-billion budget gap.
A budget gap does not mean that there is a problem in taxes. It means the state is spending too much.
A surcharge on insurance that's based on a property's replacement cost, and hence much of its market value. That may not be an honest-to-goodness property tax increase, but it's about as close as you can come without getting your hair mussed.
If the fee were going to support the Insurance Commissioner’s office (yes, California has an Insurance Commissioner, believe it or not), it would be okay.
Either we spend less money or we raise revenue, or both.
Spend less money.
All things considered, our friends in Sacramento aren't going to suddenly discover the value of frugality
Make them.
-- unless packed schoolrooms, broken bridges and crumbling levees are your idea of satisfactory quality of life.
Schoolrooms? Isn’t that why we’ve passed so many bond measures? Privatize education, or at least bill Mexico for their students. Broken bridges? Crumbling levees? Haven’t we passed bond measures for those things?
What has happened to that money?So that means we need to get our hands on some extra cash. And like it or not, that means taxes. That's a bad word, I know. But it's how things work in the real world.
No, in the real world, you live within your means. If you go to your neighbors and take their money to cover your debts, that’s called theft.
Proposition 13 is as good a place as any to start if we want to raise some serious coin and we want to do it soon.
Maybe not. For those of you who don’t know, Prop 13 has kept people from being taxed out of their homes.
What he means is that Proposition 13 allows the state to reach deep into the pockets of people and businesses that buy property at market value. But it does precious little to get a piece of the action from those with long-held properties that have soared in value over the years.
The property values have soared, true, and
if they are sold,
then the state gets a cut and gets increases property taxes. But why should someone be taxed out of their home just because it has risen in value (largely to restrictions on development, which means decrease in supply)? So you give newcomers a break, only to tax them out of their home or storefront later on?
In 2003, billionaire Warren E. Buffett, while serving as an economic advisor to then-candidate Schwarzenegger, suggested that maybe it was time to revisit Proposition 13.
Buffett is unlikely to be taxed out of
his properties, so he has less reason to value Prop 13.
He pointed out that the tax on his $500,000 home in Omaha increased by $1,920 that year. Meanwhile, the levy on Buffett's $4-million house in Laguna Beach, which he bought for less than $100,000 in 1971, rose by just $23.
Maybe Nebraska needs its own Prop 13. I wouldn’t be surprised if the $500,000 home in Nebraska has more square footage than the $4 million one in California. That’s how ridiculous housing prices have been here.
Many Californians seem resigned to Proposition 13, enjoying its protections while owning a home and then stomaching the idea of possibly paying way more than their neighbors when they buy into a new community.
People make their own choices. Why get envious when you’re allowed to make your own?
Long-term owners of office buildings, shopping centers and hotels should be paying their fair share to support surrounding infrastructure, Goldberg argued, rather than forcing more recent investors to shoulder the bulk of the burden.
Perhaps we should have more private property instead of public property?
Perhaps we should ditch socialism, especially when so many of the people receiving services are unskilled people from other countries who are here illegally?
Look, I’m looking to upgrade into a bigger home, so I would supposedly directly benefit from shifting some of the burden away from the new buyer to those who have remained in the same place. But once I move, I never want to have to move again, and it’s more likely I would have to if we ditched Prop 13. Plus, does anyone
really believe that new buyers will see any relief?
Based on history, I’m sure we’ll simply see everyone pay more.Prop 13 wasn’t perfect, but it was needed. It shouldn’t have been needed, but California governments had failed to live within their means, and retirees were suffering the most.