From: ald@clipper.ingr.com (Al Date)
Newsgroups: ca.politics
Subject: Re: Prop. 13 and California's fiscal crisis
Summary: bogosity to the max, dude
Date: 14 Aug 92 23:23:17 GMT
Distribution: ca
Organization: Intergraph Advanced Processor Division - Palo Alto, CA

In article <1992Aug10.235617.8113@nas.nasa.gov> dbailey@wk49.nas.nasa.gov (David H. Bailey) writes:

>How about for starters
>California's infamous "Proposition 13", which is arguably the root
>cause of the state's deepening fiscal crisis (since for 14 years the
>state has had to fund K-12 education and bail out local governments).
>

This was refuted by the Mercury News June 21, 1992.  The problems
that the state is having are primarily demographic and economic.
This is asserted by Phil Yost, who is no reactionary.
And most liberals contend that it is better to have the state fund
education because it evens things out.  The state gets its money
through a "progressive" income tax, which seems to meet your 
standards of fairness much more than a property tax would.

>I am frankly surprised that given Prop. 13's blatant discrimination
>against younger persons, that more readers of this forum are not
>calling for its repeal or drastic reform.  In addition to the
>education funding nightmare and the glaring younger/older inequity,
>Prop. 13 has had the following unintended consequences:
>
>1. Prop. 13 effectively discriminates against Asians, since they form
>the lion's share of recent immigrants. 

That's a good one!  Prop 13 is racist!  hooboy...

> I have not seen any breakdowns
>on property tax paid by race for property of a given value, but I
>suspect they would be scandalous.  Prop. 13 also discriminates against
>anyone who due to their line of work or the size of their family must
>change residences from time to time.  The fortunate 50% of California
>homeowners who have not moved since 1978 pay as little as one eighth
>the property tax of their newcomer neighbors.
>

This is because the price of houses skyrocketed.  If the price
 of houses had not skyrocketed, there would be no such inequity.
Did Prop 13 cause the skyrocketing prices?  or was it simply
a matter of supply and demand?  Btw, I have not held a house
since before 1978.


>2. Large, established corporations are the principal beneficiaries of
>Prop. 13, since their property seldom, if ever, changes hands.  This
>provides them with a competitive edge against young, aggressive
>entrepreneurs, who often have the impertience to offer better service
>at lower prices.
>

Again, this is only true IF there is a substantial difference
in the price of real estate then and now.  With the current high vacancy 
levels, and with banks desperate to find lessees, this apparent advantage
is disappearing rapidly.  Good luck to all entrepreneurs, btw,
God love 'em.

>3. The other principal beneficiaries of Prop. 13 are long-term
>homeowners aged 45 - 65.  A recent census study showed that in the
>SF-Oakland metro area, homeowners aged 45 - 64 had an average
>household income of $67,300.  Homeowners aged 25 - 29 had an average
>income of $60,000.  When one adjusts these figures for differences in
>typical mortgage payments, older homeowners have nearly double the
>disposable income.
>

Mortgage payments have nothing to do with Prop 13, they have to
do with house prices and interest rates.  Property taxes are
only a fraction of the cost of home ownership.  I do not fit
any of these categories, btw.  

No doubt there is some advantage to those who bought and held.  
But this advantage is not denied to the young people by law.  
It's just that it takes TIME for the benefit to accrue.  
The people who have been around in one spot and have gotten established
have always been "ahead" of the newcomers.  This is a fact of life.

>4. Among households in the SF-Oakland area with incomes over $100,000,
>fully 52% pay less than $150 per month in property tax, although their
>homes are typically worth over $400,000.

So what?  Is this ipso facto a bad thing?  Remember that it is a
very good thing to have lots of rich neighbors if you need a job.

>5. Prop. 13 is not needed to protect the elderly (65 and up), since
>they are already covered by a separate state program that permits them
>to have their property taxes postponed until the property is sold.

You're right.  Prop 13 is needed to protect ALL homeowners from 
arbitrary tax hikes.

>Note that items 3, 4 and 5 pretty well obliterate the notion that
>Prop. 13 protects low-income persons.

It protects property holders and renters, by keeping down the cost
of owning real estate.  Some of these people are low income,
some not.  So what?

>6. Since the revenue from existing property is effectively frozen
>(except for the token 2% annual increase), this means that in constant
>dollars revenue from existing property actually decreases every year,
>forcing local governments to seek ever more desperately alternate
>sources of income.
>

You assume a greater than 2% inflation rate when you make this
statement.  But your conclusion could also be that it forces local
govts to economize, privatize, and do away with unnecessary waste.
The waste that occurs at the local level of govt is astounding.
Of course, the first thing they will do is release mental patients
or close down parks, instead of getting rid of the layers of
bureaucracy.

>7. One measure that has been taken by almost all localities is to
>approve sprawling new development, especially commercial or office
>space, since this property can be taxed at full market value, at least
>for the first few years.  This has significantly contributed to the
>over-development of urban areas and the resulting strain on
>California's fragile environment.

Maybe, but nobody is building any commerical or office buildings here
anymore.  We've got a decade of inventory to work off.  

>
>8. Prop. 13 has also hurt the environment by forcing younger workers
>to commute from very far away, since older citizens in close-in homes
>have a tax incentive not to move.  Ironically, many seniors do not
>particularly like their close-in homes, since they require more yard
>work and maintenance than they wish to do, but they don't dare move
>due to Prop. 13.
>

All this is rapidly changing as prices drop and houses go unsold.
Are you in a 1988 time warp?

>
>It is well known that older, established homeowners vote in much
>higher numbers than younger persons.  Typical of the hardened attitude
>of the older set is a recent letter to the San Jose Mercury News.  It
>was appropriately entitled "Too Young to Vote for Prop. 13? Tough!".
>Another recent letter writer moaned that since he retired, without
>Prop. 13 he would have a difficult time making ends meet [this claim
>is false -- see item 5 above].  The letter was signed "Joe Blow, Los
>Altos Hills".  Los Altos Hills is of course one of the most affluent
>communities in all California, with average incomes above $100,000 and
>home prices ranging up from $1 million.  I'm sure this fellow's "need"
>is right up there with the poor immigrants who have just been shut out
>of California's universities due to budget cuts.
>

I was never impressed by the politics of envy.  


>Many of you are probably aware that a recent appeal of Prop. 13 to the
>U.S. Supreme Court failed (let's face it -- there is not much of a
>constitutional issue here).  In summary, unless the younger set rises
>in fury, California is stuck with P,13 for the foreseeable future.
>

Yep, thank God.


--Al Date


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