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About this blog: I grew up in Los Angeles and moved to the area in 1963 when I started graduate school at Stanford. Nancy and I were married in 1977 and we lived for nearly 30 years in the Duveneck school area. Our children went to Paly. We moved ...  (More)

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Older Homeowners and Local Property Taxes

Uploaded: Apr 9, 2011
One of the main arguments in 1978 for passing Proposition 13 was that rising property taxes threatened older homeowners who were retired and living on a reduced income. While they might be "house rich", they were "cash poor" and thus might be forced out of their homes through rapidly rising property taxes.

But now we have reverse mortgages. I think the older argument no longer has merit for homeowners with substantial equity in homes bought 20 to 40 years ago.

These homeowners CAN access the cash value in their equity through a reverse mortgage.

I see no reason to give a break to homeowners who are both relatively affluent and sitting in a home worth 5 to 10 times what their original purchase price. We owned such a home in Palo Alto before we moved downtown.

Similarly, I see no reason to give tax breaks to affluent seniors like the ability to opt out of parcel taxes though, fortunately, many Palo Altans voluntarily pay these taxes.

This generational inequity will only get worse as more baby boomers retire and we have to fund services for children--who will determine our future--services that are currently under great stress.

If older residents are in difficult financial circumstances, I can, perhaps, see some merit in age-based tax breaks but not for more affluent older residents. We should be paying our fair share.

And soliciting the votes of older residents for taxes while telling them they don't have to pay or they won't pay much because they have Prop 13 protected assessed values doesn't seem quite fair either.

Comments

Posted by Peter Carpenter, a resident of ,
on Apr 9, 2011 at 1:58 pm

As usual Levy is absolutely correct. Why should I pay less than 10% of the property taxes that my neighbors pay when we are all receiving the same public services.

Unfortunately the biggest, and unintended, beneficiaries of Prop 13 are businesses - whose property seldom changes hands, and therefore is almost always appraised well below market value, have so much to lose that they will do whatever is necessary to preserve Prop 13.

Why someone doesn't file an unequal protection lawsuit on Prop 13 I don't know.


Posted by business taxes, a resident of ,
on Apr 9, 2011 at 2:47 pm

How about letting business property taxes float with the market, but keep the caps on homeowner taxes?

Reverse mortgages may work for the elderly, but they are not the only ones caught in this trap. Very common for people in their 40s or 50s to have their homes appreciate 5X since they bought them. Not all of them can afford 5X of the property tax, especially if they are raising families. Are reverse mortgages available and practical for this age group?


Posted by Sean, a resident of ,
on Apr 9, 2011 at 2:48 pm

There goes Steve Levy, again! Tax the rich! Why is it that we never hear him saying, "Stop spending!"?

Palo Alto has a huge backlog of infrastructure requirements. Do we ever hear Steve Levy say, "Stop the $Millions of subsidy to PACT? Stop the BMR subsidy? Stop the "New Urbanism"? Stop the local "green" agenda? Stop the craziness of the 20 kids/class, K-3? Stop the the absurd cadillac retirement plans of the public unions and non-unionized public employees, which control this city?

[Portion removed by Palo Alto Online staff.]
Keynesianism and Marxism are as dead as the Dodo bird, yet Steve persists....


Posted by nono, a resident of ,
on Apr 9, 2011 at 4:39 pm

Here again I'm the bad guy because I bought a home twenty years ago. As it is we are wondering how we are going to afford our property taxes when we retire. We don't get pensions, it's 401K and savings and some Social Security. We do everything ourselves, fix as much on our house as we can, garden (no help), you name it, we do what we can to save money. So the seniors who spent their money (however) will get a break because they qualify under Levy's generous proposal!


Posted by Bike2work, a resident of ,
on Apr 9, 2011 at 4:42 pm

"Why someone doesn't file an unequal protection lawsuit on Prop 13 I don't know."

Someone did in LA quite a while ago. It went all the way to the Supreme Court, and Prop 13 was upheld. That was a residential case, but I doubt one related to commercial property would have a different outcome.

The only way to change Prop 13 is via another proposition.


Posted by Walter_E_Wallis, a resident of ,
on Apr 9, 2011 at 5:44 pm

Walter_E_Wallis is a registered user.

There is, of course, an alternative - hold permissible spending increases to the same standard as permissible tax increases. This way, everyone's tax would be the same.


Posted by concernPop13, a resident of ,
on Apr 9, 2011 at 6:10 pm

The worst problem is with the benefits that a public employee has. Either a City employee, a state Employee, or a Federal Employee have so much benefits, while the rest of us have the only the 401K and nothing else. When we retire we better have the 401k to last another 30 years otherwise street homeless.


Posted by concerned senior, a resident of ,
on Apr 9, 2011 at 6:14 pm

Steven's idea is without merit. His is an opinion based on pluralism. There are so many reasons not to add taxes to senior citizens. I would place fixed income at the top.


Posted by Local Observer, a resident of ,
on Apr 9, 2011 at 7:30 pm

Steven Levy wrote "... CAN access the cash value in their equity through a reverse mortgage".

OK, I'll bite. Who underwrites reverse mortgages today? None of the top 5 banks do. My contact at Merrill Lynch informed me reverse mortgage products are a thing of the past.

As a retired senior I would welcome a reverse mortgage so I could make needed repairs (new plumbing, new heating ducts, new driveway, etc.) to a home built in 1955 that I purchased in 1966.

And don't reply with "home equity" loans. Those require a reasonable and steady income for debt service.

I would really appreciate an answer based on fact.


