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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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Dare to be Fair Vote No on Prop 15

Uploaded: Oct 10, 2020
I was brought up to believe I should help pay for the public services I want. So I support school bonds and parcel taxes as a long-term investment and in gratitude (pay it forward) for those who funded great schools for me and my children and grandchildren and will vote yes on my local school parcel tax.

But I am voting no on Prop 15 where folks like me were told they could opt out while only others were asked to pay.

Before going over my reasons, I want to share some tax data. The average increase in assessed value in my county Santa Clara was 7.6% over the past 7 years far outpacing consumer price increases. While we were a relatively fast growing county in terms of AV, LA averaged 6.0% gains, Riverside 6.1% and Orange, San Diego and San Bernardino 5.8%. Whatever fiscal stresses are felt are not the result of slow propert6y tax growth.

The proponents make a big deal claiming that the share of property taxes paid by residential property has risen while the share paid by non residential has fallen. I am not sure what relevance this has but it has not been true since 2005. The Santa Clara Assessor’s report for 2020-2021 shows that the non-residential share has risen since 2005.

The proponents make a big deal of the fact that some commercial properties have not been reassessed in decades. That is true but it is similarly true for some homes (including mine and many of my friends who are supporting Prop 15 and many directors of my local and the state League of Women Voters (I chair the LWVPA housing committee).

In addition I got to sell my home buy a new home and keep my 1985 adjusted AV.

I understand why the initiative sponsors (not resident supporters) wanted this. They knew even though it was not fair that if long-time homeowners like me were asked to chip in, the proposition would lose.

But it flunks the fairness test of treating equals equally. Note that anyone who has owned a home for a long period has enough equity to make a modest additional contribution to services they want. We now have home equity loans and reverse mortgages unlike in 1978.

The second reason to vote no is that many residents much poorer than long-time homeowners will end up paying part of this tax. Large commercial properties include shopping centers and offices where tenants or customers will end up paying more. Many have leases with property tax increases passed on. Not all or even many commercial properties covered by prop 15 are large companies or owned only by wealthy individuals. There will be unintended consequences. Think of a large shopping center in poor communities. And there could be job losses.

The third reason has to do with the fiscal pressures schools and cities are facing. They are the result of surging health and retirement costs, not low property tax growth. First, as a result there is no nexus as commercial property owners are not the cause of these rising costs.

Second, it is very unlikely that much if any of the revenues from Prop 15 will end up in increased services. The most likely result is that the union sponsors will push for pay raises (maybe deservedly and no benefit cuts).

If you want to pay our teachers and staff more, offer me a chance to chip in but don’t opt out and ask others to pay.

Finally our assessor and most others say this will be costly and a nightmare to implement.
We need your support now more than ever. Can we count on you?

Comments

 +   34 people like this
Posted by disagree, a resident of Nixon School,
on Oct 10, 2020 at 4:13 pm

disagree is a registered user.

Disagree. We need split rolls.

In fifty years, Disney, PG&E, large landlords will still be paying next to nothing in property taxes. How will new businesses ever compete?


 +   4 people like this
Posted by Jennifer, a resident of another community,
on Oct 10, 2020 at 5:25 pm

Jennifer is a registered user.

NO on 15!


 +   8 people like this
Posted by Jeff Sanders, a resident of another community,
on Oct 10, 2020 at 6:48 pm

Jeff Sanders is a registered user.


"I understand why the initiative sponsors (not resident supporters) wanted this. They knew even though it was not fair that if long-time homeowners like me were asked to chip in, the proposition would lose.

But it flunks the fairness test of treating equals equally."

Even though John Paul Stevens' dissent in the 8-1 had no joiners in Nordlinger v. Hahn, people should read it for considering how they, not the courts, want to consider how property tax ought to be administered in this state.

I believe Prop 13's time of purchase assessment provisions should be replaced with ones that values property consistently on its market value. We could keep 13's assessment provisions for determining how much government can take. The much higher assessed valuation then would then require that tax rates be reduced corresponding to that so that the change would be revenue neutral. I know those pushing Prop 15 are about getting more money for themselves and their interest groups, not true fairness in the tax system. I'd like to see voters have a choice to support the latter instead.


 +   7 people like this
Posted by stephen levy, a resident of University South,
on Oct 10, 2020 at 8:52 pm

stephen levy is a registered user.

Jeff,

I like your idea. We could lower rates and do away with the unfair situation where similar properties have wildly different tax bills.

It would also be a big help to first time homeowners and small businesses.


 +   16 people like this
Posted by Steven Goldstein, a resident of Old Mountain View,
on Oct 10, 2020 at 10:15 pm

Steven Goldstein is a registered user.

