[quote=EconProf]Hibiscus: It is most unlikely you are paying 20 times what your neighbor is paying.
Proposition 13, passed overwhelmingly in 1978, limited property taxes to 1% of value and no more than a 2% increase per year. It has been watered down over the years to allow the 1% to increase to about 1.2 or 1.25% in many areas by voter-approved bonded debt.
So your neighbor has likely had a 2% increase per year if he owned the same property in 1978. That is over 32 years so with compounding his tax has more than doubled, including the bonded debt portion. Prop 13 is indeed a boon to long-time owners and yes, some would call that unfair.
But CA is not starved for revenues due to Prop 13. Since it passed total property tax revenues are up by a factor of eight, due to assessed value increases, more property, more people, etc.
CA government spending has far outpaced the growth in population plus inflation. CA does not have a revenue problem. CA has a spending problem.[/quote]
I tend to agree with you that we have a **spending** problem.
Still, there is no reason for investors/landlords to have Prop 13 protection unless they’re willing to be regulated by rent control (so taxpayers might be subsidizing poor tenants instead of wealthy landlords). Personally, I think everyone should be entitled to Prop 13 protection on their primary residences ONLY.
BTW, people only have to pay much higher property taxes if they **choose** to pay high prices. It is entirely voluntary. Buyers need to learn to include full PITI payments when they agree to a certain price. To hear people complain about the “inequity” in property taxes is a bit like listening to people complain about airport noise when they’ve bought right next to an airport. Buyers should have known about the property taxes when they bought **and volunteered** to pay higher taxes than other neighbors. If all buyers were rational, nobody would buy when prices are so outrageously high, then prices would drop so the tax “inequity” would be very small.
It’s largely because of property taxes that we are renting. We could easily afford the P&I payments, even at the peak, but couldn’t really stomach the higher prop taxes. That’s one of the main reasons we want lower prices vs. lower interest rates.
