RonBoyd
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
They will wait for... what was it? Oh, yeah the "tailspin" and be among those picking up the pieces... at a tremendous profit.
What will become of California?
- Thread starter Rich_by_the_Bay
- Start date
They will wait for... what was it? Oh, yeah the "tailspin" and be among those picking up the pieces... at a tremendous profit.
OP
OP
Rich_by_the_Bay
Moderator Emeritus
Casino gambling. Legalize Mary Jane.
I haven't the foggiest notion what will happen to California but after looking at some of the information referenced in this thread I'm glad to be where I am. I know ND is a net receiver of Federal monies, probably due to all the farm programs but the state had a surplus of almost 1 billion dollars the last time I checked.
Well, it may happen. It's close to being legalized here in Colorado. There are four dispensaries within walking distance of my condo. The taxes are irresistable to governments.
Rustic23
Thinks s/he gets paid by the post
Oldbabe,
The Texas legislature only meets every two years and then only for about six months. They also have about 18 billion in a rainy day fund that they do not intend to spend. They have said they will cover their shortfall with cuts in government, not raise taxes and not tap the rainy day fund. So while Texas does have a deficit currently, they also have the cash to cover it if they so choose. It is also a right to work state and while there is trouble is some of the major cities, Houston to be exact, they are in no way comparable to CA when it comes to run away spending.
*my information is off the top of my head, the facts may very slightly.
The Texas legislature only meets every two years and then only for about six months. They also have about 18 billion in a rainy day fund that they do not intend to spend. They have said they will cover their shortfall with cuts in government, not raise taxes and not tap the rainy day fund. So while Texas does have a deficit currently, they also have the cash to cover it if they so choose. It is also a right to work state and while there is trouble is some of the major cities, Houston to be exact, they are in no way comparable to CA when it comes to run away spending.
*my information is off the top of my head, the facts may very slightly.
It's $9B so it won't cover the $27B deficit. Gutting spending while not touching the rainy day fund begs the question...what is the rainy day fund exactly for if not to cover costs during economic downturns?
Austin news, sports, weather, Longhorns, business | Statesman.com
I'd LOVE that. Imagine if the money stayed in the states instead of being redistributed from DC according to who has been naughty or nice. Nothing would do more to re-align political power where it belongs. Or, more radically, imagine if the money stayed with the people who earned it.
When looking at the net payer/receiver status of the states remember that you couldn't make a large city out of the entire population of ND or AK (both less than 700,000). I haven't seen any of the payer/receiver statistics that are specified per capita. I suspect they are available but I haven't looked for them.
Rustic23
Thinks s/he gets paid by the post
State deficits.
FT.com / Interactive graphics - US state deficits: Minding the gap
Even this does not tell the whole story. While we hear a lot about CA's pension fund problems, it appears they are not in the worst shape
http://finance.yahoo.com/tech-ticker/11-state-pension-funds-that-may-run-of-out-money-535516.html?tickers=^dji,^tnx,^gspc,spy,dia
FT.com / Interactive graphics - US state deficits: Minding the gap
Even this does not tell the whole story. While we hear a lot about CA's pension fund problems, it appears they are not in the worst shape
http://finance.yahoo.com/tech-ticker/11-state-pension-funds-that-may-run-of-out-money-535516.html?tickers=^dji,^tnx,^gspc,spy,dia
The link that Gumby posted has per capita rankings. Alaska is #1 in Federal Spending Received; North Dakota is #5.
Thanks, I must be going blind, it was right in front of me but all I noticed was the yellow highlighted columns inn the excel spreadsheet.
WanderALot
Full time employment: Posting here.
- Joined
- Sep 10, 2004
- Messages
- 607
I'm a Californian and this deficit is disheartening and completely the fault the electorate and our dysfunctional legislature. I sincerely hope we can get down to business and get this to a more manageable level this year, but am not holding my breath.
I will say that certain states seem to be taking a bit too much pleasure in our downfall. A bit of schadenfreude I guess. This is not a reference to any of the posters on this thread.
I will say that certain states seem to be taking a bit too much pleasure in our downfall. A bit of schadenfreude I guess. This is not a reference to any of the posters on this thread.
