Property taxes are a useful tool against property speculation (which is why China is desperately considering one). Likewise, the fact that property tax is "stepped up" on sale also makes people less willing to sell (because they lose their sweet property tax valuation if they buy something else) and so pushes up the prices on the remaining second houses on the market. Grandma isn't going to move out of her 4 bedroom house because she is paying much less on property taxes than if she downsized to a two bedroom condo in the same area.
as you mention China - the property prices are declining there 3rd year in a row. in lower tier cities more than in Tier A, but also there they decline or stopped climbing.
we will have to wait and see how the common prosperity laws that Xi proposed will further change the life of people - and if they actually work, we must start thinking why WE were not able to do that in the first place with our democratic system that is supposed to represent the people.
Tier 1 cities haven't, but Tier 88 cities have been. Actually, since the red families control most of the real estate companies, they often just prevent you from selling (real estate agents won't show your house) rather than risk scoring a "loss in real estate value." So in China it is better to look at sales volume rather than sale prices.
I think that's intentional. I understand that to combat demographic disaster China has been depopulating the villages in favor of megacities. So tier 88 should get cheaper while tier 1 gets crazy.
Tier 88 cities are hardly villages, they are cities with 1 million or more people. And they aren't shrinking, they are growing as well, most of China's growth will happen in these cities, especially since they are much easier to get hukou in than tier one cities. What good is living in Beijing if you can't send your kids to Beijing schools?
China is looking for a long term solution, not quick fiat fixes from above. Despite all the mistakes they make, the Chinese government isn't dumb, they realize some continuous pressure against speculation in the property market will work better in the long term.
Why would she move into a cheaper place and thus get a higher effective tax rate and pass less advantage on to her heirs?
But the whole conversation about Grandma is stupid anyway. The California Tax Postponment Program allows her to stay in her house, with zero tax pressure, forever. Plenty of states, even high property tax NJ, have something like that and it's just fine.
Brings it into line with all other states in the country which have more sensibly priced housing market. Its crazy that someone who's owned a house in the bay area for 50 years pays a tiny fraction of the neighbor who bought just now. Its certainly one of the reasons CA housing is expensive. If I knew taxes were capped you can pay more.
I can understand you want to reward people who stay in the area for a long time, the reward is too great IMO.
You’d force a lot of older people like my parents out of their homes. Itll eventually generation out over the next 10-20 years by itself, with the exception of commercial properties like Disney. If you make them pay, there’s a chance they just straight up leave.
Good news! California has a system in place in place that addresses exactly this problem: https://www.sco.ca.gov/ardtax_prop_tax_postponement.html
It allows taxes to be deferred and taken out of the estate. Removing Prop 13 would leave this system entirely unaffected.
Your parents, assuming they are old enough to be seniors, will be fine. Your well-founded concern has been heard and handled. You can rest easy, knowing that your parents and other homeowning elders in California will not be forced out of their homes by property taxes they cannot afford.
Wow. Thank you for addressing this in such a friendly way. Every time I point it out I can't help but mock the successful owners but really your way of saying it is more effective
I don't understand. The thing the user was concerned about - their parents being forced out by taxes - is neatly prevented. What have I missed?
Or should I suppose that the goal is not keeping their parents where they are, but instead to inherit a valuable asset at exceptionally favorable taxation?
Then the heirs lose out, they probably won't like that too much, nor will the pending decedents be happy knowing that a big chunk of their estate is going to be seized. I don't see how this is going to really make higher taxes more palatable.
You'll have to pardon me if I have limited sympathy for the ability of the heirs to rich (defined here as multiple millions of USD in value) estates as they clamor to inherit tax rates from before their births. I understand the emotional pain of losing the all-important family home, but I am unwilling to structure public policy around vast tax breaks so that families flush with unearned wealth keep it.
Nobody likes paying taxes. It's literally never a pleasurable or enjoyable experience. Yet it's one that furthers society and allows it to do things like fund schools - a chronic problem in California.
> Nobody likes paying taxes. It's literally never a pleasurable or enjoyable experience.
Not disagreeing with your points, but one major reason that it's "never a pleasurable experience" to pay tax in America is that ideologues deliberately designed the process to be as painful as possible, to give taxation a bad name. Sadly, it's working.
Too bad? Generational wealth transfer is the root of many of society's ills.
If parents bought a home in CA in 1980 for $300k, and then did little more than regular upkeep and minor improvements, and then die in 2021, why should their offspring be entitled to a $10M windfall? They've done nothing to earn it, besides being lucky to be born to parents who were lucky enough to be able to buy housing in an area that they were lucky enough to keep living in when that area became popular.
