Seattlites: Borrow More Money!

[olyclimber]

its bigger than that...i know plenty of small towns in Washington that have gone up pretty dramatically in the past 5 years. seems that many of those towns must be bouyed people in CA selling their homes at insanely inflated rates and then buying in small town Washington and retiring...I know it would be hard to buy a house with the average working person's income in some of those towns.

[cj001f]

Yes, but is "market value" really how property should be taxed? I believe that increased value - CPI and bond measures notwithstanding - should not be tax-relevant until that property actually changes hands ala California's prop 13. Ask yourself sincerely; does this state really provide increasing levels of service commensurate with property values? The state budget has gone from 21bn to 27bn in just 3 years. Has population increased the same? No. If, as some here believe, the real-estate bubble bursts, will the state then lower property values at pace with the market? I seriously doubt it. The government in Washington State - lacking proper judicial separation as it does - can raise or lower taxes virtually at will. Free market forces are not particularly tied to government tax policy vis a vis property rates. The free market is what it is - taxes are what we as a people decide they ought to be. And I believe there should be much more accountability and performance standard. I don't believe this state government is entitled to a windfall not initiated by any particular policy they passed into law.

 

I'm surprised that there's not widespread agreement on this fundamental point. I don't think that you have to be an anti-tax fanatic to agree with this either.

 

I am not sure what the solution to this is, but if I had a magic wand the first thing I'd do is eliminate any tax advantage associated with real estate versus any other asset class when it comes to capital gains. The second thing I'd do is set a cap on property tax increases that's directly correlated with the core inflation rate and population growth.

 

I wouldn't be surprised if this becomes a popular issue when the YOY gains stall out.

 

As someone who's lived in CA I dislike the impact of prop 13. It's consistantly underfunded the basic functions of government. There are people living oceanside who pay $1k a year in property taxes - because they bought in 30 years ago. Well networked into local politics they have a distinct advantage in getting their wishes cattered to, but pay a disproportionately small burden (or receive a substantially better return on their tax 'investment' when they sell at an increased price). It's created even larger incentives for local governments to encourage large, expensive new housing construction, and increase property turnover - it's the only way the managers budgets will increase.

 

Starving the beast doesn't work

[JayB]

Is Prop 13 indexed to anything that's directly connected to a fundamental need for increasing outlays, like inflation or population growth - or are the increases fixed in a more arbitrary fashion?

 

I am not terribly familiar with Prop 13, and have heard rumors of some pretty ill conceived provisions. These include descendant's inheriting Granny's Prop 13 tax basis of the property is transmitted to heirs without a sale, and a loophole that allows people to use Prop 13 limitations in conjunction with commercial property if they use the right ownership structure. Not sure if this stuff is accurate, but it'd be interesting to hear from someone who's familiar with the measure.

 

Doesn't CA have a pretty full roster of taxes besides property taxes? Sales tax, state income tax, and property taxes? It'd be interesting to see some stats on tax receipts and spending per capita, and the percentage of tax receipts derived from housing versus other taxes for California relative to other states.

[cj001f]

Is Prop 13 indexed to anything that's directly connected to a fundamental need for increasing outlays, like inflation or population growth - or are the increases fixed in a more arbitrary fashion?

 

I am not terribly familiar with Prop 13, and have heard rumors of some pretty ill conceived provisions. These include descendant's inheriting Granny's Prop 13 tax basis of the property is transmitted to heirs without a sale, and a loophole that allows people to use Prop 13 limitations in conjunction with commercial property if they use the right ownership structure. Not sure if this stuff is accurate, but it'd be interesting to hear from someone who's familiar with the measure.

 

Doesn't CA have a pretty full roster of taxes besides property taxes? Sales tax, state income tax, and property taxes? It'd be interesting to see some stats on tax receipts and spending per capita, and the percentage of tax receipts derived from housing versus other taxes for California relative to other states.

 

Here's a summary

Under Proposition 13, the real estate tax on a parcel of residential property is limited to 1% of its assessed value, until the property is resold. This "assessed value", however, may only be increased by a maximum of 2% per year.

There's loopholes as well.

 

Yes, California has a quite full roster of taxes, and plenty of user fees. The Propositions process has done an excellent job hamstringing a legislature well in the grip of special interests producing a bureaucratic paralysis very similar to the federal government.

 

Perhaps it's just a function of size? Or is it voters are unwilling to make the connection between increased spending and increased taxation, and politicians let them accept, neigh, they encourage that fallacy?