Wealth Tax in California?

[scriabinop23]

Quote from veritas007:

I live in California and am considering leaving because of the high state tax rate which is 9.3% over 42k. I highly double this would pass, but an additional tax high of 17% would create a exodus from California. I would definitely leave. A tax rate this high might actually cause a decrease in revenue for the state. I'm thinking of moving to the caribbean partly because of the tax implications. I love cali though.

yes agreed. this is a stupid tax. This guy doesn't know anything about the Laffer curve. Nor does he know anything about market price for taxes. The reason there is so much wealth in CA is because of the nice weather, etc. They *already* pay a premium that the market determines.

http://en.wikipedia.org/wiki/Laffer_curve

Prop 13 (prop tax collection) is definitely broken though. That needs to be abolished. If you merely equalized recent homeowner taxes with grandfathered buyers, you get a more equitable distribution of services versus dollars paid into the system.

Example of inequities:
(I'm in San Diego)
I bought a few years ago, am 28, and pay $7500/yr in prop taxes. My neighbor across the street who is about 55 pays $2400 and enjoys the exact same house as well as more personal income. I'm not for kicking poor seniors out of their home, but poor seniors are the minority and shouldn't determine the *rule*. I know of people who bought here in socal (in Del Mar for example) who own a 2 million $ + house a block or two in from the Beach who don't pay much more than $1k/yr in prop taxes because they bought 40 yrs ago. Just doesn't make sense. How is the state expected to pay for its schools (err.. keep up with cost inflation) with a bunch of freeloaders, most who aren't needy?

 

[duffman]

Prop 13 wasn't a problem until Grey Davis boosted our state's budget to a point that was unsupportable by revenue trends. When you are 55 you will get the same benefit your neighbor now enjoys so stop worrying about it. My neighbor bought at one tenth of my price so what? My household budget shouldn't fluctuate because real estate becomes trendy. My property tax gets increased by a small amount each year which is fair maybe the percentage should be higher. Look at the trends in spending and revenue and you will likely see that government needs to control its spending. We got into this mess because Grey Davis assumed that all of the revenue they were getting from the internet bubble stock sales would continue. Either way, Prop 13 is not going to go away so it doesn't really matter.

Quote from scriabinop23:

yes agreed. this is a stupid tax. This guy doesn't know anything about the Laffer curve. Nor does he know anything about market price for taxes. The reason there is so much wealth in CA is because of the nice weather, etc. They *already* pay a premium that the market determines.

http://en.wikipedia.org/wiki/Laffer_curve

Prop 13 (prop tax collection) is definitely broken though. That needs to be abolished. If you merely equalized recent homeowner taxes with grandfathered buyers, you get a more equitable distribution of services versus dollars paid into the system.

Example of inequities:
(I'm in San Diego)
I bought a few years ago, am 28, and pay $7500/yr in prop taxes. My neighbor across the street who is about 55 pays $2400 and enjoys the exact same house as well as more personal income. I'm not for kicking poor seniors out of their home, but poor seniors are the minority and shouldn't determine the *rule*. I know of people who bought here in socal (in Del Mar for example) who own a 2 million $ + house a block or two in from the Beach who don't pay much more than $1k/yr in prop taxes because they bought 40 yrs ago. Just doesn't make sense. How is the state expected to pay for its schools (err.. keep up with cost inflation) with a bunch of freeloaders, most who aren't needy?

 

[AAAintheBeltway]

It's never been clear to me why existing homeowners should see their taxes go up dramatically to pay for schools, services, etc for new developments. Most of them would prefer the new developments weren't built at all, but they not only have to deal with increased congestion but have to foot the bill for them as well. Not just a California problem. Then there is the problem of people on fixed incomes or retirees getting socked with huge property tax bills due to inflation. They aren't planning on selling so the inflation doesn't help them at all.

The bottom line is that developers should pay the full cost of the increased population they attract. It is a question of fairness.

 

[gnome]

Quote from AAAintheBeltway:

".. The bottom line is that developers should pay the full cost of the increased population they attract. It is a question of fairness.

When it comes to taxes, "fairness" is the LAST consideration.

 

[scriabinop23]

Quote from AAAintheBeltway:

It's never been clear to me why existing homeowners should see their taxes go up dramatically to pay for schools, services, etc for new developments. Most of them would prefer the new developments weren't built at all, but they not only have to deal with increased congestion but have to foot the bill for them as well. Not just a California problem. Then there is the problem of people on fixed incomes or retirees getting socked with huge property tax bills due to inflation. They aren't planning on selling so the inflation doesn't help them at all.

The bottom line is that developers should pay the full cost of the increased population they attract. It is a question of fairness.

Not sure about that. This is a matter of values. In a secular inflation environment, school costs ARE going up. And tax revenues won't keep up. Who should pay for the schools? I say we all should. Maybe according to your line of thought there should be no public school system and it should be 'pay as you use'.

The point remains the same that we are in a secular inflation environment and our tax system should either progressively match it (which proposition 13 doesn't allow), or the entire fed policy and economic system needs to change to accomodate a flat price picture. Thats not going to happen. Decreasing money supply and government programs (both sources of aggregate demand) are not happening any time soon.

