From: ald@clipper.ingr.com (Al Date)
Newsgroups: talk.politics.theory,ca.politics
Subject: Re: Scapegoating of Prop 13   was Catching up on my bad Heinlein:
Date: 22 Jul 92 18:36:24 GMT
Organization: Intergraph Advanced Processor Division - Palo Alto, CA

In article <doom.711104364@elaine6.Stanford.EDU> doom@leland.Stanford.EDU (Joseph Brenner) writes:
>So, this is why I was impressed by the "beastly" method of
>handling property taxes.  Think about it, what are the ways
>can you figure the value of someone's land?
>
>
>(2) Use the original purchase price. 
>
>This is what's currently done in California (under
>Proposition 13).  This wonderful system has helped
>contribute to a shortage of housing by freezing people in
>place: for example, an aging couple with kids long gone
>can't trade a large house for a small one without losing
>their tax break.  (There was some talk about a patch to the
>law, a special deal for people moving within the same
>region.  I can't remember what became of it.)

There are about 10 counties which agreed to allow this.

>Another chronic problem is that the people who bought
>recently are at a severe disadvantage compared to those who
>bought earlier.  Their taxes can differ by as much as a
>factor of ten.  This system survived a constitutional
>challenge recently ("equal protection"?), but in my opinion
>it can not last.  The more newcomers, the more unfair it
>will seem.

Right.  But it isnt because "they are newcomers," it is because the
price of real estate went up as much as it did.  If prices
had stayed the same, there would be only a negligible difference
between the taxes paid by the newcomers and those who had been
here since the Gold Rush.  "Well, prices didnt stay the same,"
the new buyers whined.  "Well, no one is forcing you to buy," said the 
Court, and rightly so.

If you suggest to the new purchasers that we encourage
the price of real estate to drop back to levels of a decade
ago, so that we can achieve "tax equality," they become
highly defensive, as they realize that they will lose far more
in equity than they would've ever paid in taxes.  It seems that
they wanted the benefits of the 1% tax limitation when they bought,
but when their property lost value, they blamed the tax limitation
instead of their own greed and bad timing.  This is in spite of the
fact that they can appeal their assessment and get their taxes
lowered.  No sympathy from me--they should've rented, and waited for
a better buying opportunity.

The REAL ISSUE is the price of CA real estate, which got up to
absurd and probably unsupportable levels, which now seems
to be headed for a general decline, which will destroy the equity of
oldtimers and newcomers alike, create more problems for the banks,
and make Prop 13 inequality a complete non-issue, paling by comparison.

>And notice that _any_ scheme that uses taxes based on the
>market value of the property has disadvantages like this
>(like the first one I mentioned, above).  But if you shield
>people from the effects of a change in the market (as in the
>California system), you run into some nasty unintended
>consequences.

Where is it written that a change in market value of a property
is a justification for automatically enriching the govt?

In short, I am not convinced of the "nasty unintended consequences."  
There are now more houses for sale than there are buyers.  Where is
the perennial artificial shortage of sale-units caused by Prop 13?
The fact that there are a few old people sitting on their porches
in my neighborhood paying less property tax than me I consider
to be a blessing.  They add to the stability, cohesiveness and safety
of the 'hood.  

If that is the worst unintended consequence of putting the govt on a diet
and giving people the knowledge of what their taxes will be
from that point on, then I am all for it.  If it creates an incentive
for govt to slowly reduce its scope and economize, let's have at it.
If it creates an unintended incentive
for people to buy and hold, instead of speculating and spinning
properties to new speculators, then who's complaining other
than the realtors?

>
>You've always got to think about what incentives you're
>setting up when you interfere with the market (as any form
>of taxation has to), and the "beastly" system strikes me as
>a sort of modified free market idea that's at least a step
>in the right direction.  Maybe it's not really ideal (Ken
>Arromdee came up with a few good practical problems that
>would need to be ironed out) and maybe it's not politically
>feasible, but at least it sounds like it would be more
>robust over the long haul than California's.

The safest way to interfere with a market is to MINIMIZE the taxation,
by whatever means.  No taxation is no interference.

Prop 13 effectively minimizes property taxes, and hence becomes the
scapegoat for everyone who would expand the scope of govt. 
All I wish is that we could somehow apply a "Prop 13" to
sales taxes and income taxes and Social Security taxes as well.


--Al Date
Newsgroups: talk.politics.theory,misc.legal,alt.postmodern