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CA renter.
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March 19, 2014 at 11:56 PM #772109March 20, 2014 at 7:39 AM #772115
SK in CV
Participant[quote=CA renter]
Agree with Brian on this one. The impetus behind tinkering with or abolishing Prop 13 is to get more revenue by eliminating the tax subsidies for those who don’t need or deserve them.[/quote]I’m not sure there is any significant impetus behind abolishing it. And I think the reason for that is those supporting a repeal are making the wrong argument. The problem with it is not that it mandates too much or too little tax, but rather that it mandates a tax that is unfairly distributed. And the only fix that’s been proposed is one that increases total revenues. It doesn’t have to do that. If the limits were set at the revenue end, instead of the assessment end, the state and municipalities wouldn’t have huge swings in revenues as they’ve seen over the last decade. No huge increases when property values skyrocket, or huge decreases when property values plummet.
March 20, 2014 at 9:55 AM #772116FlyerInHi
Guest[quote=joec]Another thing to consider is the powers with money (corporations or large property owners), now see another reason to ditch and leave California and their businesses here. It’s certainly a benefit if you’re looking to own property in CA or buy/lease back buildings.
If demand drops, people will just setup in Nevada or Arizona and that hurts CA taxes again. Businesses already feel CA is one of the worst places to run a business.
Of course, other states reassess property yearly and tax it, but just more reasons for someone to leave and take all the jobs with them.[/quote]
Actually, rents are based on what the market will bear, not the costs of the landlord. If you had low costs, you would not give your tenant a discount; you will still charge market rent. And if you had high costs (like buying at the peak) you can’t charge more than what the market will bear and you have to suck it up.
Businesses that own their buildings like car dealers need to be in Cali to generate revenue. Tech companies rent and they are not in Cali because of the lowest costs to begin with.
March 20, 2014 at 3:42 PM #772123CA renter
Participant[quote=SK in CV][quote=CA renter]
Agree with Brian on this one. The impetus behind tinkering with or abolishing Prop 13 is to get more revenue by eliminating the tax subsidies for those who don’t need or deserve them.[/quote]I’m not sure there is any significant impetus behind abolishing it. And I think the reason for that is those supporting a repeal are making the wrong argument. The problem with it is not that it mandates too much or too little tax, but rather that it mandates a tax that is unfairly distributed. And the only fix that’s been proposed is one that increases total revenues. It doesn’t have to do that. If the limits were set at the revenue end, instead of the assessment end, the state and municipalities wouldn’t have huge swings in revenues as they’ve seen over the last decade. No huge increases when property values skyrocket, or huge decreases when property values plummet.[/quote]
There is a lot of energy behind the split roll property taxes. Prop 13 would never have passed if it was presented solely as a means to give commercial/industrial property owners or landlords a tax subsidy (at the expense of others, either in the form of higher fees/taxes or reduced services). The ONLY reason it passed was because it was a way of “keeeping granny from being taxed out of her home.”
We DO need more revenues, and there is no doubt that the state and municipalities are losing billions each year on these subsidies. They are not needed and, IMHO, can distort the market, as well. We need to split the rolls, at the very least, and there is quite a lot of energy behind this.
March 20, 2014 at 6:48 PM #772124joec
Participant[quote=CA renter]
If they leave, others will take their place. In a high-demand state like California, this isn’t a real threat.And other states will have other taxes or fewer/lower-quality services, instead. Every state has its pros and cons; people just have to decide what’s right for themselves. You can’t get something for nothing, no matter how hard you try.[/quote]
I disagree with this completely. A company like Twitter is in San Francisco because they (San Francisco) gave/”was Forced” to give them a huge tax break to build and have their HQ there.
Doesn’t benefit the “other” poor people neither.
If another state offers them that tax break, you can say a lot of businesses will move…
A quick google found these quick links in a second…There are tons more offering employers to move their HQ to lower tax cost areas:
http://blog.heritage.org/2014/02/23/tony-stark-come-home-hollywood-seeks-tax-breaks-lure-movies/
Sure, you will always have a guy selling food or haircuts in california, but higher paying jobs will leave if you make it a more inhospitable business climate.
That, and housing is already so expensive in the state that companies aren’t against moving as much to improve the overall quality of life for their employees.
March 20, 2014 at 7:21 PM #772125ParticipantAs you can see, there are very legitimate arguments against these tax breaks. I do find it funny when other states use taxpayer money to try to lure companies from California (or somewhere else) and then claim that they are “creating jobs.” Idiots.
Governments are going broke (blaming the unions, of course) while shoveling money at these companies in a race to spend the most money possible on these ventures that often backfire in their faces. All too often, the companies take the money, do business in the state for as long as necessary, and then leave town after using all the resources and demanding taxpayer-funded infrastructure for their businesses that ends up going to waste.
March 21, 2014 at 7:08 AM #772129livinincali
Participant[quote=CA renter]As you can see, there are very legitimate arguments against these tax breaks. I do find it funny when other states use taxpayer money to try to lure companies from California (or somewhere else) and then claim that they are “creating jobs.” Idiots.
