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Politics : PRESIDENT GEORGE W. BUSH -- Ignore unavailable to you. Want to Upgrade?

To: DMaA who wrote (451769)	9/2/2003 6:40:45 PM
From: Lizzie Tudor	Read Replies (2) \| Respond to of 769670

oes Ca have different mil-rates for different ages? Oh- sorry I thought you were aware of the CA-terminator-Buffett circus here. It is a fun read, for sure! CA has a 38 billion dollar deficit (less now since they tripled the car tax), and 65 billion in debt. Arnold hired Buffett for consulting on the CA fiscal crisis, and Buffett pointed out that he pays more property taxes on a 500K house in Omaha than his 4 million $ house in California. Also, his California house, which has assessed prop taxes of 2k/year, received an increase of a whole twenty dollars last year, while his Omaha house was reassessed for 10x that. The reason is, proposition 13, a law that was passed in California in 1978. It says that taxes can only increase 2%/year. Therefore, if you own a house for 20 years, by definition you are paying no taxes essentially and that is Buffett's situation. The 2% increase cap should have applied to the assessment of the entire house, but instead it is applied to the taxes themselves. There is an economic term for limiting increases on inflationary commodities, if I recall correctly the term is "siphoning". This is when an artificial limit is placed on pricing of some of the supply of a desirable asset. Gas, food, or housing. The predictable result is that the supply of homes which are not subject to this law appreciate dramatically. So, new buyers in CA pay the same rate technically that Buffett may have paid when he first bought his house in 1982. But new buyers pay much more for that house as a result of this law. Prop 13 is a popular law, because it has created an entire generation of freeloaders who pay nothing to live here. My former landlord for example, a 55 year old widow living in Arizona rented her house to me for $3K/mo in the 90s, she paid $700/yr property tax. I was living there, using all the services and paying dearly- but not to the CA gov't- instead my money went only to her. Property tax laws are one of the key reasons the state is broke, because since so many people pay so little prop tax they need to raise money elsewhere. In the past this has been income taxes. Now that jobs are gone, the money is gone. More jobs are leaving everyday and properties have to be reassessed in my view.