2901 Broadway circa 2007

As we reported when the list price for 2901 Broadway was reduced to $45,000,000 in 2009:

It was the 2007 Decorator Showcase Home and has been on the market for over two years (an “official” DOM of 690). It was initially listed for $55,000,000 in early 2007 and received a rumored four offers a few months later (which were all countered at asking and all walked away). And it was reduced to $48,000,000 on March 6, 2008.

With 1,727 days on the market, the list price for 2901 Broadway has just been reduced another $7,000,000, now asking $38,000,000 and now the second most expensive listing in San Francisco, just behind 2845 Broadway which was reduced to $38,500,000 last year.

And yes, the property tax bill for the Gold Coast mansion totaled $7,790 last year.

Comments from Plugged-In Readers

  1. Posted by badlydrawnbear

    Truly, a poster child for the repeal of Prop 13.
    8k a year to help pay for streets, sanitation, police, fire, schools, courts, prisons … stunning.

  2. Posted by kg

    8k a year is still plenty – I pay roughly that much in taxes on a home I just bought and I doubt they use more of the services you listed than I do. Not to mention, they’ve been paying it for many more years, and back when 8k was a hell of a lot more money.

  3. Posted by NJ

    By kg’s logic, then fine, let’s cap the taxes at $8k for everyone. What bothers me is that a new owner (or that or a similar property) would pay many times that amount, whereas this long-time owner pays only $8k.
    As to whether $8k as an absolute number “plenty” — that’s a different question. Our country’s tax systems generally put a greater burden on those who can afford it. Income taxes being a prime example. Similarly, it makes sense to me for an owner of a $30 million property to pay more than an owner of a $3 million property. But again, that’s a separate question from the “old owner discount” that Prop 13 provides.

  4. Posted by Prop13

    I live in a house that is valued at $2 million, if I had to pay full taxes of about $20k a year I would have to sell and move. I was gifted the house from my late grandmothers estate, and pay about $7k in taxes a year. I know its lower than my neighbors that just purchased and will be paying taxes of about $15k a year. But prop 13 has allowed my family to keep our family homes that we have had since the 60’s. Without Prop 13 we would have had to sell and move out of the city. Prop 13 has its place an reason. We aren’t like the 2901 Broadway family, but who knows they might not be able to afford the higher taxes either. If Prop 13 is eliminated there will be lots of average families like myself that will have to sell the family home and move because they can’t afford the new taxes. At we use the same services as KG suggested, nothing more nothing less!

  5. Posted by nancydrew99

    That $8k tax bill makes my blood boil. Srsly! I pay ~$14k on my newly-purchased home. Repeal Proposition 13.

  6. Posted by wc1

    Prop 13 and rent control – both need to go.

  7. Posted by NJ

    Prop13: Sorry to say it, but that means you should be forced to move. There is absolutely NO fair reason why the government should give you that benefit over new owners.
    In any event, if the aspect of Prop 13 that prohibits value reassessments were repealed, your tax bill would probably be not as high as you fear. Since many people would in the same position as you, prices (or property tax rates) would have to come down to compensate for the fact that so few people could afford those levels of property taxes. Thus, your rates probably would be more than you are paying now, but lower than what a new owner would pay in today’s regime.

  8. Posted by shza

    I was assuming that “Prop13” was just a troll/flame post. There’s no way an actual human being could believe that he was entitled to live essentially cost-free (at other homeowners’ expense) in a $2M home in SF by virtue of the fact that his grandparents once bought the same home.
    Actually, the poster referred to family “homes” (plural), which was the most obvious trolling clue.

  9. Posted by badlydrawnbear

    @Prop13 … the hole in your argument is that Prop 13 creates a strong disincentive to ever sell, per your own example, which artificially lowers supply and artificially inflates prices.
    The value of your home is being inflated by the market skewing forces of Prop 13 itself.
    Additionally, why you, as a new owner, should not pay market rate taxes when the city and state services that you consume are paid at the current market rate I have never understood.
    Finally, why you should receive some generous tax benefit from the State simply because of birth is beyond me. It might be nice that you get to keep the family home but that’s exactly how the landed gentry used to feel as well.

  10. Posted by lol

    Under-taxation as a birthright. Can anyone remind me why we fought the Redcoats 235 years ago?

  11. Posted by A.T.

    I agree with all the criticisms about Prop 13. But every tax policy has winners and losers. Why should I be able to sock away 1/3 of my income pre-tax into retirement accounts? Why should those whose incomes consist of capital gains pay a lower income tax rate? Why should a working stiff pay social security and medicare on 100% of income while the wealthy only pay on a fraction of their income? Why should homeowners pay lower taxes because they have mortgage interest while renters don’t get such a tax break? I could go on and on. Propose any alternative to Prop 13, and you’ll simply spawn new and different “injustices.”
    Prop 13 passed by an overwhelming majority – nearly 2/3 statewide (it lost in SF, by the way). And efforts to expand it have similarly passed by large majorities. The people of the state have spoken. Complain all you want, but every democratic decision has winners and losers. Also, anyone who bought a home since 1978 knew the rules – you can still complain about them, of course, but it’s not like any wool was pulled over your eyes.

  12. Posted by fred

    A possible modification to prop. 13 that could be approved by voters is a reduction of benefit in proportion to current market value, or in proportion to the difference between the taxable basis and the market value.

  13. Posted by Denis

    Thankfully, a handful of homes along the Gold Coat (the three blocks of Broadway west of Divis) contribute a collective 3 million a year in property taxes. That includes the three (?) sales this year which, on their own, will add 1 million annually to the city coffers. Does that help?

  14. Posted by unwarrantedinlaw

    A dollar to the City goes down a rat hole. A dollar in a private citizen’s pocket goes investment and purchase of market goods. I’m never jealous of someone else’s property. The richer you are, the more you can employ and invest, the better it is for me.

  15. Posted by The Milkshake of Despair

    $8k annual taxes sounds fishy to me since it implies an assessed value somewhere in the 700Ks. Assuming that this place’s last market assessment was back in the late 70s when prop 13 kicked in, working backwards I get a valuation of somewhere around $400K. That seems way too low. Or maybe I’m just naive about property values circa 1978.
    ————
    unwarrantedinlaw – If you think that the private citizens who can afford this sort of property are the more efficient at spending then I invite you to take a walk down Lakeshore Blvd. in Incline Village. There you’ll find a whole string of Tahoe’s prime lakefront property left vacant for most of the year.