Steve,

That solution already exists, if home owners would get their property reassessed by the counties, which is in most cases FREE and they are entitled to it, they would see greatly reduced taxes. WHY? because the taxes are assessed at the price of purchase initially.

BUT!

The reassessed value would likely make the mortgage insecure because even if the reassessment only discounts the taxes 5%, that means the principal of the mortgage value drops 5%. So, a Mortgage of say $1,000,000 initial value would become worth only $950,000 to the bank. Thus, the bank would demand either a new mortgage to secure the loan, with a higher Mortgage Interest Rate, or demand a $50,000 payment in the next payment to balance the security.

This situation has always existed ever since there were mortgages, but only when 2007-9 and today occurred that they wound up being based on possibly fictional prices that people allowed themselves to over spend. Resulting in the term called UNDERWATER

If homeowners did this aggressively, their tax burden would likely drop significantly regardi the funding of the state or counties. BUT that would further deepen the lack of funds the state or counties collect. Most likely killing the counties budgets.

No the only answer to avoid this disaster is to pass Prop 15.


 +   8 people like this
Posted by Jennifer, a resident of another community,
on Oct 11, 2020 at 6:24 am

Jennifer is a registered user.

Prop 15 supporters have admitted that their next step is to repeal Prop 13. Everyone I've talked to is voting NO. Any homeowner that supports Prop 15... do you really understand what you're supporting? Passing Prop 15 would be a disaster for homeowners.


 +   7 people like this
Posted by stephen levy, a resident of University South,
on Oct 11, 2020 at 10:27 am

stephen levy is a registered user.

I disagree with both Jennifer and Steven G0ldstein.

Re Jennifer, The Prop 15 initiative sponsors purposely avoided including homeowners and will not go after them as you assert, I think this is a scare tactic of the NO campaign and is not a reason I am voting NO.

Steven Goldstein did not respond to the suggestion I made and voting yes will undermine the chance for true and fair reform.

My suggestion (I am not the first to propose this) is that we treat all properties equally and by using market value as AV, we can lower property tax rates substantially and end with more fairness and even more money as a fair system will no longer ask new homeowners and businesses to pay more than existing similar properties.

It will eliminate the situation where side by side similar properties can have property tax bills 500% or more different and help new (often younger) buyers and business owners.

Prop 15 continues the existing inequities and creates new ones as well.


 +   16 people like this
Posted by Steven Goldstein, a resident of Old Mountain View,
on Oct 11, 2020 at 10:45 am

Steven Goldstein is a registered user.

Stephen,

Voting for Prop 15 cannot "interfere" with any continuing improvements of the reform of property taxes. Why did you say it would?

This public policy system is an ongoing process, and nothing done regarding voting for Prop 15 can stop it.

Better solutions can always be brought to the table and the voters can always revise their decisions, just like Prop 15 is a revision on Prop 13.

Isn't this correct?


 +   3 people like this
Posted by Jennifer, a resident of another community,
on Oct 11, 2020 at 11:53 am

Jennifer is a registered user.

Stephen,

The Yes on Prop 15 campaign is telling voters that they won't come after homeowners. Statements over the years show that's not true. Supporters of Prop 15 have admitted the next step is to repeal Prop 13 and increase residential property taxes -- meaning skyrocketing housing costs for millions of homeowners. Prop 15 split roll will eventually cancel Prop 13.

Prop 15 is being advertised as solely a commercial property tax. But there is a trojan horse contained in Prop 15 that will unravel Prop 13 tax protections even for residential properties.

I hope you're right, and everything I've read isn't true.


 +   7 people like this
Posted by Allen Akin, a resident of Professorville,
on Oct 11, 2020 at 12:08 pm

Allen Akin is a registered user.

I haven't made up my mind about this one, but your post did raise some questions I've been wondering about.

"The proponents make a big deal claiming that the share of property taxes paid by residential property has risen while the share paid by non residential has fallen. I am not sure what relevance this has but it has not been true since 2005. The Santa Clara Assessor's report for 2020-2021 shows that the non-residential share has risen since 2005."

It would be relevant if the policy of shifting tax burden away from corporations and onto residents has negative implications for society as a whole. As for whether the burden has actually shifted: We're not making this decision for Santa Clara County alone; we're making it for the entire state. So has the tax burden shifted on average for the state?

"Many have leases with property tax increases passed on."

Are leases deductible as ordinary business expenses? If so, in those cases this prop may be a wash for the tenants and for the State. Property owners who are unable to pass their property taxes along (for instance, large corporations that operate in the properties they own) would be exposed to tax increases.


 +   14 people like this
Posted by Steven Goldstein, a resident of Old Mountain View,
on Oct 11, 2020 at 3:46 pm

Steven Goldstein is a registered user.

