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> The only people this is appealing for are people who fancy themselves analytically minded economists with no interest in the practical humanity

Most states in the US do not have Prop-13-like laws and get by just fine. For the few states that do, they are less restrictive taxation-wise than California's.

Prop 13 has completely distorted the housing market; it is, perhaps unintuitively, a co-cause of CA's housing unaffordability issues. (Prop 13 discourages new development, and is an enabler of housing NIMBYism.)

We of course shouldn't just abolish Prop 13 overnight, or lots of people will get displaced, also overnight. But we should absolutely reform it and phase it out over time, while building more housing, as fast as we can (something that will be a little bit easier to do as all the NIMBYs realize that if they keep shooting down housing projects, their property taxes are gonna go up a ton).

Prop 13 is a bit of a nothingburger anyhow when you consider median homeownership period in CA is only like 2 years longer than national average, rather than the myth that seems to be perpetuated of every home being a 40+ year hold paying a couple dollars in property taxes. And when that home is sold the tax assessment of course goes right back to market rate, and boy that is substantial when you have what would be a 450k home outside of Boston go for 2.1m with a 1% tax. 21 thousand a year off a single 50ft wide lot is no slouch in terms of tax revenue.

> And when that home is sold the tax assessment of course goes right back to market rate, and boy that is substantial when you have what would be a 450k home outside of Boston go for 2.1m with a 1% tax. 21 thousand a year off a single 50ft wide lot is no slouch in terms of tax revenue.

The problem is all the tax revenue being lost at the municipality level for decades. National tenure average is ~12 years. Los Angeles is 20 years, SF is 16.5 and SJC is in between. It clearly has a meaningful effect, it's just harder to buy into the market and keep the home over a long period of time.

San Francisco receives over $3,000 per capita in property tax revenue alone. Dallas receives about $1,200 per capita. NYC is less than $1,000, though I gather NYC has their own property tax issues.

And California has an income tax, whereas Texas doesn't.

Prop 13 has it's problems, but I don't think they're as significant as the rhetoric claims. It makes for a great excuse, though. Politicians can blame Prop 13 for why they can't spend as much on services as people demand, and now it's become the common wisdom--but for Prop 13 California could afford to spend much more than it does, and the housing affordability crisis would end, too. It's just wishful thinking.

I don’t think the housing affordability crisis ends and I don’t think that’s the right way to model it. SF has one of, if not the highest, $/sq ft in the US. And prop 13 is suppressing it - estimates indicate that property taxes revenues would double meaning that 2.5k/person would become 5k.

And remember that that 2.5k/person is only for residential properties. commercial properties still fall under prop 13 and that’s about 50-60 of the other tax. So a full repeal would make it closer to 10k/person instead of the current 5k.

I agree the story on rents and home prices would be unclear because ultimately the people might move and just rent out their homes with property taxes baling into the new rental price.

What would they even do with $10k per person? That seems insanely high.

Also seems unlikely. It might depress housing prices and act as a natural counterbalance (but then rents and Col drops too). I think it’s really hard to model.

I don't think housing costs would drop that much, if at all. What matters is the monthly mortgage payment. Property prices drop when property taxes go up, but mortgage payments tends to stay similar.

In one sense that sounds like free money for the state. However, home equity constitutes the largest share of savings for people, and that's more true the lower down the income ladder you go. So you're taking money out of the working- and middle-class. In some circles home equity is considered a poor savings vehicle, but they don't seem to consider that it's the only secured loan most people can access for leveraged investment. It's the only investment available to most people that let's them leverage capital markets the way the very wealthy can.

And FWIW, residential rents also track monthly mortgage payments, so renters aren't likely to see any difference, either. On average renters pay roughly the same amount per month they'd pay as owners, just without building any equity. I suppose they might be slightly better off after accounting for transfer payments (i.e. public services, entitlements, etc), but they'd be even better off if they could become owners rather than renters.

"I don't think housing costs would drop that much, if at all."

That all depends on if people still want to live there, or can afford it. People tend to be sensitive to taxes, especially if they don't see it improving their lives. Businesses can be sensitive to this sort of thing too. And if they leave, people may leave too. California is already at a net negative when looking at joiners vs leavers. It's mostly been lower wage workers, but in recent years middle and high earners have also been leaving. The population is the same as it was 5 years ago.

"Property prices drop when property taxes go up, but mortgage payments tends to stay similar."

That might be roughly true for a person who just purchased and the federal property tax deduction is uncapped. A retiree who is getting a break on taxes is likely to see a big increase. Not to mention if the house is paid off, then there is no mortgage that could offset it.

> What would they even do with $10k per person?

Flock. We need more Flock.

I’m sure they can find some things to hire McKinsey to do feasibility studies on the feasibility of doing a feasibility study.

I remember when Prop 13 was on the ballot. The newspaper reported that if it passed, it would eviscerate the police and fire budgets. It passed, and nothing happened to the budgets.

> And California has an income tax, whereas Texas doesn't.

Which isn't just a few percent but around ~10% (depending on income).