  16. Posted by katdip

    Unwarranted – that comment is so economically uninformed that I can only guess that it is meant to inflame. Money spent on taxes doesn’t go down a “rat hole” – it actually gets circulated in the economy through salaries and procurement of goods and services. And it gets invested in public goods like streets, parks, libraries, schools, etc. Can these be replaced by your precious “market goods”? Should we grovel at your job-creator feet so you will pretty-please “invest” in teachers, cops and firefighters? One can certainly argue those goods may be “overpriced”, but in my mind it’s better for society to “overpay” for a teacher (avg $60K per year) than for a high-priced bauble like a new Maybach or Gulfstream. And believe me, the wealthy seem to have plenty of money to do both.

  17. Posted by lol

    Most of the time a dollar to the city goes to schools, police, firefighters, potholes, parks, etc…
    There’s waste, but not as much as what some would want to portray it.
    I agree that there must be some level of waste. Unions probably add a bit to costs. Also a city shouldn’t try and compete with the private sector salary-wise, because we’re talking different jobs for different purposes. Job security and guaranteed retirement should make salaries LOWER. Plus they need to go on closing more loopholes on late-career employees who play the retirement system. I also hate seeing so much of my taxes to help people who land on our shores as a last resort for their problems, but short of a police state, that won’t change in the future and I am OK with it…
    But dismissing the city as a rat hole? Do not forget you do live in this very city and enjoy its relative safety and very decent level of services.
    Heck, they captured the 24th serial rapist!
    Good job SFPD. You have justified your paycheck in my book! Firemen who probably saved all the houses from a fire on my block 3 years ago get my thanks too.

  18. Posted by CuriousSF

    I’m curious, for those who are against Prop 13, how would you feel if you saved for the past 10 years, bought a home today, and 10 years later your home is worth 10 times more than what you bought it for. Your income has not kept pace with the market value increase of your home so all of a sudden you can no longer afford your property tax. Do you think it would be fair that you have to sell your home because the market far outpaced your income and inflation?
    Just curious if people opposed to Prop 13 are actual property owners or just people who don’t mind if other people have to pay more tax.

  19. Posted by lol

    This was supposed to be “24th street”, not 24th. Thanks goodness 😉

  20. Posted by shza

    I’m curious, for those who are against Prop 13, how would you feel if you saved for the past 10 years, bought a home today, and 10 years later your home is worth 10 times more than what you bought it for. Your income has not kept pace with the market value increase of your home so all of a sudden you can no longer afford your property tax. Do you think it would be fair that you have to sell your home because the market far outpaced your income and inflation?
    Of course. And I would be immensely happy at my 1000% profits. Is this question a joke? Are you aware that no other state has a Prop 13 equivalent?

  21. Posted by badlydrawnbear

    @CuriousSF … oh, you mean how the other 49 states work?
    the reality is, in your example (100% apprrecation for 10 years), yes there would be some people who might have to sell, which would add supply, which would put downward pressure on prices, which means home values don’t spike like that in such short a period of time.
    Also, if I paid 100k for a home and 10 years later I sold it for 1M I have difficulty imagining I would be crying to hard about “being forced to move”.

  22. I particularly like in this post the link to the Bay Citizen article on Prop.13 and Phil Ting’s comments. He looks at the root cause of what prevents changes in the tax system: a distrust in the way State and Local money is spent. Regardless of where we stand on Proposition 13, it is fair to say that as long as the State runs a deficit, that the cost of public pensions is unchecked and dilapidates general funds, that schools fail kids, California residents will oppose changes in the Tax system. We need to resolve these root cause issues in our lifetime for the sake of the next generation of Californians.

  23. Posted by inmycountry

    Does anybody know what percentage of homes in California are still owned by pre 1978 buyers? I suspect it’s a pretty small number. Also, Prop 13 doesn’t only benefit pre 1978 owners. Homes purchased after 1978 are also woven into the fold.
    The problem is, that unlike previous generations, many people these days don’t buy homes to live out their lives in. They buy them with an eye toward investment or to flip them in short period of time.
    The real flaw in Prop 13 isn’t private residences, its commercial property, which should never have been included.

  24. Posted by badlydrawnbear

    @A.T. I agree, Prop 13 and it’s revisions all passed by wide margins.
    I guess I look at it as, of course they did! If I could get could get all the city and state services as my neighbors for 80% less in taxes would I vote for it … heck yeah! … that doesn’t make it good policy.
    The flipside is also that Prop 13 doesn’t just deny the state untold amounts in revenue it also prevents state legislatures from raising and new taxes, without a 2/3rd approval. A task so difficult Gov Brown is being forced to put tax increases on the ballot hoping that the voters will say yes where the legislature has said no.
    My argument is, that despite the popularity of Prop 13, that it is terrible terrible policy and should be reformed.
    Finally, lets also not forget that Prop 13 benefits commercial properties as well as residential. So large corporations, that may never die or structure take over deals so their is no ‘change’ in ownerships, never see the property value reset for tax purposes.

  25. Posted by Legacy Dude

    I’ve said this many times before, but prop 13 is a case study in the law of unintended consequences. One of the reflexive – and flawed – arguments in favor of it is that the government just wastes our tax money anyway. OK, fine – but they’ll waste it regardless of where they get it. At least they should get it through a fair taxation system instead of one that’s so slanted and punitive.
    And along the vein of proper resource utilization, how long has it been since anyone actually lived in this house full-time? 5 years? More? What is this place, like 20 rooms?
    Lastly, in case none of you noticed, unwarrantedinlaw is a troll – he/she just posts these nonsensical “champagne wishes & caviar dreams” comments to rile people up.

  26. Posted by Guest666

    There are pros and cons to Prop 13 (more cons IMO) and as with most tax policies there are always unintended consequences. One of my pet peeves doesn’t involve the disparity in taxes paid, but in the impact on the surrounding neighborhood. Keeping tax rates on long term property owners at artificially low rates allows for owners to neglect maintenance and repairs whereas a higher tax rate would encourage such owners to sell the property. Rent Control has much the same effect.

  27. Posted by tc_sf

    “Most of the time a dollar to the city goes to schools, police, firefighters, potholes, parks, etc…”
    Not allowing property tax to follow inflation was clearly a mistake in my opinion, but conversely what do the costs of the above or any other city services have to do with the real market values of homes?
    Having neighbors pay vastly different tax rates for the same services is clearly a problem. But the meat of CuriousSf’s point that it’s also somewhat strange for someone’s taxes to increase merely because people buying nearby similar homes have started to pay much higher real prices.
    As shza points out the increased taxes are a side effect of an increase in wealth, which is a good thing, but translating housing wealth into income (to pay the taxes) has issues. Selling and moving is possible, but can be very disruptive and if theres a widespread bubble you might have to move far down the ladder to realize much net cash after purchase of a new home. Cash out re-fi and reverse mortgages are possible, but both have issues.
    Basically, a wealth tax on an illiquid, volatile, indivisible (hard to sell off one room of your house) asset poses a number of problems. IMO it’s the volatility that drove CA vs other states to try prop 13. If home prices rose at a constant predictable pace people could simply plan around a number of the above mentioned issues.