Alen,

in a recent report from CalMatters of the proportion of commercial property taxes versus residential property taxes collected can be found here (Web Link) The graph indicates that 70% of property taxes are residential. CalMatters is a non-partisan non profit collection of news journalists.

In fact $41.07 Billion were collected by residential taxes (primary residences and vacation/rentals) where only $11.7 Billion came from commercial/industrial in the report updated in 2020. Nearly 4 times the taxes were paid by residential tax payers.

Do you really think this is proportional when commercial and industrial land is equal and in some cases more used in the communities than residential?

As far as leases are concerned, they are already over inflated and they are going to go down because of the COVID/FIRE/AB5 economic impacts. NYC and SF are seeing record drops in lease prices because of the impact of these 3 factors, in Mountain View 1 and 2 bedroom apartment rents have dropped 35% in the last year according to Zumper found here (Web Link). AB5 is relocating many commercial office space out of state for now, until the country treats contractors equally under the IRS rules. And the closure of businesses is creating a significant surplus in commercial units.

What this will do is take a bite out of the profits of the property owners, and many may wind up out of business.

I hope this makes it a little more clear.


 +   7 people like this
Posted by stephen levy, a resident of University South,
on Oct 11, 2020 at 4:24 pm

stephen levy is a registered user.

Allen,

Good questions.

Unless I am misunderstanding you, an increase in a deductible expense is not a wash.

Say you spend $100 on rent or property taxes or payroll. You are out $100. When you deduct it, what you save is not $100 but the tax you would pay on the extra income. Those extra costs will affect business decisions and also much of the time not be borne by the entity whose property taxes are levied but on who and how it is passed on, often to people less affluent than many homeowners.

I do not think you meant it imply that a tax increase is a wash and has no economic consequences.

I think the point about the share of taxes paid is a distraction from the fact that Prop 15 does not treat all long-time owners equally by allowing long-time homeowners like me to opt out. The fact that some homeowners buy and sell more frequently than many commercial owners has nothing to do with how the homeowners who have stayed put should be treated.

Commercial properties are not all or mostly held by corporations or held for a long time. They are owned by shareholders or investors who could be public employee pension funds, union pension funds, investors who are not all rich.

Take my example of a large shopping center in a poor community. How can raising their property taxes not flow thru to the community businesses and residents?

I think reform that lowers rates and makes it easier for new homeowners and businesses would be a step forward but not Prop 15.








 +   14 people like this
Posted by Steven Goldstein, a resident of Old Mountain View,
on Oct 11, 2020 at 5:27 pm

Steven Goldstein is a registered user.

In response to Stephen you said:

“I think the point about the share of taxes paid is a distraction from the fact that Prop 15 does not treat all long-time owners equally by allowing long-time homeowners like me to opt out. The fact that some homeowners buy and sell more frequently than many commercial owners has nothing to do with how the homeowners who have stayed put should be treated."

Stephen you and I both know that the Real Estate market has been abused especially where “MARKET' values are concerned. I beg you to watch the videos from Louis Rossman called “NYC real estate is crashing, don't fall for bait & switch tactics. Let the crash happen." Found here (Web Link) and the one titled “90% of restaurants not making rent in NYC - leases can't be renegotiated. Businesses are dying." Found here (Web Link). The reality is that the “Market" values posted and used in the state of California are RIGGED and protected as free speech under the First Amendment. You said:

“Commercial properties are not all or mostly held by corporations or held for a long time. They are owned by shareholders or investors who could be public employee pension funds, union pension funds, investors who are not all rich."

Please? You used the phrase “could be"? That doesn't in fact establish that the majority of these “investors" are not larger corporations taking advantage of the tax codes? You just threw this out as a means of trying to misdirect the problem. You said:

“Take my example of a large shopping center in a poor community. How can raising their property taxes not flow thru to the community businesses and residents?"

Maybe, they can get small business subsidies or minority owned business subsidies, they exist and can be made more stronger and available once property tax ‘PARITY" is restored You said:

“I think reform that lowers rates and makes it easier for new homeowners and businesses would be a step forward but not Prop 15."

Lowering taxes has done nothing but increased public debt, made the current situation with COVID so much worse because we had no “rainy day" funds either Federal, State, County or City. The claim that by lowering taxes you increase public revenues is proven to not really happen. You have heard of the Laffer curve, it states that there is an optimum tax rate. With the nonstop cutting of taxes we are no way below the optimum rate we have dropped renvenues significantly if you read the article titled “ What Is the Revenue-Maximizing Tax Rate? “ (Web Link.)