Posted by Federal spouse, a resident of ,
on Apr 9, 2011 at 8:01 pm

@ concernPop13,

You are wrong about Federal Employees. I know because my spouse is one. Guess what? Federal employees hired about some time in the late 80s have to do with their 401k just like you. My spouse was hired by the Federal Government in 1989 and has to save up money in a 401K in order to retire. There are 2 kinds of federal employees. Those on the old system who have a full pension, and people like my spouse who have to make do with social security, a tiny sliver of pension, and mostly with a 401K.

So please don't throw us into the same pot as local and state employees who do have their gold plated retirement plans. Younger federal employees don't.


Posted by Local Observer, a resident of ,
on Apr 9, 2011 at 8:08 pm

Re: reverse mortgages, some web searching revealed a 3-part series in the San Francisco Chronicle last year which seemed encouraging. However, no bank or other institution I've contacted is writing reverse mortgages at present.

The URLs to each part of the 3-part Chronicle series follows:

Sept. 23, 2010: Web Link

October 3, 2010: Web Link

Nov. 21, 2010: Web Link


Posted by concernPop13, a resident of ,
on Apr 9, 2011 at 8:21 pm

ok, I did not know that all Federal Employees are now like the rest of us private Employees. It is a good time to modify the State level and City level to cut those fat pensions, No co-pay and complete Health Benefits, and give them all 401K just like the rest of us. No need to increase tax, and as a mater of fact there will be a major surplus that we never see before in the History of this Country.


Posted by why? , a resident of ,
on Apr 9, 2011 at 10:29 pm

The problem isn't prop 13 per se. The problem is there is no cap on the tax regardless of how much the property price rises.
Rather then basing property tax on the actual value of the property, there should be bands and some discussion about how much the city needs and the citizens are willing to pay.
Always taxing the max "because they can" is what led to the state requiring prop 13 in the first place.


Posted by RS, a resident of ,
on Apr 10, 2011 at 12:00 am

Since you want us all to pay our fair share, how about eliminating the mortgage interest deduction? It mostly benefits recent home buyers with no equity in their homes, not those seniors with paid off housing.


Posted by Walter_E_Wallis, a resident of ,
on Apr 10, 2011 at 2:14 am

Walter_E_Wallis is a registered user.

Still no consideration of living within one's means, huh?


Posted by No-More-Taxes, a resident of ,
on Apr 10, 2011 at 11:39 am

Steve Levy has never met a tax he didn't endorse. Steve Levy has at the same time never called for cost-controls on government spending, or rigorous audits of government operations--to ensure that the money assigned to government (actually taken these days) is well spent, and that there is no fraud in the programs funded by government.

Only about 50% of Americans actually pay income taxes, and only about 50% of Californians actually pay property taxes (directly). Maybe it's time to pass an "occupancy tax" for the 50% who don't pay property taxes directly--so that they can "pay their fair share" too.

We are way past time to downsize government, at every level. We don't need more taxes, we need more rethinking of the role of government, and the reduction of government to providing essential services only.


Posted by stephen levy, a resident of ,
on Apr 10, 2011 at 4:05 pm

stephen levy is a registered user.

It is interesting that some posters responded to the blog as a tax increase.

My intent was to raise two equity issues.

There has been a longstanding concern among many about the negative equity and economic implications of the current property tax system.

Some way to have more long time homeowners have assessments closer to market value would allow tax rates to fall for all property owners--a revenue neutral swap.

But the economic impacts are positive by lowering taxes on new home buyers and new business ventures. Probably many posters who thought this was about raising taxes would favor making it less expensive for new investments.

The same point holds true for offering seniors the option to opt out of parcel taxes. If everyone paid, the tax rate could be lower for all residents. Moreover, this is a funny twist on the revolution cry of "no taxation without representation". This is representation without taxation encouraging people to vote for others to pay a parcel tax, but not themselves if they choose to opt out.

Peter Carpenter understood the post in his first response. I am interested in people responding to whether this is a fairer and better economic approach to raising the same amount of property tax revenue.




Posted by Sean, a resident of ,
on Apr 10, 2011 at 4:22 pm

Steve Levy personifies the old socialist axion, "Give according to ability, take according to need". Steve's new twist is that even if the old folks don't have it, in cash, they should borrow it, then give it to the state, so that Steve and his ilk can spend it on their favorite causes.


Posted by Peter Carpenter, a resident of ,
on Apr 10, 2011 at 6:12 pm

My question reamins unanswered: Why should I pay less than 10% of the property taxes that my neighbors pay when we are all receiving the same public services?

This is not stealing from the rich and giving to the poor nor is it give according to ability, take according to need.


Posted by Sean, a resident of ,
on Apr 10, 2011 at 6:39 pm

Peter,

If I bought a gold wedding band in 1978, and there was a state sales tax on that purchase, say 6% at a given gold price, should I be compelled to retroactively pay 10%, if that is the current tax rate, or if that gold is worth more now? Prop 13 held the property tax at current rates and values, when it was enacted, with an inflation factor of 1-2%. What is wrong with that?

If my neighbor wants to sell his/her property, and there is a willing buyer, and that buyer understands the property tax protections of Prop 13, namely that they cannot be extorted into unbridled tax exortion, going forward, what is your problem, Peter?

Every sale of a property in this area generates higher tax revenues, but it is not a piggy bank for the public-sector pigs.


Posted by Peter Carpenter, a resident of ,
on Apr 10, 2011 at 7:05 pm

Sean asks:"If my neighbor wants to sell his/her property, and there is a willing buyer, and that buyer understands the property tax protections of Prop 13, namely that they cannot be extorted into unbridled tax exortion, going forward, what is your problem, Peter?"


