Hi Grace, very true, but taking your point to the next level, what reduces spending? Seriously?
Reading a convincing newspaper article will not reduce spending, though it probably might have a powerful influence to help us.
Is the only way to reduce spending, is if everyone feels the painful cost of government spending?
Like you, I don't believe for a minute, more equality in property taxes will decrease property taxes even for new comers, in the near term. Nor do I believe the $2B or $3B in extra taxes will help our $38B deficit.
But what I do believe would happen is:
we all would be very much more personally aware of how we are spending a bit too much, with the net being less spending over time.
If everyone is taxed on this fully, then everyone becomes more *personally* aware of the spending problem. More vocal.
Motivates the residents to encourage the government to reduce high government expenditures.
Otherwise, the government essentially has bribed the older people to keep quiet about the high spending, on the backs of the new comers and existing high-tech businesses. California does want new businesses to come here, right?
And probably more importantly, I believe repealing proposition 13 will eliminate the real estate investors in Palo Alto, Saratoga, Cupertino, Los Gatos, and Los Altos that are consuming an unusually high percentage of homes here.
The first time I heard about people holding their former properties (rather than selling their house when they moved) was from a contractor who helped me out. (And I eventually lost her help because she could no longer afford this area.) She said people rented out their properties because of proposition 13. And I think she's right. Every real estate investor I've met myself talks about how proposition 13 keeps them holding their former house - "doesn't make sense to get rid of it because of proposition 13."
Some people I know, own 3 homes here, renting two, because of proposition 13.
Proposition 13 reduces the available supply of homes to residents, which has the net of making prices artificially higher. This makes it harder to do business.
Let's take my startup as an example, 33% of all our employees own multiple homes for investment purposes I believe for this reason.
Meanwhile, new employees starting out, don't have this luxury at all - they don't even own homes. It's also hard to attract people to this area, if a high percentage of the current residents own multiple homes for investment, because this reduces the available supply for our new employees. This makes it harder to attract people here. Can anyone say offshore? So I say, get rid of proposition 13, so the new comers have more inventory of homes, resulting in more affordable prices for them. This makes it easier for high-tech to attract top talent here, locally in the Bay Area.
On another note, regarding Buffett's tax. Who is to say, your parents house would be worth $500k if they lived in Buffett's neck of the woods - maybe his house is only $500k because his property taxes in his state are higher? Wouldn't most people prefer to have a lower priced house (i.e. Buffett's example), than an artificially pumped up one waiting to drop. I'd rather feel pain now, than later. I hope they get rid of prop 13 - I am so incredibly conservative when it comes to real estate, that I would much prefer to deal with the pain now than later - it would concern me to have a looming gift from the government that could be taken away at any moment. Never take a gift you can't afford to pay yourself. I'd rather have the thing done and gone, so I never have any concerns about it when I'm older. I can probably handle the forces of inflation and the overall market economy better than I can the whim of the government. At a minimum, it would mean less people might be so highly leveraged, because their fear of inflation impacting their property taxes might make them keep a huge buffer in store for higher property taxes just in case. Overall, that would result in less leveraged people due to more conservative purchasing behavior. My kind of thing.
Regards,
Amy J |