The research indicated that in the year 2000 when the actual rate was 24% a revenue of $318B occurred but when the rate in 1986 (after Ronald Reagan) of 33.1% we would have received $438B a lose of revenue of $120B

Cutting taxes simply for the sake of it doesn't work. Especially when we are now in the worst economic crisis equaling the Great Depression when it comes to lost jobs.


 +   7 people like this
Posted by disagree, a resident of Nixon School,
on Oct 11, 2020 at 5:29 pm

disagree is a registered user.

Jenifer: "Statements over the years show that's not true."

You've fibbed about that twice, even OP called you out on it.

Go ahead, give us three quotes from Prop 15 authors that prove your point, with links. We'll wait.

Thank you.


 +   2 people like this
Posted by Jennifer, a resident of another community,
on Oct 11, 2020 at 9:45 pm

Jennifer is a registered user.

And businesses? Taxes are a cost of businesses. If the increased tax cannot be covered by current revenues, the choices are:

1. Pass the cost on to customers
2. Reduce the number of employees or compensation
3. Leave

Enough businesses have left California already.

Money for schools? Weren't promised the same with the California lottery. Did it ever happen?


 +   14 people like this
Posted by Steven Goldstein, a resident of Old Mountain View,
on Oct 11, 2020 at 11:34 pm

Steven Goldstein is a registered user.

In response to Jennifer you said:

“And businesses? Taxes are a cost of businesses. If the increased tax cannot be covered by current revenues, the choices are:

1. Pass the cost on to customers

2. Reduce the number of employees or compensation

3. Leave"

There are always more options, why not pass subsidies for “small businesses". The reality is that this TAX REFORM is LONG overdue. These businesses should have been prepared for it ever since ANY talk regarding TAX REFORM is alive. As far as you said:

“Enough businesses have left California already."

You're not correctly identifying the real problems. The first of course is COVID which has forced us to shelter in place and is likely to require it to continue perhaps at minimum 6 more months.

But the REAL business killer is that labor law REFORM from the Microsoft Federal case in 1996, the Dynamex State case in 2018, and the final codification of what was always the correct definition of contractors versus employees in AB5. Too many businesses ran themselves literally illegally for decades and now these business owners are saying, “if I can't cheat my workers, I will leave".

As far as your question:

“Money for schools? Weren't promised the same with the California lottery. Did it ever happen?"

The answer is yes, if you look at the California Department of Education website found here (Web Link.). And the California Lottery website found here (Web Link) BUT its revenues are significantly limited given it is dependent on those buying tickets. Remember also that the lottery games like Mega Millions and Powerball are NOT state lottery games. Those game advertise large sums of money, but the intrastate lottery really doesn't earn much income at all. They were NEVER a primary source of educational funds, if you thought this you were not well informed. It is also considered the most regressive tax to be used because it depends on the poor to be in effect conned into playing a game where its odds are even worse than going to a casino.


 +   9 people like this
Posted by BB, a resident of Atherton: Lindenwood,
on Oct 11, 2020 at 11:39 pm

BB is a registered user.

While many of the merits to Prop 15 are sound, the unintended consequences for small businesses, those that use their services or eat in their restaurants, will ALL pay one way or another. Tenants will have to pay more in rent to cover the increase, which will trickle down to the customers - that is if they can even stay open! Yes, large corporations will pay their share, but so will we.

You want more money for our schools and cities? Put school bonds on the ballot or increase sales taxes - don't pass the buck off to another person thinking you won't be affected, because you will.

Vote No on 15!


 +   12 people like this
Posted by Steven Goldstein, a resident of Old Mountain View,
on Oct 12, 2020 at 12:41 am

Steven Goldstein is a registered user.

In response to BB you said:

“You want more money for our schools and cities? Put school bonds on the ballot or increase sales taxes - don't pass the buck off to another person thinking you won't be affected, because you will."

Bonds are not revenue but increased public debt. Which right now would be not possible, the COVID economic great depression has burned up all reserves, and no economic balance ins on the horizon.

Sales taxes are regressive as well, because the wealthy simply buy what they can in locations with the lowest sales taxes. Or NONE at all. As far as the state revenues it only comprises very small part of the total revenues CalMatters reported here (Web Link) that in 2015 $419B were collected from all sources, the State taxes collected were only 40% of that and the local taxes were another 40%, the rest was federal tax distribution.

This report did say this regarding taxation:

“Of course, there's some variation:

California has the highest statewide sales tax rate, at 7.25 percent, and is ranked ninth by the Tax Foundation in combined state and local sales tax rates.

If you want to depend on sales taxes, it would likely require a sales tax increase to as much as 11-12% for the state, and the counties would go even higher. The reality is sales taxes are not a means to depend on for educational and other service expenses.