  28. Posted by lol

    What’s with the ever popular “the government just wastes our tax money anyway” line?
    There seems to be a consensus here but as far as I can tell, we are enjoying a very safe and pleasant city. We have decent affordable public transit. We are also getting a lot of bangs for the bucks compared to most places I have lived. And we are grossly underpaying.
    The forever “too many taxes” party line is what has pushed a few politician demagogues to cut taxes year after year, and to put everything on the credit card for our kids to pay.
    There’s nothing constructive coming from blind blanket anti-tax attacks. They’re so out-of-line with reality that they are dismissed by our leaders as useless rants. As a result, any improvement the City is bringing is not properly recognized and there is therefore no incentive to make things really better.
    Hating taxes, sure, I hate them too. But I know what they’re for.

  29. Posted by CuriousSF

    shza/badlydrawnbear – OK, I realize the appreciation is extreme, but the purpose is to get a response on an extreme example. Keep in mind that if the market were to appreciate at that level, it will probably apply to every comparable home in the area. By comparable, I include not only the quality of the home, but the safety and respectability of the neighborhood as well. This price increase will very likely apply to rentals as well since fewer people will be able to buy putting upward pressure on rental prices. This owner may not even be able to rent in a comparable unit. The owner of this home will very likely need to sell and downgrade, since buying a comparable home would be out of the question, possibly forcing them into a sketchier area. So yes, this person will realize a profit windfall, but what then? The person still needs to live. I understand some may say “tough luck buddy” but I hardly think that would be even close to fair.
    Now what if this were to happen to a family? What if it was your family? What if you have a family and bought a home in an area known to have safe public schools that you were hoping to eventually send your children to? Because of an appreciating market, you are forced to move to a different neighborhood and because of your income, you now have to downgrade to a neighborhood with some questionable schools. Would you still be ok with that? If so, how does one even begin to plan for the future? Even if the market value of a home only triples instead of the ten fold increase used in my previous example. It is very likely that most people’s income will not increase at that rate and they could still be forced out.
    It’s easy to come on a board and say whatever you like, but I would bet if anyone of you were to be priced out of your home and forced to downgrade solely because of property tax, you would be crying foul.

  30. Posted by lol

    CuriousSF,
    Sure people would be forced to pay more in taxes.
    But this is a bit like the kid who wants his cake and eat it too. Your neighborhood has gentrified, your property value has increased, you can collect more rent from it, you and your family enjoy the social benefit of living in a very desirable area (saying “Western Addition” at a party doesn’t get the same reactions as saying “Noe Valley”). You’re getting it all, and mostly from people who are accepting paying more than you in a mortgage. But there would be ONE drawback in higher property taxes. The glass is 90% full, dude.

  31. Posted by Legacy Dude

    @ lol: some level of taxation is necessary – I doubt anyone disagrees with that. My point was that whether or not the money is spent efficiently is a separate discussion from whether it’s collected fairly. That’s like saying, “Whole Foods’ prices are too high so it’s OK for me to shoplift.” Flawed argument.
    @CuriousSF: sorry, your example is unrealistic. Where in the real world have home prices tripled that quickly? Even if this did ever happen, one could technically borrow against their booming equity to pay their taxes and still be ahead.
    I’m sure you’ve all seen the old houses that are only like 10′ wide, built that way to minimize taxes back when taxes were assessed based on frontage. Today it seems silly and we laugh at stuff like that. Prop 13 is equally as ludicrous.

  32. Posted by shza

    CuriousSF, I still don’t follow at all why you believe the situation you describe is even remotely unfair. Especially when the alternative is a subsidy from newer owners to people (sympathetic all-American families that they are, even) so that they can sit on extremely valuable real estate and realizable profits. If they absolutely need to live in SF (despite their crappy jobs that don’t pay enough for them to live here), then they can take out a reverse mortgage. Then they’d be paying their own way rather than externalizing the costs of their entitled existences.
    This still seems like a very, very easy case.

  33. Posted by anonymous

    Because of an appreciating market, you are forced to move to a different neighborhood and because of your income, you now have to downgrade to a neighborhood with some questionable schools.
    Straw man. Anyone buying in SF is already in the neighborhood with some questionable schools.
    There’s a great safety valve for all these situations: if prices and rents go up, people build more or denser housing to make it affordable.
    Some people hate that, so they pass laws to block densification, so the safety valve goes away and prices rise. So people have to sell their $2 million and move someplace there they can buy a house for a tenth of that and relish in their fortune.
    There’s a huge range of comfortable sunny places to move to if you want space and don’t make a lot of money. Florida. Texas. A lot of the rest of California.
    It’s charmingly nostalgic to think that just because you buy property you’re entitled to have everything stay exactly the way it is now, forever, and not have a 6 story condo building go up across the street from your parents’ house where you grew up, and not have to move out because a city becomes too expensive for you. But it’s one that also seems unfair to the countless people willing and able to pay good money that can be used to enrich the city and community.

  34. Posted by NJ

    CuriousSF: I suppose you think that in the vast majority of other states, which have nothing like Prop 13, people are getting routinely kicked out of their homes due to ever-increasing property taxes?
    In any event, to solve your problem of high taxes more fairly, just keep the overall tax rate low. Fair for everyone.

  35. Posted by CuriousSF

    Just to clarify – I am not saying it’s fair for the new owners to pay a higher tax. I’m just saying it’s unfair for someone to be taxed out of their home because of market events that are completely out of their control. I’ll also say that I don’t know what the solution is, but I still stick to my view that assessing taxes on FMV is unfair.
    lol – yes, gentrification. But why should one suffer the burden of the actions of others? In other words, why should a first-mover have to pay more because everyone else decides they now want to live in the same neighborhood? True you can collect more rent from it, but that’s if you can afford another home. What if that’s your only home and you have to stay put? The more rent you could collect would be meaningless. And yes, you may be “getting it all” but that has nothing to do with the actions of the first-mover.
    Legacy Dude – I’m not sure how borrowing against your booming equity would help much. That’s still money that would need to be repaid and it’s unsustainable to do it year over year.
    shza – I still believe it is unfair because I don’t think one should be taxed out of their home and forced into a downgrade due to events out of their control. If one must force a current property owner to pay the tax on the FMV just for the sake of being “fair” there should be some sort of unrealized accounting for these taxes that would be paid on the back-end when the property is sold. For example, the county can assess a tax on the amount realized from the sale. If one has a lower basis in the home, the realized amount would be larger. Still does not make up for the difference in annual property tax bills, but it seems more fair to me. I KNOW there will be flaws with this as well, such as limiting the supply of homes of sale because people will be further disincentivised to sell.
    You’re right, this does seem “like a very, very easy case.” We just happen to disagree on it.