My problem remains that you and your neighbor are receiving the same public services but you are only paying a fraction for those services than is your neighbor.

You don't get any public services or pay any annual taxes for the possession of your gold ring.


Posted by Local Observer, a resident of ,
on Apr 10, 2011 at 7:29 pm

Peter Carpenter wrote "My problem remains that you and your neighbor are receiving the same public services but you are only paying a fraction for those services than is your neighbor".

Then, perhaps, property tax is the "wrong" venue for funding such services. Those without property are paying nothing (directly) for such services.

Maybe only businesses should be taxed and that would also bring in monies from the people who are "off the radar".


Posted by Sean, a resident of ,
on Apr 10, 2011 at 7:39 pm

"My problem remains that you and your neighbor are receiving the same public services but you are only paying a fraction for those services than is your neighbor."

But Peter, I do pay. My property taxes never were reduced. They were contained, yet they were always raised at 1-2% per year. Public expenses expanded beyond the property tax take. The problem is the public spending beyond the tax take. It is not my fault that public spending was not controlled. Also, I fail to understand how I benefitted from the overreach of this public largesse. My sidewalks are worse than ever, my streets have many potholes and I rarely ever see a police car in my neighborhood.


Posted by Me Too, a resident of ,
on Apr 10, 2011 at 7:50 pm

I agree with Levy - there is a fairness issue that some pay much more than others. In Massachusetts, they did it begter, limiting the amount the town budgets could increase (2.5% - hence Prop 2 1/2), while distributing taxes as always based on assessed value. Towns could vote over-rides if they wish. That prevents the crazy notion that my neighbor pays 10% of the tax I pay for the same services.

There are a number of things severely broken in California, many set by referendum, others by the legislature. We have to dig out of the mess we've made and get back on a sensible track.


Posted by Peter Carpenter, a resident of ,
on Apr 10, 2011 at 8:00 pm

Peter Carpenter is a registered user.

Sean states:"It is not my fault that public spending was not controlled."

WRONG. It is every citizen's fault because every single increase in local public expenditures took place in public sessions which few citizens attended and to which few citizens objected.


Posted by Local Observer, a resident of ,
on Apr 10, 2011 at 11:58 pm

Peter Carpenter wrote "every single increase in local public expenditures took place in public sessions which few citizens attended and to which few citizens objected".

Just curious: are public service employee salary and pensions subject to citizen review and approval? Per this Palo Alto Online article dated January 3, 2011, pension costs top Palo Alto's budget woes:

Web Link

This Palo Alto Online article dated March 15, 2011, basically paints a doom and gloom picture for Palo Alto's finances:

Web Link

And as Peter Carpenter wrote in Comments to the above article, "Finally, they need to move the review and approval of new labor agreements out from behind the current wall of secrecy from which the public is excluded", which belies Peter's comment there are public sessions open to the citizenry at which comments can be voiced.

How many other Palo Alto financial dealings are held behind closed doors?


Posted by Same ol', same ol', a resident of ,
on Apr 11, 2011 at 4:39 am

Yawn....well, Mr. Levy, tell you what. We will raise your taxes commensurate with your home value when you are 65, and expect you to pay them.

Gotta sell your home 'cuz you can't afford the taxes? Oh well, think of the "children".

BTW, all...what would happen to the value of your home if part of the buyer's configuration was to project their tax bill in 40-50 years? Connect some dots here, ...the housing prices would plummet for everyone here, a destroying the value of our homes, and killing off that great "tax increase in the sky" that Prop 13 deniers think will rain on us if we kill Prop 13.

Raise taxes, less tax revenue. Been tried around the world, in our nation, and in our State, many, many times. And every single time there is a rise in any tax, there is a decrease in tax revenue. When will we learn?



Posted by Same ol', same ol', a resident of ,
on Apr 11, 2011 at 4:42 am

Peter: If you own a home here in PA, in 40 years you will get the same services you get now, and your new, young, neighbor will be complaining that you "get the same services" he does but pay a lot less.

It is a cycle. And unfortunately the fighting and envy never, ever ends for those who have no historical or futuristic thinking.


Posted by Same ol', same ol'., a resident of ,
on Apr 11, 2011 at 4:46 am

BTW Stephen: The generational stress is going to come from us baby boomers collapsing the next generation in taxes from our greedy ponzi schemes in Medicare and Social Security, and from our greedy massive expansion of borrowing/spending for new silly government programs.

If we really care about the "next generation", we would stop stealing their future from them by fixing right now the entitlement programs we older folks are going to suck up, and we would massively cut back on our spending/stop borrowing against our children's future.


Posted by No-More-Taxes, a resident of ,
on Apr 11, 2011 at 7:59 am

> Unfortunately the biggest, and unintended, beneficiaries of Prop 13
> are businesses - whose property seldom changes hands, and therefore
> is almost always appraised well below market value, have so much to
> lose that they will do whatever is necessary to preserve Prop 13.

As time passes, this claim becomes less and less true. Since there are no businesses allowed in Atherton, it's even less true there. Here in Palo Alto, if one looks around, one sees very few businesses that were on-going in 1978 when Prop.13 was approved by the voters.

There are a small number of businesses that haven't changed hands, but these don't make up much of the total business tax base. Even large businesses are subject to takeovers, so it's hard to identify many firms operating locally that are over thirty-five years old. Institutional operations, like Ricky's Hyatt have been sold and replaced with housing. The Palo Alto Hyatt has been re-opened under new management, Stanford Shopping Center has changed hands. It's hard to find any stores in downtown Palo Alto that were around in the mid-70s. And even the large apartment buildings are subject to turn-over every so often. It would take a little research, but this same turnover has not doubt been going on in Santa Clara county, and California, as a whole, too.