Those taxes would result in the same problems described by the opponents of prop 15. In fact if these sales taxes hit, you would see the people leave California so fast, these businesses would close even faster.

The 2015 breakdown of property taxes were $20.9B for Primary Residence Property, $20.7B for Rental and Vacation Property, $11.7 for Commercial/Industrial, and $5.5B for other. That means the share of property taxes are 36% for Primary Residences, 35% of Rental or Vacation Residences, 20% is Commercial /Industrial, and 9% other


WE can easily estimate that as much as 20% of usable land is Primary Residence, 20% is Rental or Vacation land, 35% of usable land is Commercial/Industrial ,and 10% is used by Governmental or Public use and the rest is unusable. Now to normalize this because the total usable land use comes to 85% then these parity rates should be 23.5% for Primary Residences, 23.5% for Rental or Vacation Residences, 40.1% for Commercial/Industrial, and 11% for other land use

If the taxes were in parity, the property tax revenue should drop from 36% to 23.50%s for Primary Residence, from 35% to 23.5% for Rentals and Vacation, from 20 to 40.1% for Commercial/Industrial and 9 to 11% for other.

Since Prop 15 will start this off, it looks like Primary Residences and Rental or Vacation Residences will see a significant drop in taxes. That would likely offset any cost increases that the commercial sector wants to pass through to the customers.

Simply put it is time to pass Prop 15


 +   6 people like this
Posted by ML Kyle, a resident of Monta Loma,
on Oct 12, 2020 at 4:02 pm

ML Kyle is a registered user.

Vote YES on prop 15 and fund our schools and local communities. Anyone who says this won't go towards our schools/local communities is either clueless or arguing in bad faith.


 +   2 people like this
Posted by Not our schools, a resident of Downtown North,
on Oct 12, 2020 at 5:14 pm

Not our schools is a registered user.

@ML Kyle. Very little of Prop 15 funds will go to our school districts (Palo Alto, Mountain View, etc) because they are in wealthy areas. "Basic-aid school districts are property-wealthy districts that don't receive money from the Local Control Funding Formula because they raise more revenue through property taxes than they would get in state funding " often thousands of dollars per student more. Currently, they comprise about 15% of school districts and are concentrated in the Bay Area and coastal Southern California. They would receive only $100 more per student under Prop. 15, less than a 0.5% increase for many of those districts. Additional money they would have gotten will be shared with less wealthy districts through the funding formula." Web Link

This proposition will imo hurt our cities more than help them. I voted for it because it helps to reduce inequality. But you should understand the proposition in that light.


 +  Like this comment
Posted by stephen levy, a resident of University South,
on Oct 12, 2020 at 5:30 pm

stephen levy is a registered user.

@ML Kyle

This is what I said about funding

"Second, it is very unlikely that much if any of the revenues from Prop 15 will end up in increased services. The most likely result is that the union sponsors will push for pay raises (maybe deservedly and no benefit cuts)."

There is a difference between where the money goes and whether it goes for services, which is what the proponents imply.

I am neither clueless or acting in bad faith.

And no one has answered why it is fair to let long-time homeowners like me opt out of paying if we want more services.


 +   10 people like this
Posted by PH, a resident of Woodside: Emerald Hills,
on Oct 13, 2020 at 2:38 pm

PH is a registered user.

Yes on 15. Much of Levy's argument seems irrelevant to the issue of split rolls for commercial vs residential properties.

Levy also failed to disclose whether or not he is a commercial property owner whose holdings would be impacted by the assessment. I seem to recall reading in his earlier posts that he and/or family held commercial properties in Southern California.

There is no opt-in or out for this measure. Levy may be saying that as a senior and residential property owner he is sometimes allowed to opt-out of certain new taxes on his residential property, but that is irrelevant. And for the record, I am a senior residential property owner in San Mateo County who has never opted out of any eligible assessment on my property. If Levy ever did opt out, no one forced him to do it.


Commercial properties are different from residential properties for several reasons.

One, if they are owned by a strong corporation, then it often holds the property essentially in perpetuity without transferring it. Therefore prop values rarely get re-assessed. Examples of this are the vast United Airlines land holdings in San Mateo County. Another example might be the Stanford commercial land holdings in Palo Alto and Menlo Park that are not academic properties, or the Hillsdale Mall holdings of the Bohannon Corporation, or the Oracle buildings, the new Facebook, and Apple headquarters, etc. The list of land help by Titan corporations is endless.

Second, many commercial properties are held by shell companies by design, usually partnerships, specifically to exploit a tax loophole. Buyers of commercial property have found a way to avoid reassessment. Instead of buying the property, they buy the legal entity that owns the property. Under rules set by the Board of Equalization, a change in ownership of such an entity doesn't trigger a new assessment of its properties unless more than 50% of the entity is acquired by a single person or business.