  36. Posted by tc_sf

    ” I suppose you think that in the vast majority of other states, which have nothing like Prop 13, people are getting routinely kicked out of their homes due to ever-increasing property taxes?”
    Consider the localized RE booms and busts that parts of california have endured and the dead weight losses that would occur if people were taxed out during the boom only to return in the next trough.
    The “airplane seat” unfairness (the guy next to you may have paid a lot more or less for his seat then you) is a problem and seems to annoy people a great deal. But taxation based straight off market value may work out well in flatland where prices are mostly stable, but areas with development tightly constrained either by geography or legislation are always going to be more volatile and there has to be some way to take this into account.

  37. Posted by NJ

    tc_sf: Even accepting your volatility argument as having any merit (which I don’t; California is not THAT special), there are plenty of ways to take that volatility into account that are more fair. This is not the right solution.

  38. Posted by shza

    shza – I still believe it is unfair because I don’t think one should be taxed out of their home and forced into a downgrade due to events out of their control.
    This surely proves too much. If I lose my job because my company goes out of business due to mismanagement of a division that I have no interaction with (i.e., it’s “out of my control”) and can therefore no longer afford my home, I suppose you believe that other taxpayers/my neighbors should pick up the slack so I can stay put?
    Your failure to acknowledge that the other 49 states have no such system, despite numerous people pointing that fact out to you, is particularly notable.

  39. Posted by shza

    tc_sf, I usually agree with and appreciate your comments, but what is your basis for your premise that California is exceptionally volatile? At least anecdotally, it seems that there were plenty of other states with much bigger rises and falls in the most recent bubble.

  40. Posted by A.T.

    I think New York recently enacted a tax law that is similar to Prop 13 with respect to a 2% cap on increases.

  41. Posted by tc_sf

    “(which I don’t; California is not THAT special)”
    This last bubble was credit based and nationwide (global even), but I don’t think it’s controversial that in general areas where development is cheap and easy have more stable prices then areas with tightly constrained development.
    I’m more with AT, not a big prop 13 supporter, but I do see the very real problem that it was trying to address.
    And in general I view “airplane seat” unfairness where people knew the deal at the time they took it, although others who took the deal at a different time got a different deal, as less unfair then situations where the deal gets changed by factors outside someone’s control (taxed out by others paying higher prices). I do agree that there are no absolutes though and merely buying a house shouldn’t be expected to preserve the surrounding neighborhood in amber.

  42. Posted by eddy

    I usually only comment on these threads once a year so I guess I’ll burn my impression early in the year.
    Prop 13 for commercial real estate should be eliminated.
    Prop 13 needs to be phased out over many years for residential. Residential Prop 13 can never be overturned overnight as there are far too many consequences. But there should be a gradual plan over 20 years to bring homes into equilibrium with certain exemptions for elderly and disabled persons. And transferring title to avoid taxes should be banned. Maybe the city/state could allow homeowners to grant partial ownership interest in the property for future sale proceeds to allow people that can’t afford the increased taxes to stay in their homes longer. But at some point this gift has to stop.
    It’s not about who is paying more or less; it’s about the fact that the city/state needs the money. Pay our teachers, fix our roads, clean up our city. The constant nickle / dimeing of the residents is annoying.

  43. Posted by dch

    CuriousSF, it’s an easy issue because the windfall from any increase in property value dwarfs the increase in taxes you have to pay. Property taxes are a bit over 1.15%, so let’s round up to 1.25% That means that for every $100 your property value goes up, you pay $1.25 per year. It would take 80 YEARS of increased tax payments to eat up that pure profit. It’s hardly an unjust/disproportionate burden.
    The financial reality of the situation is that the increased tax burden is tiny in relation to the gain in equity – that’s why we are overwhelmingly against you.
    If a neighborhood gets more desirable to the point where property taxes are an issue, you’ll surely be able to rent out your place for a huge profit over your mortgage – which would defray the cost of private school/whatever you pay on the place you move to.
    I wish my biggest financial worry was that I’d made so much money on house appreciation that property taxes were becoming a burden…

  44. Posted by around1905

    Every once in a while there is a sob story published in the paper about some old person living alone in their huge house, unable to pay their expenses. Drives me nuts since so many younger folks in SF are doubled and tripled up in small rented flats.
    If prop 13 went away and somebody living alone in her valuable house had trouble with property taxes, she could just take in a housemate. The rent would track inflation since even in SF you don’t have rent control if you share your place with one other person. Probably be happier for the company, too…

  45. Posted by lol

    I have an easy fix to help people stay in their homes.
    Owners could opt to stay in the Prop 13 system, but under one condition.
    The owners would permanently agree that they cannot resell their home at a higher price than the current county valuation.
    The property would be still sold on the open market, but any profits on the top of the prop 13 valuation would be forfeited to the county.
    We would solve 3 issues:
    1 – Long term owners would be able to afford staying in their homes
    2 – The county would collect windfall taxes
    3 – Long term owners would not be punished by unacceptable increases in property value. After all, it’s not their fault.
    Voila. Everyone’s happy.
    [/end_tongue_in_cheek]

  46. Posted by NJ

    One should not liken Prop 13 unfairness to airplane seat unfairness. Prop 13 is a TAX levied by the government. Airplane seats, by contrast, are sold by private enterprise.
    I am all for price discrimination by private sellers (such as airlines) as a way to maximize their profits. That is no justification for disparate taxes levied by OUR GOVERNMENT.
    Also, it is not a legitimate defense of Prop 13 to say it was “already there” before someone bought property. If it’s unfair, it should be changed.

  47. Posted by tc_sf

    “tc_sf, I usually agree with and appreciate your comments, but what is your basis for your premise that California is exceptionally volatile?”
    Glad to hear that! In some arguments it seems to me that one side is just clearly wrong. Here, I’m pretty lukewarm about this whole thing and I just see where both sides are coming from and chalk it up to the general political messiness of tax policy.
    Regarding the volatility I pulled this up which I saw a while ago:
    http://www.cato.org/pubs/regulation/regv25n3/v25n3-7.pdf
    And just general belief that if supply can easily be created to meet demand you won’t see as much price volatility then if this is not the case.
    Situations like that on the other thread where some people are living rent/mortgage free next to others who are paying rents or mortgages seem much more concerning to me. The same unequal result of neighbors paying different amounts for the same good but there someone is trying to retroactive re-write the contract to basically borrow the money, not pay it back and keep the house. As i mentioned above I consider this far more unfair then some of the prop 13 outcomes

  48. Posted by Unwarranted law

    Senior meter maids make 160,000 in sf. More taxes just gives these parasites a raise. Already spending huge amounts in schools, they just keep getting worse. Anyone who pays less tax, good for them to keep some of their own money.