What's really unfair is that places like Channing House, and Webster Woods, which occupy prime downtown real estate, and in the case of Channing House cater to wealthy, upscale seniors, are tax-exempt. Talk about your "equity" issues, and let's see how many people would be ready to do away with all of those tax-exemptions.

The Santa Clara County Auditor has put on-line all (well almost all) of the property assessment data. This data can be viewed either by parcel number, or by address. If anyone is interested in what a business pays in taxes, that's a good place to start. The Santa Clara Tax Collector has also put on-line all of the tax collection data. This data can be access by parcel number. The identities of property owners is not revealed on the publicly-accessible web-sites, but obviously if the business address is known, then the tax data can be accessed on-line.

We also have to remember that businesses don't really pay taxes--they simply collect taxes from their customers in terms of higher prices for goods and services. While a little hard to prove, some claim that about 25% of the cost of retail goods can be attributed to "corporate taxes".


Posted by No-More-Taxes, a resident of ,
on Apr 11, 2011 at 9:32 am

> Peter Carpenter wrote "every single increase in local public
> expenditures took place in public sessions which few citizens
> attended and to which few citizens objected".

While this may be true, it's meaningless to the discussion, because until Prop.13 and it's 2/3rds requirement for tax increases became law, governing bodies were under no obligation to listen to any citizens' objections-about taxes, or any other thing--and few ever did listen.

The political process in the US (and California) does not require that candidates tell the truth to their constituencies. (Recently the Stolen Valor Act, which was passed after a candidate for political office claimed to have received the Congressional Medal of Honor was proven to have lied about receiving the Nation's highest Military honor, was overturned by a court action. The Court claimed that political candidates' Constitutionally-protected free speech rights allowed them to lie to voters about "little things", like whether they served in the Military, or having received the Congressional Medal of Honor--when in fact the did not.)

Prop.13 did many things--such as introducing some "equity" into the process of setting taxes. Prop.13 shifted the power to tax from elected officials that rarely showed evidence that they represented "all the people", rather than the special interests that have traditionally dominated "democracy" to the voters (in most cases).

People objecting to Prop.13 need to at lease acknowledge the history of elected Government in California, when tax policy, and practice, are concerned.




or even answer questions put to them. They are not required to post their resumes,


Posted by stephen levy, a resident of ,
on Apr 11, 2011 at 11:42 am

stephen levy is a registered user.

Same ol'

You raise some good points but you are also misreading parts of my post ans argument.

One, I am proposing a revenue neutral switch in how property taxes are assessed in order to 1) improve equity and 2) provide more incentive for new business investment. This is a tax increase for some property owners in exchange for lower rates for many others.

Two, you are right that the big dollars re the budget and in generational conflict are in the currently promised benefits to seniors through Social Security, Medicare and Medicaid (where 70%+ of the money goes to nursing home care for poor seniors).

I have another blog on the federal deficit where I do call for reductions in the growth of these spending streams, cut that if put into place today would directly affect me.


Posted by 35USC101, a resident of ,
on Apr 11, 2011 at 12:24 pm

You have failed to delve into the pernicious effects of Prop 13 on the schools in basic aid districts, like PAUSD.

Prop 13 permits properties that are assessed far below market value to throw a continuous stream of students into school system through rental properties and multi-generational tax breaks. Why should my neighbor who lives in a second home in Hawaii be able to rent his house to a family with 4 children, yet only pay $2000 in property taxes? Do statistics that quantify the magnitude of this problem exist? What percentage of PAUSD students live in homes that are assessed at less than 10% or 20% of market value?


Posted by Robert Smith, a resident of ,
on Apr 11, 2011 at 12:40 pm

It is difficult for me to understand why two people should pay differentially for the same service. We bought our house 30 years ago, and are now paying 1/6 of the taxes that our neighbors in similar houses pay. Whether we are more or less able to pay is irrelevant to this point. If I am supposed to be "guaranteed" that my taxes will not increase, how about my utility bills? Shouldn't they also be the same as when I bought the house? Or my insurance rates? Or how about my food? This is not an ideological point: I cannot imagine any contortion of either "left" or "right" wing economics that justifies this. I suspect, however, that the constituency for the current rules is so strong that it can never be changed.


Posted by Sean, a resident of ,
on Apr 11, 2011 at 1:09 pm

"It is difficult for me to understand why two people should pay differentially for the same service. We bought our house 30 years ago, and are now paying 1/6 of the taxes that our neighbors in similar houses pay."

Robert, if you sent your kids to school in Palo Alto 30 years ago, you were paying your fair share, based on your property assesment at the time. After Prop 13, you continued to pay a fair share for later generation kids...your property taxes INCREASED at the rate of about 2% per year. Public spending on schools and city services ahould have been contained to a 2% inflation rate. Instead, our city leaders and school board officials decided to go wild, increasing public spending into the stratosphere, espcially with cadillac pensions. Don't blame Prop 13, blame those city leaders who caved into absurd demands of the public sector employees. After all, those leaders based THEIR decisions on unequal tax sacrifices. The problem is spending, not taxation. What's your beef? I just don't get it!


Posted by same ol' corporate WELFARE, a resident of ,
on Apr 11, 2011 at 1:37 pm

"Here in Palo Alto, if one looks around, one sees very few businesses that were on-going in 1978 when Prop.13 was approved by the voters."