It's not reset of you inherit, or a bunch of other bullshit exemptions.

We live in a gerontacracy. Every advantage and tax break and handout is given to the elderly and the ladder has fully been pulled up for the new generations.

They patched that with a recentish assembly bill, but they really need to patch the LLC loophole too.

Prop 13 also applies to commercial real estate.

Most states also rely on sales taxes and various fees, and assign limited property taxes. A Georgist land value tax would have much greater effects than the current tax regimes.

Many states have senior property tax reduction programs. It doesn't go as far as prop 13, but had similar goals.

Prop 13 isn't for seniors, though, it's for all ages. And the heirs inherit the tax base. A senior-only prop 13 would reset at death, so at least it's limited in duration.

The effects have got to be pretty intense.

‘We need new shit! Let’s raise taxes.’ While not having to pay them yourself.

A common one I've seen is that for the elderly, property taxes are deferred until they die and are then deducted from their estate (including a sale of the house).

IMO this is a much more fair system than just saying "lol no taxes on the elderly."

> Prop 13 has completely distorted the housing market; it is, perhaps unintuitively, a co-cause of CA's housing unaffordability issues. (Prop 13 discourages new development, and is an enabler of housing NIMBYism.)

I have heard this assertion with no proof or backing data a lot. There is an assumption but no explanation how kicking long time residents out of their homes due to tax pressure is a benefit to the community, or real estate market prices. Real estate agents and other service companies might benefit from more transactions.

There is also usually no mention that the main problem of Prop 13 is that it applies to commercial and industrial properties, not just individual primary residences. Individuals have a limited impact scoped to their life, but tax implications applied to long term corporations is what has an outsized effect.

The nonexistence of Prop 13 in other states should be pretty clear evidence that there are more options besides Prop 13 or kicking out lifelong residents.

California already has property tax deferment.

Sure, Florida doesn't have prop 13 and experiences 10x the property tax forclosure rate of California. It's not a desirable thing.

Florida also doesn't have swarms of homeless people like CA does.

I find that forcing the elderly out of multimillion dollar homes and into apartments or even smaller homes is infinitely preferable to the human catastrophe plainly obvious on the streets of LA and SF.

> There is an assumption but no explanation how kicking long time residents out of their homes due to tax pressure is a benefit to the community

One benefit of an equal property taxation system would b having workers close to the city centres where they work rather retirees.

Some things to keep in mind:

1. There are many states such as New Jersey or Texas that do not have Prop 13 style laws and their seniors are not suffering excessively. However housing is much more affordable for younger people in those states.

2. States that freeze property taxes have more volatility and boom/bust cycles. You are trading being shielded from tax volatility for increasing economy-wide volatilty and asset price volatility, so the gains are not as high as you think, and seniors are exposed to this volatility indirectly.

3. There are more targeted relief mechanisms available, such as deferring the tax liability until the owner dies for senior owners.

Many states have prop 13 style laws, and they’re fine. The key difference is that they kick in at retirement age.

Kicking in at retirement age plus limiting it to a single owner occupied property is the key, IMO.

In California, it applies to multiple properties, you can pass it down to your children and it applies to property owned by businesses both commercial and industrial, which is absolutely crazy.

California has basically created a class of landed gentry.

As someone from NJ...you think seniors and young people don't have affordability problems, especially wrt housing here, in the 5th most expensive state to buy a house? (California, Hawaii, Massachusetts, Washington, New Jersey, in that order, according to redfin, if you're going by house cost to income ratio, NJ is 6th)

https://www.redfin.com/blog/most-expensive-states-to-buy-a-h...

> you think seniors and young people don't have affordability problems?

Of course I don't think that, which is why I didn't say it. That would be a silly thing to write. What is the advantage for you in mischaracterizing what someone wrote and then expending effort to "correct the record" for a statement no one made?

You created a strawman and then knocked it down.

What I actually said: "New Jersey or Texas that do not have Prop 13 style laws and their seniors are not suffering excessively. However housing is much more affordable for younger people in those states."

Both of these statements are demonstrably true. Let's look at the data.

   * NJ price to income ratio for housing: 5.5
   * mortgage cost burden: 31% of mortgage owners spend more than 30% of their income on housing.
   * renter cost burden: 52% of renters spend more than 30% on rent

   * CA price to income ratio for housing: 8.0
   * mortgage cost burden: 38% of mortgage owners spend more than 30% on housing
   * renter cost burden: 58% of renters spend more than 30% on rent

So housing in NJ is more affordable than in CA.

Now, let's look specifically at seniors.

In California:

   * 68% of senior renters are cost burdened
   * 35% of senior homeowners are cost burdened

In New Jersey:

   * 59% of senior renters are cost burdened
   * 35% of senior homeowners are cost burdened

So we see that across the board, seniors in NJ are not cost burdened more than in California, and that in fact they are cost burdened a bit less.

Therefore if your solution is to look to Prop 13 style fixes to address cost burdens for either seniors or the general population, then you are not making a data based argument, and in fact the data goes against you, because there is no excess cost burden in states without these property tax freezes.

