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Old 01-31-2011, 11:53 AM   #81
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Any Californians unhappy with the result could simply emigrate to Texas
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Sometimes I think that our politicians are trying to put me in the position of having to choose between being a pauper in California or a prince elsewhere.
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I would like to move back to N.Calif for my retirment years as I have family there. But the possibility of higher taxes, wider poverty and social breakdown frightens me.
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Those who want to live there, love it so much that higher income taxes or sales taxes won't drive them away IMO.
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I'm just waiting to see what happens to CA this year and see if I should move out of this state.
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Over the years I lost several large corporate clients each year due to moves out of state.
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Lived here in CA most of my life and we will be moving out fairly soon (last daughter heads off to college this fall!!!), as other have stated solution will be a combo of higher taxes (several kinds) and lower level of services
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If some states keep spending, and try to fund it with a constant flow of increased taxes, we can all sit and watch them lose business, lose resident,
These are all quotes from above. If you don't think taxes will hurt prices maybe I can put it this way.
Higher taxes=lower demand=lower prices
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Old 01-31-2011, 12:17 PM   #82
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These are all quotes from above. If you don't think taxes will hurt prices maybe I can put it this way.
Higher taxes=lower demand=lower prices

We are not saying that higher taxes will not affect housing prices... we are saying they will not affect them to a large extent...

Let's use the example above of a $500K house... we borrow the full $500K.. at 6% for 30 years... with taxes the payment is $3431 per month...

Now, double taxes... what is the house worth if we keep the $3431 per month payment About $431K... or a 13% reduction...

And the probability is that it would not drop that much... ie, the supply and demand curve would move prices down, but demand up to a higher number than above...

So... gvmt gets more money...


PS.... just thought of this... does the STATE get any of this money, or is this just a local issue and the state still has a lot of problems with their budget IOW, the state of Texas does not get any of our property taxes... it all goes to local gvmts...
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Old 01-31-2011, 12:55 PM   #83
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CA resident here again. I currently don't own a property but if they did double my property taxes to cover this deficit, then I'm not buying anytime soon. On a 400k house, that's add'l $417 a month in property taxes... another good reason to move out of this state. At least they're making the decision easier and easier.
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Old 01-31-2011, 01:02 PM   #84
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PS.... just thought of this... does the STATE get any of this money, or is this just a local issue and the state still has a lot of problems with their budget IOW, the state of Texas does not get any of our property taxes... it all goes to local gvmts...
It is collected by the counties, but all goes to the state, who then redistributes about half back to the counties. Yes, that is also part of the broken system, as the state legislature uses the pre-distribution funds as part of it's piggy bank.

The current governor wants to change this to leave more funds in place at the local level, and also move more service related decisions back to the local level. (Smaller state government, more local decision making.)
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Old 01-31-2011, 01:18 PM   #85
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Congrats on surviving. I wonder if everyone did?
No links, just common sense.
Well, it's a serious question. I'm not sure whether Prop 13 is a raging success, and I'm not sure whether Hawaii's system is any better. But Hawaii has managed to keep property taxes under control without having to resort to Prop 13 maneuvers.

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We pay some of the highest gas prices in the country.
Preachin' to the choir on that one, too.
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Old 01-31-2011, 03:00 PM   #86
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I still have to sit in defense of prop 13. If I bought my house today my taxes would be well over $6000 a year. I pay only $1200 per year. Even with all the breaks I've had because of prop 13, $1200 is still $20 more that the national average.
Where Americans Pay Most In Property Taxes - Yahoo! Real Estate
I will continue to use the "golden rule of wing walking" here. I will hold on to something sure, prop 13 has been a savior.
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Old 01-31-2011, 03:08 PM   #87
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I will continue to use the "golden rule of wing walking" here. I will hold on to something sure, prop 13 has been a savior.
Did it save the Great State of California from financial ruin? Are you going to have to pay a 'savior' penalty in the form of massive cuts in services and increased taxes and fees elsewhere?

Just askin'...
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Old 01-31-2011, 03:11 PM   #88
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I still have to sit in defense of prop 13. If I bought my house today my taxes would be well over $6000 a year. I pay only $1200 per year.
So why should your neighbor have to pay more than you?