Pete
Recycles dryer sheets
- Joined
- May 9, 2008
- Messages
- 350
Prop 13
Getting rid of prop 13, and raising taxes on property would probably have some unintended consequences like lowering property values and creating a zero net gain for the state.
An early retirement forum is the last place I thought I would find people who want to raise taxes...on anything. You should all be so lucky as to have a prop 13. It limits the amount they can raise your property taxes each year to 2%...very fair I would say. 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.
Getting rid of prop 13, and raising taxes on property would probably have some unintended consequences like lowering property values and creating a zero net gain for the state.
An early retirement forum is the last place I thought I would find people who want to raise taxes...on anything. You should all be so lucky as to have a prop 13. It limits the amount they can raise your property taxes each year to 2%...very fair I would say. 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.
I'm in the same boat (CA resident). I'm waiting to see what happens on the state's financial front. A lot of things up the air at 54 yo - can almost RE, currently out of work, kids in college, waiting to see where they will end up. Optimally I'll stay a few more years, but if the tax rates go much higher I will strongly consider out of state relo. Also possible if a kid settles somewhere else or I get a j*b somewhere else. I know a few other higher income people who would also consider moving. I believe that much higher taxes will drive a lot of the higher earners out of the state, so they will never get as much revenue as they expect from higher rates.
You're describing 1980s Hawaii, and somehow we all managed to survive that experience.
Got a link for the unintended effect of raising property tax rates causing lower tax revenues?
M Paquette
Moderator Emeritus
Yup. Looking at property taxes paid by county, it turns out that most California counties rank in the top half of the counties in the US.
The Tax Foundation - Property Taxes on Owner-Occupied Housing, by County, 2005 - 2009, Ranked by Property Taxes Paid (PDF and spreadsheets available here)
Raise property taxes significantly, and you'll find home prices magically dropping to look like some of the Northeast US market.
I know folks back east, living on pension + SS, who are now faced with having to move in their 80s, as taxes have gone from $3,000 annually up to $16,000 on the latest bill. They just can't afford it.
California passed it's property tax cap specifically because this was happening. Older folks were being taxed out of their homes. Of course, a desire to 'starve the beast' also played into that. We can all see how well that worked out.
The LATimes link is a political exercise. On that exercise you can cut EVERYTHING they give an option for and you still have to raise taxes to balance the budget. They don't break out the pensioners and a lot of sub-items, so they make it look like tax increases are inevitable. With the amount of spending that California is doing, I refuse to believe that spending cannot be cut more. It's just that nobody wants to face it. Sort of like Medicare and SS at the Federal level. It's a train wreck not quite happened yet.
Pete
Recycles dryer sheets
- Joined
- May 9, 2008
- Messages
- 350
Congrats on surviving. I wonder if everyone did?
No links, just common sense. People can only afford so much a month. If the taxes go up the P+I must go down.
Taxes, at least in LA county, are based on 1.25%. With houses going for 300 to 500K, taxes are somewhere in between 3750 and 6250 a year. Plenty. In addition we pay extras like Mello Roos which aren't even tax deductible.
Mello-Roos - Wikipedia, the free encyclopedia
On top of that, many homes now come with association fees used on roads, sidewalks, lighting, and other things the county used to provide. Add on almost a 10% sales tax, high registration taxes... well you should get the picture we pay plenty.
Over the past few years there have been many take aways too. We now pay for school busing, school sports, band... They've introduced toll highways. Many state park fees have tripled. We pay some of the highest gas prices in the country.
Pete
Recycles dryer sheets
- Joined
- May 9, 2008
- Messages
- 350
Thanks...My parents were gonna lose their house. They still sing the Howard Jarvis praises.
NW-Bound
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
- Joined
- Jul 3, 2008
- Messages
- 35,712
I think I know what is meant by the "Federal Taxes Paid". It must be the Fed income tax collected from the residents of each state, and any Federal excise tax.
But what is the "Federal Spending"? What does it include? SS and Medicare or welfare assistance, funding for insterstate system? Those are probably included. How about defense spending, or any other commercial-type of purchases? I am simply curious.
GregLee
Thinks s/he gets paid by the post
Raise your taxes, not our taxes.
The issue with Prop 13 is that over time your taxes have less and less relation to the value of your house. Whereas new owners pay all the property taxes. Prop 13 (paraphrasing from memory) only allows 2% increases per year, and if the property value goes down and is reassessed, that is a new basis from which increases can only be 2% per year.