Governments are going broke (blaming the unions, of course) while shoveling money at these companies in a race to spend the most money possible on these ventures that often backfire in their faces. All too often, the companies take the money, do business in the state for as long as necessary, and then leave town after using all the resources and demanding taxpayer-funded infrastructure for their businesses that ends up going to waste.[/quote]
In states with high income tax it might make sense to offer corporate tax breaks. For example Facebook made about 1.5 billion last year and CA corporate tax is 8.84% so CA got $126 million in corporate tax from Facebook barring some kind of tax break that I don’t want to investigate. Facebook spent 6.4 billion to generate that 1.4 billion in profits and let’s just guess that at least 75% of that expense is in labor costs. So 4.8 billion but let’s just round to $5 billion in labor to make the math easier. Income tax in CA is 9% and for many people at Facebook it’s higher than that. So let’s just assume a blended rate of 8% on that $5 billion in labor. So CA collected 5.0*0.08 = $400 million in income tax from the Facebook employees. So CA get’s 3+ times the amount of revenue from Facebook employee incomes vs corporate tax rates. So keeping those jobs is far more of a revenue benefit than losing them because of a couple of percentage points in corporate tax breaks.
March 21, 2014 at 3:43 PM #772133ParticipantAbsolutely, the companies with many very highly paid employees make it worthwhile to offer tax breaks, though it might still shift costs and benefits between the state and municipalities, depending on where the breaks are coming from, and where the taxes are coming from; but the examples of this type of situation are not necessarily the norm.
March 21, 2014 at 11:18 PM #772135GuestYou know what, the highly paid tech employees will always be in Cali or NYC or Boston or Seattle.
I think tax breaks are better going to manufacturers or call center or the types of operations that can easily move. Facebook, not so much. Would they really move to Phoenix or Dallas? Ha, that would be a first.
If you look at the Bay Area, people are commuting from San Francisco to San Jose, they are not coming to San Jose from Vallejo where they could enjoy lower costs. Costs don’t seem to be a concern.
March 22, 2014 at 9:05 AM #772137moneymaker
ParticipantI think Prop 13 is being worked around with special voter approved taxes like MM where special assessments are collected by the city. The most expensive neighborhoods in the county actually have the lowest tax rates, Solana Beach, Del Mar, Coronado. That is because rich people hate taxes. I hate taxes but I’m not rich yet, got the mindset ready however.
P.S.- 2 things that really piss me off about the whole tax structure are paying double taxes and tax loopholes. Maybe when I’m rich the loopholes won’t bother me so much.March 22, 2014 at 5:14 PM #772147ParticipantThey pay the lowest taxes because of Prop 13, and it’s hurting the cities’ finances. Most of these houses are the “dream homes” to which these families aspired, so they bought them with the intention of staying in them indefinitely. After all the appreciation, they’d be fools to let go of these homes with their Prop 13 tax rates, so they (and their heirs) stay. Many of them are paying lower property taxes than people who live in Vista, Oceanside, etc.
March 27, 2014 at 3:34 PM #772288skerzz
Participant[quote=CA renter][quote=SK in CV][quote=CA renter]
We DO need more revenues, and there is no doubt that the state and municipalities are losing billions each year on these subsidies. They are not needed and, IMHO, can distort the market, as well. We need to split the rolls, at the very least, and there is quite a lot of energy behind this.[/quote]
I disagree. We don’t need more revenues, we need politicians that spend less and citizens that rely less on government services.
March 27, 2014 at 3:56 PM #772290Participant[quote=livinincali][quote=CA renter]
In states with high income tax it might make sense to offer corporate tax breaks. For example Facebook made about 1.5 billion last year and CA corporate tax is 8.84% so CA got $126 million in corporate tax from Facebook barring some kind of tax break that I don’t want to investigate. Facebook spent 6.4 billion to generate that 1.4 billion in profits and let’s just guess that at least 75% of that expense is in labor costs. So 4.8 billion but let’s just round to $5 billion in labor to make the math easier. Income tax in CA is 9% and for many people at Facebook it’s higher than that. So let’s just assume a blended rate of 8% on that $5 billion in labor. So CA collected 5.0*0.08 = $400 million in income tax from the Facebook employees. So CA get’s 3+ times the amount of revenue from Facebook employee incomes vs corporate tax rates. So keeping those jobs is far more of a revenue benefit than losing them because of a couple of percentage points in corporate tax breaks.[/quote]Agree with the point you are trying to make — increasing business activity is the best way to increase tax revenues. However, the math you used to calculate CA’s tax revenues from FB has seriously flawed assumptions. 1 – Not all FB employees are California tax payers, 2 – The computation used to derive GAAP income (which you probably pulled from a 10K filing), is significantly different than the calculation of Taxable income. FB likely reported a significantly lower tax (vs. GAAP) income due to employee exercises of in-the-money stock options (Per the 10K, these “excess” tax deductions resulted in a reduction of cash tax liability greater than $600M in 2013), 3- California only gets to tax income attributable to California sources — which is very likely significantly less than world wide income (apportionment rules).
Proof of this is in the financial statements — FB’s US state CASH income tax liability for all of 2013 was only $69M. You can assume less than 50% of this was paid to California due to apportionment rules and the Company’s global presence.
My best guess is that FB pay little or no Corporate income tax in California due to the facts above and the availability of R&D tax credits.
March 27, 2014 at 7:40 PM #772294Participant[quote=skerzz][quote=CA renter][quote=SK in CV][quote=CA renter]
We DO need more revenues, and there is no doubt that the state and municipalities are losing billions each year on these subsidies. They are not needed and, IMHO, can distort the market, as well. We need to split the rolls, at the very least, and there is quite a lot of energy behind this.[/quote]
I disagree. We don’t need more revenues, we need politicians that spend less and citizens that rely less on government services.[/quote]
If you’ve ever had the opportunity to witness what these politicians have to deal with regarding all the different interests knocking on their doors and calling them all day looking for money, you’d know how distant that dream is.
Until we get citizens and various interests who want less from the government, we need more revenues.
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