Ah yes, "derangement". What a way to argue your case. You don't agree with me, so I must be deranged!
No one is an island. They did not achieve their wealth on their own, without benefiting from the commons. Accruing all those benefits to a single family's estate is not in society's best interests.
We already have estate taxes, income taxes, sales taxes, property taxes. We already have collectively agreed as a society that everyone needs to share in the cost of common services and infrastructure. From there it's just a negotiation as to how much. You seem to think people (especially rich people?) should get to pay less. I think they are not paying nearly enough, and have been fleecing the commons for centuries.
The idea that you think anyone who disagrees with your taxation policy is "deranged" speaks volumes.
No, I just think it's a natural for society to encourage its members to invest in the long-term future of that society by way of endowing their children with the rewards of their investment and good fortune. That's a natural and universally understood principle, and it is indeed deranged -- i.e. a deviation for ordinary and healthy function -- to govern as though this is bad for society.
It's quite the uphill battle you've chosen, I hope you keep talking like "parents shouldn't be allowed to privilege their children" is a weird idea.
Anyone who has received the economic and educational benefits of a wealthy family has gained immensely by being heir. Plus the estate itself!
What's being proposed here doesn't stop generational wealth transfers. The suggestion at hand means that the owners of real property in California would have to pay (or defer) an amount of tax that's related to its current value. Inheritors would have to continue this, instead of inheriting a tax assessment from their parents or grandparents along with the ancestral pile.
A family is absolutely allowed to prioritize a child as the target of its earned resources and good fortune and exploitative practice or whatever. Potentially less a cut, because society has agreed to tax large inheritances. The family just shouldn't get to pass down an inherited tax break too. That's aristocratic, which is unacceptable in a free democracy.
I think his point is, you don't get to pass wealth not earned by you to your heirs. You had nothing to do with 300k to 10m appreciation, so you nor your heirs are entitled to it. The appreciation is in land, not in the small improvements to the house. Owners never have influence on the price of land. That is strictly determined by the surrounding dwellings.
> Owners never have influence on the price of land.
One of the most frustrating thing about property tax discourse is that people feel like the fact that they hit the jackpot by accident is grounds for a tax cut. As if getting rich by the work of other is more deserving of a break vs. earning your own wealth.
> Owners never have influence on the price of land. That is strictly determined by the surrounding dwellings.
But then the owners of those surrounding dwellings also had nothing to do with the appreciation of their houses, right? Only the owners of their surroundings added value, and so on. What a contorted argument you'd have to make, to claim that land somehow accrues value due to zero action of the people who happen to occupy it. Land appreciates because of the choices made by the community who lives there, e.g. to attract industry, prioritize certain uses, create or draw desirable businesses, etc.
The choices made by your parents, and the other parents from your previous generation, are almost entirely the reason why a the neighborhood you grew up in appreciates. And they make those decisions for your benefit, because they want to create wealth and community for you.
The responses to my comment confirm that yes, liberals absolutely believe nobody has a right to investment of their parents. What an alienating perspective, I hope you guys run with it and shout it from the roofs.
You're right, it's the community and its actions that made the land appreciate. Surrounding dwellings and their occupants are just a part of that.
You can be entitled to inheriting the value that you and your parents created, wchi you'd somehow have to extract from the surrounding dwellings, the land of which appreciated due to your parents' good actions.
You are not entitled to appreciation of your land, because others in the community are responsible for it.
You essentially have these solutions:
1. let land owners keep the value created by others in the community, which works only if 100% of members of the community have a piece land, and it has to be of equal value. This inevitably eventually results in a feudal system of landowners and serfs.
2. Take the value of land appreciation from your neighbors properties and they take back value they added to yours. In theory this is is the ideal solution, but omits non-land owners who also contributed
3. distribute the value back to the community responsible for creating the value in the first place by equal share using a citizens' dividend collected by land value tax which captures all the misallocated value appreciation
I would defer to no less than a luminary like Thomas Jefferson in my attitudes toward the would-be inheritors of all those million-dollar ranch-style SDUs, who said something along the lines of..
> I set out on this ground, which I suppose to be self evident, "that the earth belongs in usufruct to the living": that the dead have neither powers nor rights over it.
(Though really, even before I knew of Jefferson's attitudes about inherited wealth, I'd read enough to know that divesting children of unearned windfalls isn't necessarily a bad thing. Can't take it with you, ya know.)
If it encourages them to downsize from their family home after their children have moved out, its a better outcome than having lots of older couples living in 5 bed houses mixed in with families in High Density buildings.