OMG. Are you kidding?!? This isn't about a bagel shop on university. it's about the corporations that own blocks of property.

Who are the biggest landowners in Palo Alto? Take a look. HP? Stanford? What they do not pay dwarfs any residential payments.

Think much of those huge corporate tracts has been reaccessed?

Prop 13's corporate welfare status doesn't really apply to small businesses or residential property.

It's ALL about the big landowners being given massive tax breaks.


Posted by common sense, a resident of ,
on Apr 11, 2011 at 1:52 pm

Around 48% of property taxes goes to the school district, and 8% to the city; the rest goes to the county, community college, and other miscellaneous government entities.

Business owners do not send their kids to Palo Alto schools so it doesn't seem fair to me to raise their property taxes for a service they don't derive any benefit from.

And as some posters have mentioned, our local government entities have not spent our money wisely; for example, in 2006, the Palo Alto City Council enhanced the retirement benefits, which in 2009, added another $7 million in budget costs; and this figure keeps going up as the CalPERS retirement fund has not been able to meet it's return on investment targets.

And have you noticed that as the administrative/management staff has retired from the local government entities, the replacements that are hired are getting higher salaries? Quite a bit different than in the private sector, where many people who do find a job, are finding jobs pay less than pre-recession?


Posted by same ol' corporate WELFARE, a resident of ,
on Apr 11, 2011 at 2:10 pm

common sense: this isn't about business owners, where their kids go to school and corporate taxes, as you deftly pivoted to, but about property taxes and the massive corporate welfare that you and I are subsidizing for the biggest landowners.

"This trend is especially dramatic in counties that both support large industries and have had thriving residential real estate markets recently like Los Angeles and Santa Clara counties. In Los Angels County the share of residential property taxes has shifted from 39 percent of the total in 1975 to 56 percent today. In Santa Clara County, the home to Silicon Valley, the share has gone from 50 percent to almost 70 percent." Web Link

You, I and the rest of the residential owners are now paying a far larger burden than the larger commercial landowners.

From half to almost 3/4. Is that what granny voted for in 1978?

That was never the intention of prop 13.

Close the commercial loopholes in prop 13.

Leave granny alone. Changing the residential part of prop 13, right of wrong, is a non-starter.


Posted by No-More-Taxes, a resident of ,
on Apr 11, 2011 at 2:17 pm

> Who are the biggest landowners in Palo Alto? Take a look. HP?
> Stanford? What they do not pay dwarfs any residential payments.

Stanford is, in fact, a large land holder. It receives a $4.7B exemption, based on its "educational mission". This exemption was originally written into the State Constitution, but the exemption was moved into state law in the early 1970s. It's a shame that Stanford isn't required to pay taxes, but "that's the law".

Companies that lease land in the Stanford Business Park pay the taxes, based on the time that they leased the property. They also pay "unsecured" property taxes, which are not limited by Prop.13.

Stanford is very aggressive in petitioning the County Assessor in reverting the tax assessment back to zero each time a tenet moves out, since the taxes fall on the owner when not leased to a business.

> Think much of those huge corporate tracts has been reaccessed?

Any company operating in Palo Alto can be researched, in terms of property tax assessments by looking on the SCC Assessor's web site.

> Prop 13's corporate welfare status doesn't really apply to
> small businesses or residential property.

Prop.13 deals with every entity equally. The bulk of the property in SCC is owned by individuals, not corporations. Statewide, there is still significant land in the hands of non-profits, the state government, universities and the federal government--all of which pay no taxes.

> It's ALL about the big landowners being given massive tax breaks.

Wonder if this gibberish is taught in public schools, like the PAUSD and Berkeley?

The SCC Assessor puts out a fairly nice annual report that is full of facts and figures about property taxes here in SCC:

Web Link

It's a shame that this isn't required reading in the public schools.


Posted by No-More-Taxes, a resident of ,
on Apr 11, 2011 at 2:28 pm

> In Los Angels County the share of residential property taxes has
> shifted from 39 percent of the total in 1975 to 56 percent today.
> In Santa Clara County, the home to Silicon Valley, the share has
> gone from 50 percent to almost 70 percent."

Ah .. this is meaningless unless you look at the actual parcel count, and track the ownership by type. The recent census puts SCC at about 1.7M people (if memory serves). These people have to live somewhere. In the last 30 years, we've seen a lot of new housing, most of it being privately owned. This means that each owner gets a parcel number, and a tax bill. New parcel numbers, new taxes from residential sources, of course pushes up the percentage of taxes paid by residential sources. This, by the way, is a "good thing"--because home ownership is at the essence of the American dream.

Math skills, and basic logic, are sadly lacking in so many people these days.


Posted by same ol' corporate WELFARE, a resident of ,
on Apr 11, 2011 at 3:05 pm

"Math skills, and basic logic, are sadly lacking in so many people these days"

Agreed.

Such as the basics that homeowners taking over 70% of the prop tax burden is the issue, as you stated, UP from 50%.

Commercial, industrial, etc, the big landowners have dropped from 50% to 30%.

From your link: "Historical trend of assessed values in Santa Clara County
The chart compares the contribution by single family and condominium
properties versus other property, such as commercial and industrial properties, to the County's total net assessed value. Since proposition 13 passed in 1978, the contribution of secured assessed value of commercial and industrial properties relative to the total has declined 15 percent, a trend consistent with data from other counties."

In other words, corporate welfare subsidized by residential property owners at their expen$e, to the benefit of corporate property owners.

"It's a shame that this isn't required reading in the public schools."