So if you, your spouse, and cousin or some similar gimmick buy the entity owning the commercial property with 49%, 49%, and 2% shares, the property doesn't get re-assessed. I presume you could also form three shell entities of which you own 100%, and have each of these three shell entities buy a percentage of the target property.

This is America. Tax avoidance is an art form. It doesn't take much imagination to exploit the BOE loophole. That is why developers create shell companies to own their development projects, and that is how buyers of commercial properties avoid re-assessments.

Hence commercial properties are rarely re-assessed relative to residential properties. The true metric is not whether or not the current percentage of property taxes paid is by commercial vs residential, but what should the percentage be if both were assessed at market value vs what they are now.

Finally, the claim that increased taxes will be pushed through to small businesses that rent and onto consumers is not consistent with economic theory or practice, particularly in California.

Rents are determined by supply and demand, not costs. Profits are determined by costs. A project whose costs exceeds available rents is simply not economically viable.

It's completely consistent with economic theory that 1.) rents in California are extremely high, and, for long held properties, much higher than actual costs. Hence windfall profits.

If one assumes rational landlords collecting rents in equilibrium rent markets then rents are always as high as they can be. If marginal costs increase there is no mechanism to force higher rents on a market that cannot pay them. Hence, the higher taxes will come out of profits, which in many cases are already windfall profits.

I know this to be true because I rent a residential property in San Mateo County and I do not have the option of simply raising my rent whenever I need to make say, a significant capital improvement to my property which has happened several times. Rents I can collect are determined by market demand regardless of my actual costs.

Finally, services likely will increase as a result of the new taxes. Population is increasing, and school population is increasing. If schools add no teachers and cities add no staff even while populations increase then service levels must be decreasing. If, on the other hand schools and cities are able to maintain staffing ratios given increased populations then services have increased.

If I educate 1000 new students at the current rate of pupils per teacher then services have increased.

If I protect 1000 new residents at current rates of police per resident then service have increased.

Prop 15 would allow cities and schools to keep service levels while populations increase.


 +   10 people like this
Posted by PH, a resident of Woodside: Emerald Hills,
on Oct 13, 2020 at 6:21 pm

PH is a registered user.

Yes on 15.

This is a particularly thoughtful editorial in the LA Times: Web Link

And just to debunk much of the pseudo economics that appears on this blog.

"A group of economists supporting the split-roll measure contends that supply and demand are the primary drivers of prices, and that a higher property tax is more likely to reduce profits than lead to price increases."

Web Link

Two arguments you may not know about:

1.) Prop 13 distorts costs lowering them for firms that have owned property for longer than others. This gives some firms an unfair advantage over others.

2.) There is a loophole that allows commercial property ownership to be transferred through a so-called "structure purchase" without triggering a re-assessment of the market value of the commercial property. Therefore commercial property re-assessments happen less frequently than do residential property re-assessments.


 +   2 people like this
Posted by Concerned, a resident of Crescent Park,
on Oct 14, 2020 at 11:24 am

Concerned is a registered user.

Private businesses are having a difficult time at the moment.

It seems very unwise to raise taxes on businesses at this moment. People claim that NNN renters won't see any of the tax N increase (which has never been my experience and would question why tax leases are structured to pass through property tax increases if they never are), or they can apply for aid ( if that is the solution than why isn't the aid included in the proposition?).

It also doesn't pass the logic test. If there is going to be no effect other than on "strong corporations" as proponents of higher taxes seem to claim, then why not double or triple their taxes?

The state is also receiving higher tax receipts than projected in part because of corporations paying high wages and IPO's.

Now is not the time for 15.


 +   12 people like this
Posted by Steven Goldstein, a resident of Old Mountain View,
on Oct 14, 2020 at 12:08 pm

Steven Goldstein is a registered user.

In response to Concerned you wrote:

“Private businesses are having a difficult time at the moment."

Yes they are, BUT they are NOT forced to be in business. It is THEIR choice, and they bear responsibility for not being prepared or having insurance to protect them from the current mess. There were many Business Continuity Insurance policies out there, but they CHOSE not to purchase ti. You said:

“It seems very unwise to raise taxes on businesses at this moment. People claim that NNN renters won't see any of the tax N increase (which has never been my experience and would question why tax leases are structured to pass through property tax increases if they never are), or they can apply for aid ( if that is the solution than why isn't the aid included in the proposition?)."

