Prop 13 for protecting individual residential property owners on a fixed income from escalating "assessed" property values makes a good deal of sense. Especially in a state like California, if left unchecked, would be raising all sorts of taxes and fees for failed experiments.
(Note - born/raised/ life long Bay Area resident)
Prop 13 needs a revision to exempt commercial property...
From this point of view, commercial property is at least used for economic activity. Exempting it from Prop 13 would reduce inequitable treatment of different commercial property owners, yes, but it would also impose yet another burden on productive activity, and ultimately on the overtaxed serfs. Instead of reducing feudalism, it would exacerbate it.
No, the biggest problem is precisely residential property.
Track 13 and the commercial revenue space and the ease with which getting around 13 is available.
Sorry corporations aren't people.
A librarian inheriting property worth an interesting amount shouldn't be forced to sell it based on tax predictions... when corporations have exemptions that shelter them from the same exemptions...
It is always interesting reading HN libertarian comments from people who haven't grown up in a region or community.
The discussion on manhattan and traffic is classic.
Maybe spend a few years living and understanding.
Looking forward to the down votes.
Oftentimes, properties in California (especially multi-family residential) are owned by a corp/LLC which owns nothing other than that single property. That corp is then owned by a larger company who can sell a stake in single property company if the right buyer comes around. The CPAs have avoiding a prop 13 reassessment down to a science. If you write a rent check to a company that has your street number or street name in the company name, that's why.
Much of valuable property in this state was developed before 1978 and as a result the owners are paying just a fraction of what their taxes would be after a assessment. Sales and income taxes are subsidizing this difference. Now, the counterpoint to this is that raising property taxes will result in some of those taxes being passed on to renters. While this is true, not all of it could be due to simple supply and demand. The worst offenders will be able to pass on the least of that difference. The state would also be able to lower corporate, sales or income taxes as a result of phasing in market property taxes too. Maybe that last part is just wishful thinking on my part.
Regardless of your take on residential vs commercial property and prop 13, this is a problem that is only going to get worse with time. With no changes, 50 years from now, there will literally be people and companies paying property taxes like it is 1990. The result is that in order to make up that difference, corporate, sales, income and "new" property taxes will have to be higher than they are today. If those other taxes rise enough, people leave the state for greener pastures and property values fall or stagnate which is another more painful way to equilibrium.
Significantly higher property/land taxes in this state than we have now would solve or curb a lot of problems. From housing bubbles (probably merely curbed) to encouraging cities like SF to build more densely to allowing lower income/sales/corp taxes to encourage investment, many of the states problems were created or exacerbated by prop 13. When Warren Buffett was Schwarzenegger's economic advisor during the campaign he said that prop 13 doesn't make sense. He was right.
If prop 13 went away statewide but local rent control laws remained in effect, owners would be looking around to make up the difference.
If an apartment building saw regular property tax hikes, the owner's inability to pass most of the higher tax costs on to renters would cause new unintended consequences (e.g. reduced building maintenance).
and eliminating prop 13 would mean less profit. if the experience of rent control laws over the last forty years in places like Santa Monica is any guide, the property owners will cut corners on building maintenance if they are not allowed to raise rents and pass the tax hikes through to tenants.
It's comical in an ironic sort of way walking around SOMA. You find yourself treading what is literally some of the most valuable land on the entire planet, and yet you're surrounded by automechanics, private parking garages, old warehouses, and frequently — even empty lots. In a world without prop 13 the development of this sort of low value use would be highly incentivized because your tax bill would go up with the surrounding land, but in modern day California these things can stay ~forever (or at least until a developer comes along with an offer so preposterous that the owner cannot refuse it).
I do have to add the caveat that it's mostly bad, but not _all_ bad: some of my favorite spots in town would have almost certainly had to evacuate the city by now if they weren't grandfathered into a certain tax rate (usually cafes/restaurants/bars).
This is certainly true-- it does create its share of "hidden treasures," but I find that for every favorite business that sticks around because it owns its property, I see two favorite businesses that close because they rent.
Agreed. Unfortunately it's a case where the lucky [1] survived. Even in the few years that I've been in SF I've seen a lot of amazing places disappear.
[1] I use "lucky" because no one 30-40 years ago could have predicted the disproportionate lucrativity that real estate would have compared to any other class of investment. It wasn't all that unreasonable to rent at the time.
All arguments _for_ Prop 13 are about people who live in their homes whose value appreciate abruptly. Prop 13 needs to be revised to narrowly target this group and only this group.