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Strategies & Market Trends : Fundamental Value Investing

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To: Willitsoar who wrote (4450)	5/31/2020 1:23:08 PM
From: E_K_S	of 4719

I knew NY tax was bad but the amount of taxes NY peeps pay is even higher than what Californians pay. At some point there will be a revolt. In CA we had Proposition 13 that limited the increase on property taxes by a max of 1% per year. Proposition 13 was passed in 1978 and still remains in force today. I moved to S. Lake Tahoe, Nevada 8 years ago (NV has no State income tax) but still keep my house in Silicon Valley (as a vacation home). If I sell, I could never buy back because of the higher property tax base (would be 5x per year what I pay now). The City of San Jose has a similar issue w/ the pension obligations for Police & Fire as they gave them very attractive 'COLA' increases that over time become 'unfunded' because not a large enough tax base (remember property tax increases are limited to 1% per year) to maintain those increases. It's a mess and at some point little pension 'bombs' will explode as there is no money to support the past commitments. I suspect there will have to be some type of restructure (old vs new) and move the old pensions into some private/public structure w/ a means test and even then vested people may only get 65% of what was stated. These unfunded pension obligations are also in many of these 'legacy' corporations so very important to screen the balance sheet for these obligations. BK can discharge them (move them to a public/private system) similar to what GM did when they BK'd in 2009. EKS

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