The “AID" has already existed, and many businesses already get some. They are managed by the Small Business Administration. In reality those businesses always new that the day would come that this might happen. And they then say, “not fair"? You said:

“It also doesn't pass the logic test. If there is going to be no effect other than on "strong corporations" as proponents of higher taxes seem to claim, then why not double or triple their taxes?"

You and I know that those businesses hire tax experts to figure out all methods to use tax credits and tax deductions. Just look at Donald Trump a great example. In any event the property taxes are “targeted" for specific funding allocations and not the “general" funds. You said:

“The state is also receiving higher tax receipts than projected in part because of corporations paying high wages and IPO's."

Please provide some unbiased proof of this? The fact is the “high wage" workers also use the tax system experts to cut income taxes, lobby for lower income taxes, pay low capital gains taxes, lobby to reduce capital gains taxes more. IPO taxes are “tax deferred" until the stocks are sold, but if the proceeds of a sale are ROLLED OVER into another stock, that money is STILL tax deferred. You know this. In effect they are NEVER collected, especially if bought back by the Corporation, which will retain them unless forced to sell them for cash flow problems. Which will be a tax “deduction".


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Posted by stephen levy, a resident of University South,
on Oct 14, 2020 at 12:29 pm

stephen levy is a registered user.

@PH

In 2016 I inherited a 1/8th interest in a retail property in Los Angeles. It is instructive with regard to your accusations and claims.

In 2016 the property was appraised at $2 million and since it is a retail property in a purple county I doubt today I would be affected by Prop 15. But in good times it id in a growth area and could fall under Prop 15.

Like most tenant occupied properties rent is not adjusted frequently so your claim that the tax increase comes out of profits of the owners is false and most of your case disappears. Think of all the 5 and 10 year leases we read about in PA.

In our case the tenant has a 5 year lease with an option for 5 more. And property taxes he owes on top of the rent. So the tenant bears the burden of Prop 15.

I have known the tenant and the other owners for a long time. We are just folks not some large corporation.

I have owned my share of this property for 4 years but the AV on my home is the 1985 basis (35 years) and it is worth 10 times my retail property value.

Yet many proponents are in my situation and allowed not to have their property included. Equals should be treated equally.

My assessor does not support Prop 15 as does the board of the California Assessor's Association.

Santa Clara County Assessor Larry Stone says November's referendum on California's Proposition 15, the so-called “split-roll" initiative, makes him uncomfortable.

First, it addresses huge inequities in the state's property tax laws created by the state's most famous tax reform measure " Prop 13 passed by voters in 1978 " that the longtime assessor would like to resolve, too. But Stone said that implementing Prop 15's requirements to assess business property differently from residential property would be “impossible" to implement.


“People ask me, ‘Why do you oppose Prop 15 when you openly acknowledged that that there are inequities that allow commercial properties not to pay their fair share?'" Stone told the Business Journal. “And I always say, ‘Because my job is to let people know when something would create chaos.'"

The board of the California Assessor's Association voted 8-4 not to support Prop 15, which would increase business property taxes


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Posted by stephen levy, a resident of University South,
on Oct 14, 2020 at 12:38 pm

stephen levy is a registered user.

Prop 15 will also create a disincentive for new business formation by raising costs.

What real reform is means broadening the tax base by asking all owners to see a move toward equal AV on similar properties in exchange for lowering rates.

These claims that everyone is gaming the system are just assertions without any supporting evidence from assessors.

It is true that long-time owners do not get reassessed but that is true for homeowners as well.


 +   3 people like this
Posted by stephen levy, a resident of University South,
on Oct 14, 2020 at 12:59 pm

stephen levy is a registered user.

Goldstein, you have made two lies that show me and all that you do not read carefully.

IN an earlier post you claimed I did not support tax increases showing that you did not read my blog before spouting off. So here is the start of my blog.

I was brought up to believe I should help pay for the public services I want. So I support school bonds and parcel taxes as a long-term investment and in gratitude (pay it forward) for those who funded great schools for me and my children and grandchildren and will vote yes on my local school parcel tax.

Then in your rant above you attribute to me quotes from Larry Stone.

You like Trump seem to enjoy claiming anyone who disagrees with you should be discredited.


 +   11 people like this
Posted by Steven Goldstein, a resident of Old Mountain View,
on Oct 14, 2020 at 1:34 pm

Steven Goldstein is a registered user.

In response to Stephen levy you wrote:

“IN an earlier post you claimed I did not support tax increases showing that you did not read my blog before spouting off. So here is the start of my blog.

I was brought up to believe I should help pay for the public services I want. So I support school bonds and parcel taxes as a long-term investment and in gratitude (pay it forward) for those who funded great schools for me and my children and grandchildren and will vote yes on my local school parcel tax."