There are special programs in states like Texas that help fix this problem for seniors. For instance, allowing them to let property taxes go unpaid until they die, and then take the taxes from the value of the house.
Some California counties have agreements to allow people to buy a house in a different county, even, and they maintain their low property tax basis. I have a friend who held one of the two highest positions at a University of California school. They had owned their house for a long time and paid very little property taxes. After he retired and started drawing his pension (presumably over $250,000 inflation adjusted per year for the rest of his life), they moved to a different county and maintained their very low property tax basis on their new home. (how nice!)
Warren Buffett mentioned this before, on his place in Mailbu that he had owned for a long time, he was paying a fraction of the property tax of his neighbors.
I would be for a revenue neutral change back to a normal system. Prop 13 also had the unintended effect of cities and counties refusing to approve new housing and creating stringent zoning laws -- this has been the primary cause of housing inflation in California. They favor approving business real estate that generates reliable sales tax revenue.
However, the business unfriendly policies of California has chased businesses away and has started to erode the tax basis.
There are special programs in states like Texas that help fix this problem for seniors. For instance, allowing them to let property taxes go unpaid until they die, and then take the taxes from the value of the house.
Some California counties have agreements to allow people to buy a house in a different county, even, and they maintain their low property tax basis. I have a friend who held one of the two highest positions at a University of California school. They had owned their house for a long time and paid very little property taxes. After he retired and started drawing his pension (presumably over $250,000 inflation adjusted per year for the rest of his life), they moved to a different county and maintained their very low property tax basis on their new home. (how nice!)
Warren Buffett mentioned this before, on his place in Mailbu that he had owned for a long time, he was paying a fraction of the property tax of his neighbors.
I would be for a revenue neutral change back to a normal system. Prop 13 also had the unintended effect of cities and counties refusing to approve new housing and creating stringent zoning laws -- this has been the primary cause of housing inflation in California. They favor approving business real estate that generates reliable sales tax revenue.
However, the business unfriendly policies of California has chased businesses away and has started to erode the tax basis.
RonBoyd
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Rustic23
Thinks s/he gets paid by the post
What causes high property values in CA? I worked for a CA bank in the mid 90's in their appraisal department. That was a question I ask my self. While zoning had an effect on value, it goes deeper than that. I saw that raw land around SF was not that out of land with other areas. However, there was a huge difference between raw land and land that had been platted. The process of platting the land for development was generally very expensive. Once platted, all sorts of fees were incurred. Often the cost of schools and other development options were added to the platted cost of a lot. Add this the increased cost of construction brought on by generally higher prices, locations closer to the city, and before you know it you have a million dollar 1,800 sq ft home.
By the way, Texas has prop 13 (not called this) for all school taxes and for city and county taxes if they choose to freeze them. I believe only 24 of counties currently freeze property tax. I live in one of those. They also have portability, i.e. if you move you can take your exemption along to a more expensive dwelling. Texas law is to keep seniors on fixed income in their homes.
While Texas has high property tax, they generally have lower property values.
By the way, Texas has prop 13 (not called this) for all school taxes and for city and county taxes if they choose to freeze them. I believe only 24 of counties currently freeze property tax. I live in one of those. They also have portability, i.e. if you move you can take your exemption along to a more expensive dwelling. Texas law is to keep seniors on fixed income in their homes.
While Texas has high property tax, they generally have lower property values.
ERD50
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
It's neither common sense nor common arithmetic.
First, many (most?) municipalities use the assessed value to determine how to split a pre-determined tax bill. The assessed values have zero affect on the total amount collected, just how the total bill is divided.
Second, even if the tax was set directly by assessed value, the arithmetic doesn't work. If they doubled your tax rate, the home value would need to drop to half of it's current value for a net zero gain. Seems extreme.
Third, a non-Prop13 wouldn't affect the resale value (which is the only 'value' that matters) because the tax benefit can't be passed on anyhow.
In fact, by splitting up the bill across everyone more evenly, it would proportionately reduce the tax bill, (or reduce the proportional amount of any increases) on the homes that are sold. This would raise home values.
-ERD50
Similar threads
- Poll