-ERD50
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Old 01-31-2011, 03:13 PM   #89
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They shouldn't be able to tax you out of your house because the values suddenly rise. Example...Rich foreigners bid up housing prices and drive up taxes, forcing elderly people on fixed incomes out.
Isn't this really the crux of the problem? In a rational world, the required government expenditures would be determined and then a tax system (with an appropriate rate) would be established to collect the needed funds (thus, a demand-driven system). Instead, CA (and other states) has a system that collects taxes based on the price of real estate, and spends all that money (and more) in a supply-driven system. An increase in property prices leads to more money being collected, but property prices have very little correlation to the cost of services the state needs to provide (fixing roads, enforcing the law, educating the young, etc). So, house prices went up and more money was collected and spent, which never should have happened. Now that house prices have gone down, the legislature (and the people) are unwilling to make the expenditures match the lower govt revenue. They want a supply-driven system when house prices go up, and a demand-driven system ("these services are essential!") when prices go down. That ain't gonna work, just as it won't work in the budget of a family.

I grew up in CA and remember when Prop 13 passed. It was seen as a way to reign in government growth (taxes and spending). It seems to have distorted the tax base and folks in Sacramento found a way to spend more than the incoming revenue anyway. Still, I'm not sure things would be better today without Prop 13--the state budget likely would have grown even faster, taxes would be higher and economic growth lower, and the scale of the problem would be bigger. Having the law on the books just reduces the tools available to dig out from a problem that never should have happened.
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Old 01-31-2011, 03:34 PM   #90
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I think they will legalize drugs, gambling, and prostitution, with appropriate taxes, of course. They will become even more of a tourist destination because what could be better than riding Magic Mountain with a hooker and a joint, or taking a few mikes and wandering through the redwood forests? The increased taxes and tourist dollars will enable them to maintain their foolish overspending until the big one hits and it all becomes moot. JMO.
Hey that is my state you are talking about , on the other hand, I do like your ideas .

I do not see a way out aside from hoping for another tech bubble. Property value in general is stable except for couple of cities. There is no bargain to be had contrary to the news. Gasoline cosumption is down substantially, an indication of the state of our economy, the rich are still spending and the poor.... Meanwhile, it is sunny and the temperature is around 67, it is beautiful, you guys should come and visit.

mP
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Old 01-31-2011, 03:49 PM   #91
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Prop 13 is the same as other tax exemptions. Why should renters pay a part of your home interest? Why should they pay part of the tax for the disabled? *in Texas at least. One of the drawbacks of property tax is that in a period of rapidly increasing home values people on fixed incomes can be taxed out of their home. Currently my property tax and my mortgage are the same. If it was not frozen, I could easily be paying more in tax than for the home. Do away with Prop 13 in Ca. and you will senior home owners that will have to leave their home. I believe there have been cases in Texas of folks loosing their home because they could no longer pay the property tax.
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Old 01-31-2011, 04:09 PM   #92
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Florida has a similar approach to property tax, which I feel is selfish. People demand services, refuse to pay their fair share, willingly burden their neighbors (and children) with an unfair share. And then they complain.

This is the cornerstone of an unsustainable system.
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Old 01-31-2011, 04:09 PM   #93
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Do away with Prop 13 in Ca. and you will senior home owners that will have to leave their home. I believe there have been cases in Texas of folks loosing their home because they could no longer pay the property tax.
In California (and I suspect in Texas also) you can forego property tax payments in exchange for the state to take your property when you die.

Therefore the lose-your-house-to-property -tax is a myth that keeps getting told.
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Old 01-31-2011, 04:47 PM   #94
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In California (and I suspect in Texas also) you can forego property tax payments in exchange for the state to take your property when you die.

Therefore the lose-your-house-to-property -tax is a myth that keeps getting told.
Not any more. Besides the problems that forgoing taxes and turning property over to the state on death had with mortgage holders and HELOCS (as in "No! Is Mine!"), the various counties didn't want to be in the real estate business any more.