First, thank you very much, I want to 100% without reservation withdraw that statement. I am simply human and I made a terrible mistake in over generalization. You said:

“Then in your rant above you attribute to me quotes from Larry Stone."

OK, I also did make a mistake there too, but I didn't see you in any way say you either agreed or disagreed with those statements. Please in the future make sure you are telling us more than just repeating a quote. Otherwise we are not able to understand you. You said:

“You like Trump seem to enjoy claiming anyone who disagrees with you should be discredited."

NOW that is a major misrepresentation of my postings. I am not discrediting anyone, I am simply pointing out counter arguments. I have never attacked anyone personally, nor gave them the kind of indignation that Donald Trump has done. This is a statement I am only going to repectfuly request you retract.

I can and have both agreed with you (Prop 22) and disagree with you (prop 15). I never will intentionally try to damage your character, or personally harm you mentally or emotionally. If I have in ANY way, again, I am willing to apologize with NO RESERVATIONS.

Thank you for listening.


 +   8 people like this
Posted by Steven Goldstein, a resident of Old Mountain View,
on Oct 14, 2020 at 1:48 pm

Steven Goldstein is a registered user.

In response to stephen levy who wrote:

“Prop 15 will also create a disincentive for new business formation by raising costs."

I simply disagree with this idea. If a person thinks they can make a living by going into their own business, they will. Yes there will be a “sticker shock" for the first 2 annual cycles, but the playing field will level off and it will not be any issue after that. You said:

“What real reform is means broadening the tax base by asking all owners to see a move toward equal AV on similar properties in exchange for lowering rates."

I have no argument there, but given that the laws allow for presumed values based on purchase prices, and they are inflated for any new buyer, that it will never reach an EQUAL AV. Especially when a buyer once getting a reassessment gets a reduces property base, their financing of that property will be scrapped. To any new buyer, that action is prohibitively expensive for the long run. The AV equalization will simply never happen. You said:

“These claims that everyone is gaming the system are just assertions without any supporting evidence from assessors."

Yes, but ASSESORS are only brought in where the property owners request a reassessment under the laws. As I stated above, that process is literally not used because of the consequences. Thus, their work is almost simply recording a recent sale of a property and calculating the property taxes on it. I can only imagine what it would be like if the buyers could by getting a reassessment automatically see their Mortgages be made the same, the assessors would be flooded with reassessment orders. So when you wrote this statement:

“It is true that long-time owners do not get reassessed but that is true for homeowners as well."

That is the inevitable result.


 +   4 people like this
Posted by stephen levy, a resident of University South,
on Oct 15, 2020 at 10:10 am

stephen levy is a registered user.

@ steven goldstein

thanks for clearing stuff up.

let"s leave it that we disagree and see if anyone else wants to post.


 +   4 people like this
Posted by stephen levy, a resident of University South,
on Oct 16, 2020 at 11:11 am

stephen levy is a registered user.

Gale and Goldstein,

Here is what I said. Nowhere did I say anyone would be happy to pay more.

For repeated violations as with the main blog you are both barred from this blog until next year.

"But it flunks the fairness test of treating equals equally. Note that anyone who has owned a home for a long period has enough equity to make a modest additional contribution to services they want. We now have home equity loans and reverse mortgages unlike in 1978."


 +   4 people like this
Posted by Prop 15, a resident of College Terrace,
on Oct 16, 2020 at 1:52 pm

Prop 15 is a registered user.

With sweetheart in Prop 13 favoring commercial land holders, they have now had a very long run of very low property taxes compared to residential property.

When Prop 13 passed, Palo Alto's property tax revenues were split approximately 50/50 between commercial/residential. Since then loopholes favoring commercial property the split is now approximately 30/70, with the percentage of revenue from commercial property continuing on a steady downward trajectory.

Prop 15 will take a number of years before its provisions begin to be implemented. By which time, if history is any predictor, the economy should be well on the way to recovering if not fully recovered. Using the current downturn is a red herring.


 +   8 people like this
Posted by Common sense, a resident of Mountain View,
on Oct 16, 2020 at 2:20 pm

Common sense is a registered user.

Mr. Levy, kudos. For some cogently argued points, which give me food for thought. And for exercising (with patience and restraint) your blogger's prerogative with a disruptive commenter. Posting oftener than anyone else, and longer, lacking decorum or communication skills. It made this discussion hard to read.

That commenter (or troll) has been an issue on our MV paper (the Voice), and has spilled into the PA Weekly; I hope editors follow your lead, which would make these forum pages more useful.

In a discussion in my town, a resident complained she'd abandoned the Voice's Town Square section thanks to one person posting exceptionally long winded replies to everything and everyone, "monopolizing every conversation." Guess who.


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