tax limit prop 13 supermajority parcel tax

A New Yorker Goes Further While In California ...
kern county tax reform split roll land value homelessness

Los Angeles Times et al Poke at Prop 13

It's not easy to challenge Prop 13 and land speculation but one prof knows goes even further -- to the root solution. We excerpt three 2012 editorials on property tax reform from (1) Los Angeles Times, Dec 6, (2) Bakersfield Californian, Dec 15, and (3) New York magazine, Nov 22 by J. Davidson.

by Editors at Lost Angeles Times and at Bakersfield Californian and by Justin Davidson

The 1978 tax limitation measure was in many ways the hallmark of a generation of Californians. It capped property taxes at 1% of assessed value. It limited annual increases in value for property tax purposes to no more than 2%, regardless of how high a property's market value jumped, until ownership transferred or major improvements were made. It banned the state from imposing any new property tax.

And it allowed local governments — cities, counties, school districts, transportation districts — to raise "special taxes" (taxes restricted for use to particular purposes) only with two-thirds voter approval.

Unlike a regular property tax governed by Proposition 13, a parcel tax is a flat fee assessed against each piece of real estate regardless of big or how valuable the property is. The owner of a quarter-acre lot on the poor side of town pays the same as the owner of a 1,000-acre estate. And that goes to the nub of the issue about changing the parcel tax requirements.

The notion of equal fees on unequal parcels of property is hardly fair or sound policy. Perhaps the real question should not be whether to reduce the margin to 55% for parcel taxes, but whether residents should be able to increase traditional value-related property taxes.

It matters little whether supermajority requirements date to 1849, 1978 or 1996; the question for the current generation of Californians should be how to shape the rules they use to tax themselves to finance their government. The laws set down by their forebears in constitutional conventions or at the ballot box may be instructive, but they are not sacred.

To read more

So far, no one has mentioned rolling back the hallmark cap on residential property tax increases. While this provision has created just as much trouble as any other in Prop. 13, polls show consistent public support for it.

Assemblyman Tom Ammiano, D-San Francisco, has proposed changing the method of taxing commercial property, imposing a so-called "split roll" that would tax commercial property at market value. Since commercial property changes hands much less often than homes, it is reassessed less often and therefore enjoys far more benefits from Prop. 13 than residential properties.

It could significantly impact tax revenue. Take Kern County, for example, with its vast tracts of land owned by energy companies, mainly oil and gas but increasingly wind companies, too. The current combined value of that land exceeds $35 billion. Significant new revenue would result if those properties were reassessed more often and taxes paid on property values that were closer to the actual market value.

It's completely reasonable to question the need for a two-third majority of the vote to raise special taxes locally. What justification is there to require such an overwhelming percentage of the vote?

Kern County's attempt to raise the sales tax a half-cent to help fund local roads garnered roughly 56 percent of the vote in 2006 but failed to meet the two-thirds requirement. In tax-averse Kern County, 56 percent is a major victory on a tax increase. More recently, Los Angeles County voters in November overwhelmingly supported a measure to increase sales tax to pay for transit. But a mere 66 percent of the vote wasn't sufficient: It fell a half-percentage point short of the two-thirds threshold.

A call for debate on this topic is not to be confused with a call for more taxes. But there's no denying the tax system is broken. And it's long past time to explore ways to fix it.

To read more

New York has 3,000 adults living on the streets, and another 47,000 people forced into homelessness by the economy; shelters are overflowing.

In a city as dense as New York, land can be even harder to come by than money. Yet plenty of vacant lots are scattered around the city.

To free them up, NYU urbanism professor Mitchell Moss proposes taxing fallow land at a high enough rate to prod owners to build now or sell to those who will.

To read more

JJS: California led the nation on property tax selfishness. Maybe now Californians can expand their debate to include the ideas of New York reformers.

Public recovery of site rent is not only immensely beneficial, the payment of location value to one’s community is also a sine qua non for living sustainably in prosperity. Presently, it’s the speculator’s grasping for land rent that leaves some parcels poorly utilized and wanna-be land-users in the cold, stuck in poverty. Further, it drives waste of land and resources. None of these fundamental problems can be solved as long as land remains an object of speculation, yet all of them can be solved, experience shows, once society begins to recover the socially-generated value of locations.

Recovering rents allows even more fundamental reforms. It becomes possible to eliminate counterproductive taxes on labor and capital. And, coupled with abolition of subsidies to special interests, that makes it feasible to pay citizens a dividend. This total package of the reform of the flow of public revenue is a conversation every community should be having.


Editor Jeffery J. Smith runs the Forum on Geonomics and helped prepare a course for the UN on geonomics. To take the “Land Rights” course, click here .

Also see:

Why should Prop 13 be sacrosanct?

What's the Fair Price for Land Rent?

The Rich Get More From Government Than Anyone

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