Posted by common sense, a resident of ,
on Apr 11, 2011 at 8:18 pm

same ol' corporate WELFARE - Residential property owners are not subsidizing businesses; it's the other way around! Business property owners are subsidizng our school systems through the property taxes they pay; they don't have kids in the school system, yet through their property taxes, they are helping to fund your kids education.


Posted by No-More-Taxes, a resident of ,
on Apr 11, 2011 at 9:14 pm

> In other words, corporate welfare subsidized by residential property
> owners at their expen$e, to the benefit of corporate property
> owners.

This poster has no idea what he is talking about. If he really hates the US approach to life, the door is open. Try life in Zimbabwe, or Somalia, or Cambodia, or Tibet, or any number of countries were there is no "corporate welfare". And then report back in five years or so, and let us know how that's working out for you.

> they [corporations] don't have kids in the school system

While technically true, in fact the employees of corporations do have kids in school. Since the taxpayers (including the customers of corporations who pay prices raises to pay the taxes imposed by every level of government), ultimately the cost of education falls on the taxpayers--many of whom are the employees of corporations (or businesses). BTW.. here in California there is something called the "Allen Act", which allows parents to petition the school district where the parent works to accept his/her children as inter-district transfers. For ADA school districts, this isn't such a big deal, but for Basic Aid school districts (like the PAUSD), these transfers are rarely allowed.


Posted by same ol' corporate WELFARE, a resident of ,
on Apr 11, 2011 at 10:33 pm

And neither of you will address how Prop 13 has shifted the tax burden from commercial to residential as I've posted several times above.

Good deflections though, suggesting I should move to Cambodia. And parents petitioning to change districts. Cambodia, that's great! Hyuk! Wonderful logic in the face of facts.

Let's try again: "In Santa Clara County, the home to Silicon Valley, the (residential) share has gone from 50 percent to almost 70 percent."

Maybe this time, instead of Cambodia, just come out and call me a socialist commie fascist. That works with the tea baggers.

"shifted the tax burden from commercial to residential" = corporate welfare

Eliminate the loopholes. Corporations should pay their fair share, like homeowners do.


Posted by common sense, a resident of ,
on Apr 12, 2011 at 1:10 am

same ol' corporate WELFARE - the share of commerical vs residential property taxes is pretty irrelevant. Going back to 1978, property taxes of agriculture zoned properties were much higher than they were now.

However, as properties were rezoned from agriculture to residential, the property taxes from agriculture zoned properties dropped, and the property taxes from residential properties increased.

We can see the same effect in some of the more recent projects done in Palo Alto, which converted commerical zoned properties to residential. For example, the commerical building at East Meadow Circle was rezoned to residential, and 75 condominiums built. As a commerical property, it was worth a several million dollars, but torn down and rebuilt into 75 condominiums, it's now $70 million. So residential property values went up by $70 million, and commerical went down. Repeat that for the past 30 years, and it's a big factor in why the ratio has changed.


Posted by same ol' corporate WELFARE, a resident of ,
on Apr 12, 2011 at 10:03 am

CS: You think it's irrelevant, which explains a lot, and you give anecdotal stories without any real data.

Agriculture to housing? In Santa Clara Vally, all those orchards went to housing? None of them now have an Intel facility on it? A much higher value manufacturing site or office park?

Sorry, doesn't fly.

Apple's old corporate HQ address was on Mariani, yup, the family name for the orchards. Now a very wealthy landowning corporation. Web Link

The reason that "In Santa Clara County... the (residential) share has gone from 50 percent to almost 70 percent" happened is because of the loopholes written in for big land owning interests to keep from paying their fair share.

Fight it, call it irrelevant, tell me to take it to Cambodia, facts are facts. Prop 13 was put into place to protect Granny.

Granny's getting screwed, corporations are getting an easy ride to the bank.

And our budgets and schools, the very schools that once stood on top of the nation in funding AND performance, the schools that helped build Silicon Vally, are paying for it.

So Granny AND the kids are getting shafted by these loopholes.

As are you, I and any other property taxpayers.

You argue it like you don't own and don't pay taxes.

Or, perhaps, you own quite a bit, and want to keep it this way.

Loopholes.


Posted by common sense, a resident of ,
on Apr 12, 2011 at 11:06 am

same ol' corporate WELFARE - in 1978, Santa Clara's population was around 1.2 million; today it's around 1.8 million. So there's been a conversion of non-residential property to residential property of 250,000 housing units over the last 30+ years.

That's been a big contributing factor to the chaning ration between residential & non-residential property values.

You should study the price of property values for commerical vs residential.


Posted by same ol' corporate WELFARE, a resident of ,
on Apr 12, 2011 at 11:47 am

CS: "in 1978, Santa Clara's population was around 1.2 million; today it's around 1.8 million."

Thanks, I'll file that under "duh". Along with the fact that in 1978 there were a few (honest, maybe even more than a few!) tracts of orchards that are now business parks, plants, retail, and lots of rentals owned by large commercial landowners, etc..

It's called Silicon Valley. You may have heard of it. Been in all the papers. Might be a small part of the reason for the population growth. Just maybe.

You keep ignoring the point, so I'll ask directly to see if we can have an honest discussion, or you'll continue to deflect:

Are you denying that corporations, under prop 13, have huge loopholes not available to residential property owners?

That these loopholes have effectively transferred huge parts of the tax burden from business to individual property owners?


Posted by stephen levy, a resident of ,
on Apr 12, 2011 at 1:42 pm

stephen levy is a registered user.

My intent was to start a discussion of what I see as an inequity when long-time property owners pay far less in property taxes than new owners.

I know that this has bad impacts in terms of incentives for, say, starting a business.