  49. Posted by CuriousSF

    shza – I failed to acknowledge the fact that other states don’t have a Prop 13 equivalent because that is not the issue(for me). I am merely focusing on the fairness of the system. The issue is what I happen to think is fair and I don’t think it’s fair for someone to be taxed out of their home. OK, maybe in other states people are not being taxed out of their homes. I still happen to find it unfair that someone would have to commit a higher proportion of their income to property taxes as their property value increases based solely on market events without an equal increase in their income. While not necessarily the same, I would argue that this would be like the IRS assessing income tax on unrealized gains in your portfolio. I acknowledged it isn’t fair for new homeowners to bear a higher burden of the tax, but it still doesn’t change my opinion that it is unfair to tax someone out of the home they purchased or bear a tax burden on a property they own disproportionate to their income solely due to market movements.
    I see where you are going with your employment example, but it is slightly different. One has almost zero influence over the market in general. I would be interested to hear an argument against that. While you have no control over losing a job due to management’s mismanagement, you can still find another job so you can still meet your financial obligations, albeit there may be a period where you fall behind. That’s where savings come in. You can’t save for a continued increase in property taxes if your income does not keep pace.
    dch – I know that my personal views on tax policy is in the minority and used to having people be overwhelmingly against me when it comes to taxes. I realize that taxing the gain instead of assessing the annual tax still does not equalize the tax burden, but it is better than nothing. Also, you can go further by adjusting up the tax rate on the realized gain to equalize it even more. Over the long run, someone with a low basis will pay more gain on the sale than someone who bought in later since they would have a higher basis, therefore a smaller gain. Theoretically, if you can buy at the higher price, you can afford the higher current property tax. The person who bought earlier would defer the tax until they sale so they don’t get taxed out. Still doesn’t fully equalize the tax burden, but would be better than what we have now.

  50. Posted by El Bombero

    Prop 13 helps renters of single family homes in nice BA suburbs. Schools are great in Orinda, Tiburon, Mill Valley, etc. and renting is a fraction of the cost of buying a place and paying the super high taxes. Those places wouldn’t be available to rent at those prices if taxes were assessed by value. Just sayin’….

  51. Posted by A.T.

    Here is some interesting research on the “Prop 13 effect” – something for everyone.
    http://www.nber.org/papers/w11108
    Note the 2.9% property tax rate in Nebraska. I guarantee that is what we’d see here but for Prop 13 (along with aggressive annual market “assessments” on which to apply that rate). Prop 13 has lots of warts but it is the lesser evil. Property taxes are too easy a target for Pols because people can’t simply move en masse and avoid the tax. To those complaining about neighbors paying less, careful what you wish for – were prop 13 repealed, believe me, your property taxes would skyrocket along with your neighbors’.

  52. Posted by shza

    were prop 13 repealed, believe me, your property taxes would skyrocket along with your neighbors’.
    . . . thereby driving down prices (and thus actual taxes, versus the tax rate) as this new premise is worked into prospective buyers’ valuations and determinations about what they can afford. (In a rational world, anyway.)

  53. Posted by shza

    “therefore,” not “thereby,” sorry. Bad lawyer!

  54. Posted by A.T.

    Yep, it would drive down prices quickly. And we’ve seen that THAT doesn’t cause any economic upheaval!
    And I’m not sure that would drive down actual taxes – Pols would just raise rates on the new lower assessments to keep the same taxes flowing.
    I recognize all the serious problems with Prop 13. I’m just saying that life would not be without different problems of equal magnitude were we to get rid of it.

  55. Posted by lol

    Comparing NE with CA is perfect strawman’s argument. Prop 13 is about property assement, not the rate!
    Median property values in NE are in the 120K range. With a CA tax rate the amount collected would be roughly 1350/y per property owner. With a 2.9% rate this brings the bill to 3500, which happens to be the same amount as what would be collected on the median 300K CA home without prop 13!
    You cannot have a working local government with only 1350/Y/property. People in Nebraska knew they couldn’t get something for nothing. Hence a higher tax rate.

  56. Posted by lol

    Correction, that should read “the problem with Prop 13 is with property assement, not the rate!”

  57. Posted by Legacy Dude

    CuriousSF, we could easily get around your issue by limiting prop 13 benefits only to primary residences and only to the original owners’ lifespans. How about that?

  58. Posted by Rich Cederberg

    Wowza! Something is definitely off balance in this situation. Interesting article and I enjoyed all the comments too.

  59. Posted by CuriousSF

    Legacy Dude – no problem with that at all. Where do I sign?

  60. Posted by katdip

    Actually, there are serious political costs to raising rates, so those are not done willy -nilly (I know this from my time living in NH, where politicians had to defend their rate increases at town budget meetings). I wonder if anyone has done the “what if” analysis if Prop 13 were eliminated tomorrow. Assuredly the rate would go down if all kinds of properties were suddently reassessed (mark to market) and we hold the amount of revenue fixed. But over time prices would go down as well, so would reassessments, so the RATE would have to go up to raise the same amount of revenue.

  61. Posted by tc_sf

    “I wonder if anyone has done the “what if” analysis if Prop 13 were eliminated tomorrow. ”
    The general issue with this is that people change their behavior in response to changing incentives and this is hard to quantify.
    You could do a static analysis, such as how CBO predictions are usually done, and have the analysis be fairly objective in the sense that you used actual data to back up assumptions for prices, homeownership rate,… but in reality all the factors would change. Doing a dynamic analysis trying to predict what people would do could yield a better prediction, but so many subjective judgement calls are involved that invariably both sides of any issue come up with vastly different results and the results are less defensible to the other side.
    This issue goes far beyond prop 13 and there isn’t much of a solution other then to be skeptical of forecasts unless you look into what assumptions they are based on.

  62. Posted by Denis

    I love these threads… I’m too stupid to follow them, of course..
    I pay 10x in property taxes what some of my neighbors pay… and it really doesn’t bother me. There are several homes on my block that have been in the same family for generations… literally! The only time the inequality of Prop 13 has annoyed me is when an elderly couple sold their Pac Heights home and bought another similarly priced home nearby to maintain their low tax rate… only their kid is the one living in the home… Grrr.
    Also, is the upheaval of instantly repealing 13 really worth it? It seems the conclusion is the total tax revenue in SF would wind up being more or less the same… Everyone’s property value would plummet causing the city to raise tax rates to compensate for lost revenue.. Right? New buyers are, in a way, subsidizing the beneficiaries of Prop 13… In other words, I’m paying the taxes my neighbors “should” be paying, sans 13… Raise their rates, force them to sell, and my home value plummets, so I ask the city for a reassessment based on the new lower value. So is the city REALLY going to be getting raking in any more money from new taxes? Probably not… It’s just houses would temporarily be cheaper during the chaos. It seems to me the argument is more about making homes “more affordable” than providing the city with more equitable revenue. I’ve said this before, but 100 homes in SF in D7 bring in about 60 million in property taxes.