Frequently Asked Questions - Property Tax Payment And Relief - Board of Equalization
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The property tax reimbursement or postponement programs once available to senior citizens and to persons who are blind, disabled, or who have difficulty paying property taxes have been eliminated.
The State Controller no longer accepts filings for Property Tax Postponement.
California State Controller's Office : Property Tax Postponement
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Old 01-31-2011, 04:50 PM   #95
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Ok I stand corrected. My information evidently was dated.
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Old 01-31-2011, 05:03 PM   #96
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It is still available in Texas. You defer your tax, and incur an 8% simple interest penalty. Your heirs have the choice of paying off the tax or letting the county take the home. However, I don't think most mortgage companies will let you do it.
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Old 01-31-2011, 05:17 PM   #97
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One other scenario (a very unlikely one) is that taxes will go up, people will leave, jobs disappear, illegals move to Colorado, rents go down, housing prices fall, and with a much smaller population the state will have a budget it can afford and the state will be much more liveable. One can dream!
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Old 01-31-2011, 05:30 PM   #98
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Isn't this really the crux of the problem? In a rational world, the required government expenditures would be determined and then a tax system (with an appropriate rate) would be established to collect the needed funds (thus, a demand-driven system). Instead, CA (and other states) has a system that collects taxes based on the price of real estate, and spends all that money (and more) in a supply-driven system. An increase in property prices leads to more money being collected, but property prices have very little correlation to the cost of services the state needs to provide (fixing roads, enforcing the law, educating the young, etc). So, house prices went up and more money was collected and spent, which never should have happened. Now that house prices have gone down, the legislature (and the people) are unwilling to make the expenditures match the lower govt revenue. They want a supply-driven system when house prices go up, and a demand-driven system ("these services are essential!") when prices go down. That ain't gonna work, just as it won't work in the budget of a family.

I grew up in CA and remember when Prop 13 passed. It was seen as a way to reign in government growth (taxes and spending). It seems to have distorted the tax base and folks in Sacramento found a way to spend more than the incoming revenue anyway. Still, I'm not sure things would be better today without Prop 13--the state budget likely would have grown even faster, taxes would be higher and economic growth lower, and the scale of the problem would be bigger. Having the law on the books just reduces the tools available to dig out from a problem that never should have happened.

Samclean... it is not a given that the gvmts bring in more income with higher property values... they are supposed to figure out their budget and then establish a tax rate.. I am not in Houston, but IIRC they dropped their rate a few times before the crisis since property values had increased... the problem is with the vast majority that do see the extra income as money that needs spending...
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Old 01-31-2011, 05:33 PM   #99
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Prop 13 is the same as other tax exemptions. Why should renters pay a part of your home interest? Why should they pay part of the tax for the disabled? *in Texas at least. One of the drawbacks of property tax is that in a period of rapidly increasing home values people on fixed incomes can be taxed out of their home. Currently my property tax and my mortgage are the same. If it was not frozen, I could easily be paying more in tax than for the home. Do away with Prop 13 in Ca. and you will senior home owners that will have to leave their home. I believe there have been cases in Texas of folks loosing their home because they could no longer pay the property tax.

I would like to see examples of your last stmt... I believe there is a law that allows the person to not pay the tax and the gvmt can not foreclose on them... when the person dies, they have a lien on the property that must be paid... so if it has happened, then it must be voluntary moving... not wanting that tax bill over their head...
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Old 01-31-2011, 05:47 PM   #100
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So why should your neighbor have to pay more than you?

-ERD50
A valid question. Why should my neighbor pay more than the national average? Also a valid question. I'm just saying I pay enough, my neighbor pays too much, and I would like to help in lowering his taxes...not raise mine.
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Did it save the Great State of California from financial ruin? Are you going to have to pay a 'savior' penalty in the form of massive cuts in services and increased taxes and fees elsewhere?

Just askin'...
Did it save the state?...No...Did it ruin the state?...Don't think so. Did it save many old folks homes and make my life a whole lot better?...Yes. Will there be a cost? Sure, always is. I'm economically conservative so I hope they cut services.
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