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Comment by epistasis | Hacker News Reader

California rewards property speculation and rent seeking with Prop 13; this is an untouchable source of inequality because landowning wealth is fiercely anti-tax.

The more tax-friendly stance of tech wealth means that tech money funds much of the state, while those who hoard land reap many unearned profits from rent seeking and increased property values, which directly pushes our so many of those with lower incomes.

Meanwhile the general attitude of the state is that tech is the source of the problems, rather than the conservatives who are unwilling to share their neighborhoods with new residents. It's quite an upside down view of the world.

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Prop 13 was heavily pushed by businesses under the guise of “saving your grand parents from excessive taxes”.

What it actually is, is a tax cut for businesses (they don’t generally sell property, and so don’t ever pay tax on the actual property value), and land owners who rent/lease out property (because they can increase revenue in line with market value, while only paying taxes on increasingly far from market value properties). Given property taxes are generally used to fund a lot of public services (police, fire, schools, roads, etc) and a lot of those have costs determined by market value of property (eg cost of rent/mortgage is a significant determining factor for income), you end up necessarily pushing those costs on to individual tax payers. Businesses can easily incorporate out of state and so choose yet another cheap tax rate, pushing all of the costs into individuals.

Prop 13 must be revoked.

> Prop 13 must be revoked

It might be easier, politically, to add carve-outs.

Not your primary residence? Assessed value rises with CPI. Renting it out? Assessed value increases capped to e.g. 5% per year. Businesses with more than X in revenues or Y in employees? No price protection. Home value more than Z? No price protection. Et cetera.

> Not your primary residence? Assessed value rises with CPI. Renting it out? Assessed value increases capped to e.g. 5% per year. Businesses with more than X in revenues or Y in employees? No price protection. Home value more than Z? No price protection. Et cetera.

You'd need a CPA to figure out your annual property tax, and the exemptions would make tax evasion much easier.

> You'd need a CPA to figure out your annual property tax, and the exemptions would make tax evasion much easier

If you own a a second residence, are a landlord, are a large business or own an ultra-high value home, you probably need a CPA (or would be fine with this level of mechanical complexity).

Yes, complexity makes evasion easier. But that still beats the status quo where everyone is underpaying. Given how concentrated homeownership is in California, at least by value, it wouldn't be difficult to prioritise prosecution to yield a good bang for buck.

Also we could defer taxes for elderly and charge the deferred taxes when they pass away. That way they don't lose their home.

That's what we always did before Prop 13. Nobody was being turfed out of their homes. The counties were just putting liens on properties.

or simply ask them to take out a second mortgage. with everything their house is worth, i'm sure their net worth is high enough to afford it.

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