  63. Posted by shza

    It seems to me the argument is more about making homes “more affordable” than providing the city with more equitable revenue.
    It’s also about fairness and about allocational efficency — i.e., it’s a good thing for grandma to get forced out of her home if it’s a 5BR house that could be more fully occupied by a large family.
    The point about a few expensive and more-recently purchased homes supplying a large amount/proportion of tax revenue seems like a non sequitur. That would remain the case under a non-Prop 13 regime.

  64. Posted by EBGuy

    Anybody know what the mortgage is on this place?

  65. Posted by sfinheriter

    My wife and I bought her grandmother’s house 2 years ago. It’s worth about 500k right now, but we inherited her tax basis. We only pay $500 a year total in property taxes. I will never sell; it’s a really sweet deal.

  66. Posted by pablo

    I’m curious, for those who are against Prop 13, how would you feel if you saved for the past 10 years, bought a home today, and 10 years later your home is worth 10 times more than what you bought it for. Your income has not kept pace with the market value increase of your home so all of a sudden you can no longer afford your property tax. Do you think it would be fair that you have to sell your home because the market far outpaced your income and inflation?
    Income is a major driver of property prices, if your income doesn’t keep pace with property prices, you have too much home for your income. time to trade down. In addition if your income isn’t keeping pace with inflation you are going to have a lot more issues than not being able to pay property tax.

  67. Posted by futurist

    I think Denis is right on with his take on prop 13, and the non-event effect if it were repealed. Totally agree.
    @shza: not about “fairness” at all. Fairness, whatever that means has nothing to do with it.
    Life is never fair. Stop whining.

  68. Posted by builtsf

    Do the math, Pablo. Say you bought your house for 500K, with an 80% mortgage. 10 years and 10x appreciation later, your net investment of 100k has yielded you an net worth of 4.6M, an annualized “income” of $460,000. I don’t think there would be too many people who would fail to sell their home in order to realize this income, and I also doubt that too many people would be lamenting the lack of fairness of their predicament, regardless of the tax rate they would have to pay.

  69. Posted by BillyBalls

    I like Denis’ point.
    It would be simple enough to tax homes over $10 Million at a different rate.
    Looking at another example, its important to have some stabilization of property taxes (read, taking away absolute control of property taxes from the state legislature).
    Just ask New Jersey and Rhode Island home owners, to pick the choice examples.
    In periods of revenue shortfall, there should be some mechanism for a temporary .25% increase, whether by ballot measure or 2/3 majority.
    Lets not forget what got us here in the first place; those same forces, present today, align to drive politicians to take the easy way out (spend) rather than making choices of efficiency.

  70. Posted by lol

    I also like Denis’ thinking, with one caveat.
    This logic would be fine if SF did exist in the void. But it is not.
    There are many people on the sidelines (either physical, like suburbs, or figurative, like renters) who would jump on SF properties if they were 10-20-30% cheaper. This would certainly cushion the fall from property tax related sales.
    Ultimately, the equilibrium on a median home could be around 6 times median income or 500K which is roughly 15% less than today. The biggest changes would be in family-sized homes where most of the prop-13-subsidized elderly owners live.

  71. Posted by Rillion

    While new buyers start off subsidizing longer term home owners the new buyers still gain a benefit from Prop 13. Even though I know I am paying more in property tax then almost all of my condo neighbors, I have the comfort of knowing my property taxes are capped. It makes the economic decisions around the purchase easier.
    Also in times like this you can have newer buyers actually gain the advantage over a longer term buyer. For my house up in the mountains I will always being paying an equal amount or less in property taxes for the place I bought in 2011 then my neighbors pay, since they will get a temporary reduction in their assessed value based on my bargain basement purchase price but when the market eventually recovers their assessed value will increase back to its adjusted base year value.

  72. Posted by eddy

    What about those who sell their Prop 13 homes and move out of state and have to pay a higher property tax?! I think the State should subsidize these owners who move out of state and have to pay a higher property tax when they buy a new home. It’s simply not fair that these people have to be burdened with paying a fair share of resource consumption just because they moved out of state.

  73. Posted by lol

    Ask a kid what he wants for dinner and he’ll tell you “ICE CREAM” day after day.
    10 years later the kid has grown into a monstrous sick blurb of a teenager with tubes coming out from everywhere.
    For sake of making his miserable life happier, you will give him MORE ICE CREAM.
    That’s the same thing with tax cuts and laws created as quick fixes. People take them without any regard to long term consequences. MORE TAX CUTS please.

  74. Posted by Mr. Kurtz

    Without Prop 13, house prices would be a lot lower. Yes it limits the taxes generated from houses owned a long time, but it increases the revenue from new houses by inflating their value. If a buyer does not like the property taxes, he is free not to buy the home. At least this way they are predictable. And if I like my house and have paid it off, why should my taxes go way up because some parvenus overpaid for their houses across the street?
    When mortgage rates went to 11%, I don’t remember a lot of jealous whining about neighbors with 6% fixed rates.

  75. Posted by NJ

    Mr. Kurtz, by the same token, if you feel the market (thanks to the parvenuses) is grossly overvaluing your home, you are free to liquidate it (or take a reverse mortgage and continue living in it) and enjoy your windfall.

  76. Posted by NJ

    I disagree with all of you who think home prices would wildly change with a repeal of Prop 13.
    I believe that any successful repeal of Prop 13 would have to be crafted to avoid this very issue. Thus, for example, property tax RATES would be adjusted downward simultaneously with the legislation, such that overall tax collections are relatively even. Old owners would see an increase in taxes, while new owners would see their taxes decrease. The fresh blood from the sidelines would cancel out with the grannies who are forced to sell. The overall prices would remain in general equilibrium.
    I am sure there are other ways to compensate, as well.

  77. Posted by lol

    ^^^ NJ, that was more or less my conclusion, except I think there’s a prop 13 premium built in.
    For instance, a side effect of prop 13 is that landlords can afford to subsidize renters and keep the proportion of renters at an artificially high 60% in SF.
    Without prop 13, a lot of these landlords will be stuck with higher taxes while their income stays pegged. They would have no other solution but to sell their property to owner-occupants.
    More supply or at least more turn-over would mean more market efficiency and therefore possibly lower prices.
    Of course, we’d need an end of rent control in SF to remedy that effect. This is yet another can of worms politicos are staying away from.