I guess my point: taxation policy should be consistent with monetary policy, and its not. That leads to unsustainable income shortfalls which necessitate excessive borrowing to make up the difference.

I'm all for no inflation accompanied with economic growth -- but no one seems smart enough to figure that one out (technology improvement & business investment is the only sustainable way to do it, as a method of increasing aggregate supply ... instead we do it by increasing govt programs & money supply & spend money on unneeded wars).

Blaming excessive development on new homebuilders and excessive new demand is also goofy. What about the fact that prop 13 creates an environment where homeowners are incentivised NOT to sell (to avoid higher prop tax revenues)? Less supply hits the market, and prices are further driven up, accentuating these very inequalities that stimulated the creation of Prop 13.

Prop 13 = flawed. It would've been ten times more effective to just create a program that allowed means based reductions of property taxes.

 

[blackjack007]

Quote from scriabinop23:

Example of inequities:
(I'm in San Diego)
I bought a few years ago, am 28, and pay $7500/yr in prop taxes. My neighbor across the street who is about 55 pays $2400 and enjoys the exact same house as well as more personal income.

and in 30 years you'll be that lucky guy paying $14000/yr in prop taxes when the new couple nextdoor pays $35000. will you be whining then, like you are now?

shut up already.

you wanna hear some whining? how about me paying nearly 200k in income taxes for 2007 when others i know pay $1500.

no one feels sorry for you or for me.

 

[clacy]

Quote from blackjack007:

and in 30 years you'll be that lucky guy paying $14000/yr in prop taxes when the new couple nextdoor pays $35000. will you be whining then, like you are now?

shut up already.

you wanna hear some whining? how about me paying nearly 200k in income taxes for 2007 when others i know pay $1500.

no one feels sorry for you or for me.

I don't think he's whining. I think he's expressing his dislike to the unfair tax burden that most middle class and higher Americans are faced with. In Cali it is worse obviously, but this is not unique to just CA.

It's not just a high federal tax rate, it's state tax, property tax, sales tax, hotel tax, air travel tax, gas tax, licensing your car, and every other tax that politicians are able to imagine.

And when you meet your maker, it's time to fork over half of what you were able to tuck away, to the politicians once again.

 

[Eliot Hosewater]

Quote from veritas007:

I live in California and am considering leaving because of the high state tax rate which is 9.3% over 42k. I highly double this would pass, but an additional tax high of 17% would create a exodus from California. I would definitely leave. A tax rate this high might actually cause a decrease in revenue for the state. I'm thinking of moving to the caribbean partly because of the tax implications. I love cali though.

Just curious, where in the Caribbean would you move to?

 

[jficquette]

Quote from scriabinop23:

Not sure about that. This is a matter of values. In a secular inflation environment, school costs ARE going up. And tax revenues won't keep up. Who should pay for the schools? I say we all should. Maybe according to your line of thought there should be no public school system and it should be 'pay as you use'.

The point remains the same that we are in a secular inflation environment and our tax system should either progressively match it (which proposition 13 doesn't allow), or the entire fed policy and economic system needs to change to accomodate a flat price picture. Thats not going to happen. Decreasing money supply and government programs (both sources of aggregate demand) are not happening any time soon.

I guess my point: taxation policy should be consistent with monetary policy, and its not. That leads to unsustainable income shortfalls which necessitate excessive borrowing to make up the difference.

I'm all for no inflation accompanied with economic growth -- but no one seems smart enough to figure that one out (technology improvement & business investment is the only sustainable way to do it, as a method of increasing aggregate supply ... instead we do it by increasing govt programs & money supply & spend money on unneeded wars).

Blaming excessive development on new homebuilders and excessive new demand is also goofy. What about the fact that prop 13 creates an environment where homeowners are incentivised NOT to sell (to avoid higher prop tax revenues)? Less supply hits the market, and prices are further driven up, accentuating these very inequalities that stimulated the creation of Prop 13.

Prop 13 = flawed. It would've been ten times more effective to just create a program that allowed means based reductions of property taxes.

Schools need to be privatized. Government doesn't belong in education. The only reason it got involved originally was because there was no one else to do it. Now our economy can create companies that can do a better at educations then the government can.

California spends about $12k per student per year. I say disband all of the government infrastructure and give families $12k a year to send them to private schools and get a real education.

John

 

[jficquette]

Quote from AAAintheBeltway:

It's never been clear to me why existing homeowners should see their taxes go up dramatically to pay for schools, services, etc for new developments. Most of them would prefer the new developments weren't built at all, but they not only have to deal with increased congestion but have to foot the bill for them as well. Not just a California problem. Then there is the problem of people on fixed incomes or retirees getting socked with huge property tax bills due to inflation. They aren't planning on selling so the inflation doesn't help them at all.

The bottom line is that developers should pay the full cost of the increased population they attract. It is a question of fairness.

I agree. In the old days people worked paid off their house and lived for basically free except for utilities.

Now, how do you retire and pay $20k a year in property taxes? It has the seniors in a real bind. I believe we should do away with property taxes or at least eliminate them for people who are over a certain age and income level.


John