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Comment by surlyadopter | Hacker News Reader

Property and sales tax in CA are both very high(varies by county but most are up there). The LA county sales tax is 9.75%! You are right that CA has a lot of potential. The double whammy of decreased revenues from the recession impacted construction industry coupled with the soaring cost of entitlements over the last half decade are probably the two major factors in the states current situation. They are not the ONLY ones, but they are the most signifigant.

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Property taxes are actually at the root of much of the problem, but not because they're too high. Thanks to Prop 13, which prevented property taxes from increasing except when a property is sold, they're very unevenly distributed. In essence, we have a subsidy on old homeowners paid for by new homeowners. Not only has this starved local governments of revenue traditionally used to pay for schools, police and other municipal services, but it has badly distorted the housing market.

For example, my parents bought a house in Santa Cruz, CA for about $100,000 in the 1970s. Before the housing crash, the house was probably worth more than 8x that. This makes it very difficult to move, because if they did their property taxes would go up almost an order of magnitude. The problem is even worse with commercial real estate, which can stay in the same hands for decades.

Without repealing Prop 13 and making our tax system more equitable, we cannot reduce the high property/sales taxes that currently pay for municipal government.

Without repealing Prop 13 and making our tax system more equitable, we cannot reduce the high property/sales taxes

I don't know anything about this issue, but your statement here doesn't make logical sense. You're saying (if I interpret it right) that "property taxes can't be reduced because some people are already paying low property taxes".

What am I missing?

That's exactly right. The property tax rate (the percentage of the value of your home that you must pay every year) cannot be reduced, because many property owners are paying that percentage on the values of their homes twenty years ago or more. This makes the tax rate very unfavorable for new owners and very good for those who have owned since Prop 13 was passed in 1978. If everybody paid tax based on their current home price (an order of magnitude difference for some properties), the tax _rate_ could be reduced for everybody (though many would end up paying more tax).

Edit: re-reading my original comment, I should have made clear that I was talking about the property tax rate, not the dollar amount assessed, which will of course be different for everybody.

I encourage people to read into Prop 13 if they are not informed about the issue.

He is saying that the burden of property tax is not distributed evenly while the benefits of the property tax in the form of more educated populace, fire and policy protection, and better infrastructure are enjoyed evenly. People living in their houses longer are being subsidized by the new home owners, who are paying high property tax. If it's taxed more evenly, those new home owners would see a lower property tax bill.

How is this different than 'most every other tax? One way or another, it's always one group of people subsidizing another group. Why the call for tax equality here, when in pretty much every case we hear calls for "progressive this" and "helping disadvantaged that"?

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