  78. Posted by lol

    Expanding a bit on my point of why market efficiency could create lower prices:
    1) SF is a city that constantly welcomes newcomers
    2) Most of these newcomers start off as renters. 3) Many of them will want to buy later on.
    4) Their median income is mechanically higher than long-timers who are rent-controlled or prop-13 subsidized.
    5) With 60% of all properties dedicated to rentals and a good chunk of the remaining 40% stuck in prop-13 subsidy, the available pool of homes in potential turnover is shrunk to say 20% of the total home pool, as opposed to 65% for the US overall.
    6)This means that a constant flow of buyers is competing for a pool of homes artificially shrunk to 1/3 of the US norm.
    7) The market being created at the margins, this pushes prices higher than they should be.
    8) Without regulation meddling with the RE/Rental markets, the ratio of rentals could go under 50% (landlords leaving the rental business under higher taxes, less restrictions on use of property after eviction, resale value improved because of less regulation, etc…)
    9) All owner-occupied properties would join the potential turnover pool. The pool of buyers would be watered down by previous long-term renters with a lower purchasing power.
    The market would have hick-ups for a few years then stabilize to reflect the actual median income of SF-ers and people on the outskirts. Therefore, lower than today.

  79. Posted by eddy

    You can’t just flip a switch and equalize property rates on everyone. Any solution that kills Prop 13 would need to be phased in over time. And the solution would need to be designed to avoid dramatic swings in home values, which a phased solution would contemplate. I hate these threads.

  80. Posted by p3p

    All this whining about Prop 13 is humorous. You can rant all you want, but Prop 13 is not going away any time soon. Because the vast majority of the voters would consider it vastly unfair that their taxes could go up randomly based upon the market value of something they happen to own. It is one thing to tax them when they have an actual gain. But to tax people more just because the value of something they own went up, when they have not even gotten much, if any, value from that increases, is going to strike a majority of the voters as very unfair.
    The equivalent would be to tax you on the value of stock you own, every year, regardless of whether you have actually sold that stock at a profit. So every time your stock goes up, the government would tax you based upon that swing, regardless of whether you ever actually got anything out of it.
    The bottom line is that local governments need to find a better way to tax that isn’t based solely upon the market value of something you happen to own. It needs to be based more directly upon your ability to pay (e.g. income).
    I’m sure people will quote all sorts of “elegent” justifications on why property tax is “fair”, but I’m afraid that’s not going to convince the vast majority of voters who see it as simply a way for the government to increase your taxes based upon something not really in your control (at least if you want to own or rent any place to live) and also not based upon whether the actual governmental need for funds has also increased at the same rate as the market.

  81. Posted by NJ

    p3p: There are plenty of solutions for that issue, as noted in this thread. E.g., accrue the extra taxes and make them payable on sale of the property or death of the owner.
    IMHO the real reason Prop 13 is unlikely to die is that its proponents stick their heads in the sand as to all of the workarounds to their doomsday predictions.

  82. Posted by p3p

    NJ: Accruing taxes on gains you’ve never actually seen is just as unfair. The only thing that would be fair would be a capital gains tax on the actual gain, if any, that you got on the sale. Not a tax based on phantom gains from years past when the market was higher that you never actually realized. Of course the other big problem with that approach is that the government doesn’t get any predictable flow of taxes when people hold on to their houses for years and years.
    This is just one of the many tweaks people will try to make to an inherently unfair system of taxing based solely on a phantom value that is at best only indirectly related to the ability to pay.
    You can continue to delude yourself that the sole reason Prop 13 will never be repealed is because of “greedy” people. However, the real reason will continue to be that when you ask voters to repeal Prop 13, they will perceive you as really asking the following question:
    Shall we allow goverment to arbitrarily raise your taxes every year based upon your house’s value, irregardless of whether you actually received anything for that increase of value, and irregardless of whether your own income situation and ability to pay has actually increased or decreased during that year?
    And of course the majority of voters will say, no way to that.

  83. Posted by fred

    There are a few basic ways to tax people: transactions, asset value and income. Regardless of prop. 13, gov. budgets increase each year. It is unsustainable for taxes to continuously not align with revenue.

  84. Posted by shza

    p3p, as numerous people have pointed out, the scheme you decry as “inherently unfair” and disagreeable to all human beings is precisely the scheme in place in every other U.S. state.
    Moreover, as a matter of policy, it seems better to tax people on gains that are “beyond their control” (because they do not result from any productive activity) than on income from productive activity. We want (or should want, anyway) to incentivize productive activity, not sitting on land.

  85. Posted by shza

    Also, use of “irregardless” is an instant credibility-killer.

  86. Posted by lol

    Yup, once you make tax concessions like the Bush tax cuts or Prop 13, people take them as an entitlement, and any attempt to sunset these gifts is viewed as unfair.
    What’s unfair is digging the hole deeper for our kids for the sake of quick buck today.

  87. Posted by p3p

    All of these arguments against Prop 13 are interesting in the academic sense. However, it remains that Prop 13 is not going to be repealed any time soon. Because when you ask voters to repeal Prop 13, they will perceive you as really asking the following question:
    Shall we allow local government to arbitrarily raise your taxes every year based upon a fuzzy approximation of your house’s market value, whether or not you actually received anything for that alleged increase of value, whether or not the government really needs that increase, and whether or not your own income situation and ability to pay has actually increased or decreased during that year?
    And of course the majority of voters will say no way to that.
    So you can say all you like about how everywhere else also does this unfair taxation, so that somehow makes it right. Or whatever other justifications you try to make. But the majority of the voters ain’t gonna buy those arguments, irregardless!
    So you better find some other way to avoid “digging that hole deeper”, rather than fantasizing about repealing Prop 13. Ain’t gonna happen.

  88. Posted by wtfever

    @prop13,
    I’m glad you got a free $2M house and that you’re getting a deal on the taxes. Thing is, you should be paying more and if you can’t afford it, too bad. I’ll never cry for someone who inherited their assets and can’t afford the tax. The very purposes of estate taxes is to limit the strength of aristocracies, not to strengthen them in encourage people like yourself not to be productive members of society. Somebody in your family(probably 6 or so generations ago)had to work for their money, perhaps you should do the same.

  89. Posted by wtfever

    http://hamptons.curbed.com/archives/2011/07/19/can_you_imagine_paying_40000_a_month_in_property_taxes.php#pointmap
    This article reminded me of the prop 13 discussion. It would appear from the article that one can be a fat cat and still serve as a contributing member of society. It’s just a rarity.