Your exact words were "housing is much more affordable for younger people in those states", which, even by the numbers you have cited, is not correct. More affordable? Sure, we are number 5 or 6, not number 1. Much more affordable? Come on now.

And no, I don't think prop 13 style laws would be helpful, it would just create more problems, as it has in California.

> So housing in NJ is more affordable than in CA.

I don't know if it changes the result significantly, but remember the NJ has very high property taxes, more than double of California. So mortgage cost alone does not paint the full picture.

This is more significant for seniors, who likely have a paid-off home so their main expense is property tax. So being a fixed-income senior with a home is likely more affordable in California than in NJ. The worst thing after retirement is cost increases when you no longer have a salary that goes up with inflation.

You shouldn't strawman the other side. Us "people who fancy" actually understand that there are real negative side effects. But the money has to come from somewhere.

If not from land taxes, where? Would you like to double sales tax? Or increase income taxes? Every solution costs something, what does yours cost?

> actually understand that there are real negative side effects.

Everything has real negative consequences. One side does not hold the monopoly on negative side effects.

Land is not cheap to repurpose. The Georgism dream that land can be optimally used is a farce. There is significant costs to repurposing land - to make those costs worth it because of the taxes would heavily distort current society, and I think the assumption that this would be desirable compared to the status quo is unproven.

> double sales tax? Or increase income taxes?

Why not the taxes we have? Where is the presumption that taxes need to be changed at all, never mind doubled?

Even if we decide we want to raise taxes, choosing where to do so is delicate. Again, the optimal answer from an economist is not necessarily desirable from an emotional perspective of the people being governed.

The negative side effects of taxes on labor are enormous, and have distorted humanity probably more than any other factor.

Any consideration of the consequences of taxes also has to consider the consequences of the current taxation.

But taxes have and will always be a transfer of wealth from the working poor to the rich and powerful. People talking about tax reform or more effective and just systems tend to forget this. It's like the lamb having an opinion on how the wolves should share it.

Stating truisms ahead of straw manning me avoids the actual discussion. "Everything has real negative consequences." "Land is not cheap to repurpose." I never said otherwise.

You're right about my estimate being off though and it was a disservice to the discussion. An equivalent revenue from sales tax would require ~2.1%. In SF, that would move the total sales tax from 8.6% to 10.7%; in Oakland, 13.8%. A large increase would likely bend some consumer behavior (chasing sales that have feet, aka move to the informal/grey market).

> Again, the optimal answer from an economist is not necessarily desirable from an emotional perspective of the people being governed.

This is the real difference between us imo. I believe the optimal answer is based on realistic projections on revenue collected and what prevents bankruptcy. The compromise answer is what passes a vote and in fact, the bankrupt answer.

I would prefer we didn't raise taxes and instead reduce spending. But given the complexity of reducing spending and the scale of our deficit, we will have to do both. On the side of raising revenue, a land tax offers a way of taxing a wealth that cannot flee.

> Land is not cheap to repurpose. The Georgism dream that land can be optimally used is a farce. There is significant costs to repurposing land - to make those costs worth it because of the taxes would heavily distort current society, and I think the assumption that this would be desirable compared to the status quo is unproven.

Your friction is real - and already exists.

So the bar for improvement is not no friction.

The bar is less friction, and higher productive use of land, which benefits everyone. Lowering the costs of both housing and business space, while increasing economic output.

That is was economic alignment does, it doesn't just improve one thing, or improve on a one-time or fixed percentage basis.

And less passive, underutilizing, economically-parasitic investments from the rich. (Rich passive investment in land, uses land like Bitcoin for its deflationary nature, which compounds land prices while suppressing its full productive use.

Not raises. Compounds. The more the rich passively invest in land, the more profitable land becomes to passively invest in.

HOA are forclosing more than banks in some regions, it's not just trailer parks these days getting hard lessons in being the "fake owner" of your property

Existential nihilism is always possible to have regardless of how taxes are setup.

> I would argue that this is unpopular not only amongst retirees but everyone. And it would have tons of negative side effects.

Every tax is unpopular and undesireable.

Why would I work if government is taxing my income? Why would I invest? Why would I drive the car, blah blah.

Land tax is easy to collect, fast to pay, hard to avoid or game, and encourages productivity and efficiency.

And this cuddling of boomers who've benefited by piling up gigantic government debts and expect to be paid back (typically holding gov bond) is literally going to destroy the financial system. Part of the benefit of this tax is that if you can't pay for fair value of the land you're preventing others from using, you have to sell and get out, so e.g. a productive family can pay your for it, and use it instead of your now unproductive self. If you don't want that, you have to pay the same tax they would pay. Just because you're retired doesn't mean "your done with your duties to the rest of society and you can just expect free shit and do nothing" _especially_ that your "wealth" is just rent seeking on younger generations.

If boomers keep preventing younger generations from being productive and having opportunities, the economy will dwindle, the pile of of debt and other financial assets will collapse, hyperinfation is going to destroy their paper wealth and they will be starving or worse. Just watch, because I doubt at this point is avoidable anyway.