I should have included long-time non-residentail property owners as well as homeowners.

This can be a revenue neutral swap with new owners paying less and longer-time owners paying more than they do now.

Or it could be crafted to raise revenue but that is a revenue raising debate not a fairness and economic incentive debate, which is what I was interested in hearing about from readers.

I don't think turning this into a fight over whether businesses in general are paying too much or too little is helpful although that subject is a legitimate national and local debate.

Much of the reason why residential owners pay a higher share of property taxes now than they did 30 years ago is about the higher turnovver rates for homes versus other properties.

The argument that the share shift is becasue orchards turned into homes has takes a true point (some orchards did turn into homes) but as other posters have pointed out many "orchards" turned into the large wave of high tech developments that have housed the dramatic economic growth in Silicon Valley since 1978.

Finally, I offer a question and a tease to posters who argue that the rates in 1978 are off limits as part of a grand agreement we made 33 years ago.

Should we then go back to the federal income tax rates of 1978--a maximum of 50% on earned income, 70% on unearned income and 39% on capital gains. If those rates can change in response to changing circumstances, why not the much smaller change in property taxation I suggest to make the system fairer?


Posted by Sean, a resident of ,
on Apr 12, 2011 at 2:01 pm

Steve,

You fail to address the issue of public sector greed. Public employees, and public causes, have sucked our blood dry. All you seem to want to do is to, somehow, suck the blood from seniors and property owners, in order to feed the public greed.

Please tell us where you want to cut public spending in Palo Alto and in California, Steve. Until you do this, you will have no credibility.


Posted by same ol' corporate WELFARE, a resident of ,
on Apr 12, 2011 at 2:11 pm

SL: "...an inequity when long-time property owners pay far less in property taxes than new owners. ...this has bad impacts in terms of incentives for, say, starting a business."

So called "champions of small businesses" need to look at the disincentive that prop 13 provides for new businesses starting up vs larger or established businesses.

Oh, that's right, I forgot, conservatives only like using "small businesses" as a talking point.

Prop 13 loopholes are corporate welfare that makes it harder for new businesses to compete. Vibrant new businesses that can be at the heart of job creation and a recovering economy.

Provide them a level playing field: end tax loopholes for businesses in prop 13.


Posted by intelligent observer, a resident of ,
on Apr 12, 2011 at 2:27 pm

Try it this way: Tax people who increase the population. The consumers' needs drive the services. Services drive cost. If you are having more children (consumers) charge accordingly.


Posted by Local Observer, a resident of ,
on Apr 12, 2011 at 8:08 pm

My apologies for this partially off-topic but I couldn't find any way to initiate a new thread, so I'll keep it short -- it does pertain to money (lots of it, perhaps 100s of billions eventually).

In this San Jose Mercury News article at 7:18PM Tuesday April 12, 2011:

Web Link

is written this great news: "In another swift blow to California's $43 billion high-speed rail plan, federal officials Tuesday stripped all funds for the mega-project this year -- casting more doubt on the bullet train line's extension into the Bay Area and Southern California"


Posted by Batak, a resident of ,
on Apr 12, 2011 at 11:47 pm

Stephen,

You're dead right--it is unfair that long-time property owners are subsidized by newer owners. This amounts to a transfer of wealth from the young to the old and is just one more way in which the boomers are being carried by younger generations. (See for example the new Republican budget, which has "grandfathered" the boomers so that they will enjoy massively subsidized healthcare while their children and grandchildren go without.) Prop 13 is a tax on younger homeowners.

Prop 13 is just stupid--the people who thought it up were angry and not thinking clearly. It is possible to limit property taxes without imposing a special tax on younger homeowners--one could put a lid on overall growth of tax revenues without giving a windfall to those who have owned for a longer period.


Posted by Walter_E_Wallis, a resident of ,
on Apr 13, 2011 at 5:44 am

Walter_E_Wallis is a registered user.

So why is a 2% annual growth rate not sufficient?


Posted by Peter Carpenter, a resident of ,
on Apr 13, 2011 at 6:06 am

The aggregate 2% should certainly be sufficient but the way it is apportioned among different tax payers remains manifestly unfair.
Why should I pay less than 10% of the property taxes that my neighbors pay when we are all receiving the same public services.


Posted by same ol' corporate WELFARE, a resident of ,
on Apr 13, 2011 at 10:50 am

"Prop 13 is just stupid--the people who thought it up were angry and not thinking clearly."

No. The way prop 13 was sold to granny in a very effective campaign, and the way we bought it hook line and sinker, was "less than smart".

Stupid? No, it was insanely BRILLIANT for large landowners, with all the loopholes that have the effect of shifting the tax burden from business to residential tax payers.

As each decade goes by, the shift continues.

End the corporate welfare. Close the loopholes.


Posted by Darwin, a resident of ,
on Apr 13, 2011 at 1:24 pm

I'm in my early 30s and Proposition 13 makes it very difficult to participate in home ownership, and I can't help but wonder what life would be like if property taxes were shared equally across the board.

While I do feel the biggest problem with the prop 13 situation is due to the fact that business properties can stay in trusts in perpetuity, it also does NOT SEEM FAIR AT ALL, that private citizens who really benefit from Prop 13 can vote on various measures and bond initiatives that add extra hardship on those who are paying a bundle property tax. Especially wealthy seniors who have no problem paying their property taxes, and pay only drops in the bucket for measures that are passed.

Something has got to give!