  90. Posted by Mr. Kurtz

    NJ, I want to stay in my house, not liquidate it, even if I think it is grossly overvalued. That is the rotten thing about the old system; people who just wanted to stay in a property they liked and had paid off were hit with completely unpredictable increases in property taxes, for nothing they had done. A person buying a new house today knows exactly what her taxes will be, and should not buy the house if she can’t afford it. And (just like people who buy a house near the airport) sure as heck should not whine about what they knew beforehand.

  91. Posted by Alex in Santa Clara

    “Shall we allow local government to arbitrarily raise your taxes every year based upon a fuzzy approximation of your house’s market value, whether or not you actually received anything for that alleged increase of value, whether or not the government really needs that increase, and whether or not your own income situation and ability to pay has actually increased or decreased during that year?”
    Modest proposal:
    If the city increases the assessed value of the property, owner may force the city to purchase the property at its newly assessed value.
    This way, if the assessment is below, or at market value, the rational decision is to pay your “fair share” tax on the fair market value of the home. If the city decides to get greedy and raise the assessed value beyond the FMV, then it risks eating the property. Since the city doesn’t want to find itself in the real estate business, this will keep assessed values a few percent lower than FMV across the board.
    This would ONLY apply if the assessment is INCREASED from one year to next. If assessment stays the same or drops, but still ends up higher than FMV due to home values dropping, then regular re-assessment procedures apply.

  92. Posted by p3p

    Alex, yours is a variant of one of many tweaks people suggest from time for Prop 13. However, they all won’t pass with the voters, because they don’t address anything about the fact that your taxes go up whether your ability to pay does or not. That is the worst unfairness of property tax without Prop 13 (and to a lesser extent even with it).
    Some will say, tough, force ’em to sell and move. Their argument goes something like this:
    If their taxes go up and they can’t afford to pay because their income hasn’t gone up also, then screw ’em, it is better for the “common good” anyway that the riff-raff be forced to move out if the neighborhood or city’s property values appreciate. Rather than charging more tax on the more well-off neighbors, just force out the less well-off ones. Etc.
    Most voters don’t agree with that sentiment.
    Some make a big deal about two neighbors living in identical houses paying different property tax amounts. That’s really terrible to them. But on the other hand, if those two neighbors had completely different incomes, one very well off and one just getting by, they have no qualms about the local government raising their taxes by the same substantial amount just because their houses are similar. Weird.

  93. Posted by shza

    p3p, what does property tax have to do with income?
    These impoverished masses huddled up in their $4M mansions are already getting an income tax break (to the extent they work) to account for their subpar or non-existent incomes.
    Why should they get an additional tax break on their significant asset wealth (asset wealth that matches that of their supposedly much more well-off neighbor)?

  94. Posted by p3p

    shza, exactly the point, property tax doesn’t have a direct relationship to income, which is the problem.
    So, two people in idential homes pay the same local taxes, even though one has more income than the other. So the wealthier of the two is getting a local tax break, because property tax is only loosely based on their income. That’s exactly the problem.
    Many would say the one with the higher income should pay more in local taxes, it shouldn’t be based solely upon the value of their house.
    But if you think it should, why stop at houses? If this asset tax is such a good thing, we should be taxing their stocks and cash, too, based solely upon the current market value of those stocks and cash on January 1 of each year.

  95. Posted by shza

    The wealthier one is not getting a local tax break. Property tax has nothing to do with income. That’s not a “problem.” We also have income tax, and the wealthier neighbor in your example is paying more of it, as his/her prize for being a more productive member of society. No need to double that up by keying property taxes off of income as well, unless you really want to disincentivize productive labor.
    Not that Prop 13 has anything to do with this. There are loads of very wealthy people in SF who get Prop 13 tax breaks versus more recent and less wealthy buyers.

  96. Posted by NJ

    Mr. Kurtz, p3p, etc.:
    You laud predictability. Do you forget that property taxes CAN be increased from year to year? By your rationale, which seems to be that taxes should remain constant, even this annual increase is apparently an unfair money grab by the government.
    If your answer is that some increase is okay, then your argument falls flat.
    In any event, if you do agree that some increase is okay, the argument becomes one of degree — i.e., by how much should taxes be allowed to rise each year? Today’s limit, which is BELOW INFLATION, simply makes no sense — once you agree that the numbers should be allowed to rise.

  97. Posted by shza

    BTW, this really doesn’t merit a response, but you’ve now thrown up the same straw man twice.
    The stock price example is silly, as I’m sure you recognize. While 49 states do just fine taxing real estate, it would obviously cause huge market disturbances to try and do this with far more liquid assets (huge numbers of people selling off large positions and crashing the market every December 31, etc.). The idea, also, is that the home is part of a neighborhood and city that provides public services. No such connection with stocks. (And also almost certainly preempted by federal law.)

  98. Posted by p3p

    The wealthier one is not getting a local tax break.
    But of course he is, because he is paying less local tax than he would if his local tax was based upon his ability to pay rather than solely upon the value of his residence.
    Property tax has nothing to do with income.
    Yes, my point exactly — currently, it doesn’t. That is part of what makes it closer to a regressive tax than it is to a progressive tax (it is not purely one or the other but falls somewhere inbetween).
    We also have income tax, and the wealthier neighbor in your example is paying more of it
    Yes we do have income tax, but not at the local level, which is exactly the problem. He may indeed be paying more income tax to the US or CA, but not at the local level. He is probably not paying his fair share of local taxes. Interesting that you seem to find income tax acceptable, just not at the local level for some reason.
    You laud predictability“.
    I do not, you misunderstand. I laud taxing based upon ability to pay.
    There are loads of very wealthy people in SF who get Prop 13 tax breaks versus more recent and less wealthy buyers
    Thank you for agreeing that property tax is an unfair arrangement. Prop 13 was, in part, an attempt to address the unfairness that caused it’s own problems and skewed the unfairness in different directions.
    The idea, also, is that the home is part of a neighborhood and city that provides public services.
    Fine, then let’s come up with a system that bases taxes on the burden a home puts on those public services, and increases based upon the actual increases of the costs of those public services. Rather than a system based upon the vagaries of market value, which has only an indirect relationship with the burden on city services.

  99. Posted by Mr. Kurtz

    NJ, if the voters decided they want property taxes to rise more than 2% per year, so be it. But I should point out that the general take from property taxes has far exceeded the rate of inflation since passage of Prop 13, because of the rise in real estate values. Part of that increase was due to Prop 13.

  100. Posted by SocketSite

    The list price for 2901 Broadway has just been reduced to $34,000,000.
    As noted above, the property was initially listed for $55,000,000 in early 2007 and received a rumored four offers a few months later (which were all countered at asking and all walked away).

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