Posted by 94025, a resident of ,
on Apr 14, 2011 at 2:49 pm

Would you all quit assuming that just because "someone" (me) bought "property" (a condo) 25 years ago, and now as a single and retired (laid off) disabled person, I am considered "wealthy"? What in the world makes you think that just because a person owns "property," they are therefore "wealthy"? I'm so sick of that line. Right now my only income is Social Security and I manage to live on that plus what I was able to save while working until I'm old enough to withdraw from an IRA. I live very carefully, so please stop assuming every property owner is wealthy and should therefore pay higher property taxes. Remember that older people may live alone and can be disabled. Just because they own what they live in does not make them wealthy! That's a bunch of nonsense!


Posted by stephen levy, a resident of ,
on Apr 14, 2011 at 3:42 pm

stephen levy is a registered user.

I don't think all long time homeowners are wealthy. That is not the point I was trying to make.

But as Darwin poitned out not all new homewowers are wealthy either and I am arguing for more equity among people living in similarly valued homes and owning similarly valued commerical properties.

It is probably true that if you have owned your home or commerical property for a long time that you have experienced a large increase in value.

If there were some way to incorporate income into the property tax assessment formula I oculd see that being a possbility.

But Peter Carpenter's argument that people living in similar homes shouldn't find one payong five or ten times the property rtax of another simply becasuse they bought more recently (something we want to encourage) is not fair in my opinion.

I would pay more tax under the system I favor.


Posted by Walter_E_Wallis, a resident of ,
on Apr 14, 2011 at 4:08 pm

Walter_E_Wallis is a registered user.

Peter, with a 2% increase, we would all be equally taxed. You are buying in to a hell of a lot more than I bought in to. You had your choice. I had mine. Live with it.


Posted by Peter Carpenter, a resident of ,
on Apr 14, 2011 at 4:19 pm

Peter Carpenter is a registered user.

Walter - I don't understand your logic. Under Prop 13 everyone starts from a different cost base depending on when they bought. I paid less for my house 39 years ago than my new neighbors are paying in property taxes. And I pay a hell of a lot less in property taxes than my neighbors even after the 2% increase per year since Prop 13.


Posted by Prop13 welfare pigs, a resident of ,
on May 14, 2011 at 1:36 am


No my dear little babies... we need to take care of these people.. they are so broke they need their Medicare and their hundred $50,000 hit replacements and their scooters and everything else because they just have earned it!! No what we need to do is get rid of all these TEABAGGER pigs and make them pay their own true responsibilities instead of being welfare queens


Posted by Perspective, a resident of ,
on May 14, 2011 at 4:37 am

Bottom line, think of the results.

You buy a house at 30 years old, and 30 years later you are 60...and the house is worth, if we take averages over the last 40 years, 10 times what it was when you bought it.

So, you folks want to tax 70 year olds on their properties at the same rate at 30 year olds just coming in, who are making 10 times as much?

We bought at 30 years old a property that, now 20 years later, even in this economy, would sell for at least 3 times what we paid. You want to raise our yearly tax from $5,000 to $15,000?

Results: Older folks would have to sell and move, probably out of State or to a much smaller and less expensive area...so, think about it, not only are you forcing out those 50 and older because we hit our peak earning power and are on the downhill side, you will lower the value of all homes because they wouldn't sell for as much from 1) more supply 2) people figuring out what they would be paying in 20-30 years and factoring in the housing costs in 20-30 years...and being willing to pay much less up front for a house.

Net result, lower housing prices all around, less property taxes coming in overall. Along the lines of increasing taxes on employers driving employers out of State, driving out employees, and lowering the amount of actual tax money coming into the State coffers.

Think long term.

Housing prices really took off once folks could count on a fixed tax rate that was predictable, and could put that figure into their long-term payment ability.

Prop13 welfare pigs? Your post is full of hate and envy. I recommend you work on that if you want to be happier.

Everyone's home values would plummet..even more than they are right now.

Of course we older folks pay less than our young neighbors, AND we older folks have already put our kids through schools etc at the current rate at the time.

Like Walter said, it is all about choices. We made ours, leave us alone and make yours.

Think about it.



Think of what would happen.


Posted by Perspective, a resident of ,
on May 14, 2011 at 4:47 am

Batak, your swipe at the current Repub plan is silly: do you want to simply say no to people who have worked their whole lives for SS and Medicare, and break their social contract?

By the way,the baby boomer generation is the FIRST generation to actually put into the system their whole lives.

SS and Medicare were Ponzi schemes, poorly thought out, poorly executed. We have known for 30 years that they would be in the red by the time boomers hit the rolls, but nobody had the cojones to touch the '3rd rail"..it is time to fix it, but not on the backs of the only generation to pay into it their whole lives. We paid for our parents, we paid for the schools, we paid for the immigrants who brought parents in who had paid nothing, we paid for people who paid nothing, and a lot of people were duped into thinking we were paying for our OWN senior years.

It was all a big lie. I remember many times when the impending doom of our Seniors was boo'd off the table by Democrats who wanted to politicize the issue and not deal with it, turn it into a "big bad Republicans want Seniors to eat dog food and die in the streets" rhetoric.. the last time being Bush's 2 runs for office. No, THEN there was no problem, NOW, suddenly there is?

Think long term folks. The ponzi has to stop, AND we have to honor the commitment to people who were duped into believing the Ponzi, while setting up the younger ones with a system that actually works, while not hemorrhaging them for our own needs.

The same is true for Prop 13. If you want to change it, it needs to be done in a way that does not screw the people who bought homes under one contract, and now the contract changes. No matter how you change it, current homeowners will lose yet more property value, and put yet more of us under water...but, go ahead, be my guest, hurt more folks.


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