Part One: As Attacks on Proposition 13 And Prop 58 Weaken, Critics Continue on with Split-Roll Tax Effort – Featuring Jon Coupal, CEO, Taxpayer’s Association

Property Taxes Proposition 13 and 58

Property Taxes Proposition 13 and 58

As we all know, for many years, critics of California Proposition 13 have been blaming property tax relief, the right to avoid property tax reassessment, for overall under-funding of public services…

The critics also blame parent to child transfer of a home and/or land, in other words simple parent to child exclusion from present-day property revaluation, however they mainly place the blame on the  1978 California Proposition 13 property tax relief measure, and the 1986 Proposition 58 property transfer tax shelter, for the under-funding and watering down of critical statewide public services – without any believable data or statistics to back up these accusations.

These claims, largely false and overblown, are still bandied about    in the media by critics, even though they have been debunked and discredited countless times – as the facts repeatedly point, again ad again, at state and local government over-spending on high salaries, reportedly extravagant pensions and benefits, as well as ruinous special-interest construction, building projects, and so forth.

Not, as economists and analysts have said repeatedly, property tax shelters made possible by Prop 13 and Prop 58; which merely benefit offspring when it comes time to transfer parents property taxes when inheriting a home from parents, for example,  and inheriting property taxes… Allowing the family to avoid property tax reassessment, enabling any property tax transfer to be less costly.

All things considered, from an objective standpoint, this is brazen misinformation. In fact, there is a mountain of data revealed in various charts and tables, with arrows pointing up, not down, showing us that total inbound revenue from property taxes has gone up since Prop 13 went into affect in 1978 – not down; despite residential and commercial property owners’ ability to avoid property tax reassessment.

In a recent interview with Mr. Jon Coupal, Chief Executive Officer of the Howard Jarvis Taxpayers Association; with offices in Sacramento and Los Angeles.  Their official motto states that, “When illegal taxes are imposed by state or local governments, our legal organization goes to court to protect your taxpayer rights.”

During our brief interview, Mr. Coupal addressed several current, related issues – beginning with the so-called “2020 Proposition 13 Split-Roll Property Tax measure”; the latest public initiative being promoted throughout California by virulent critics of the original 1978 Proposition 13…

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Property Tax Transfer: Mr. Coupal, thank you so much for taking some time out of your very busy schedule today to speak with us.

Jon Coupal: No problem.

Property Tax Transfer: Can you tell us what you think about the 2020 so-called Split-Roll property tax measure, by coincidence also named Proposition 13, pushed forward by opponents and critics of the original 1978 California Proposition 13 property tax shelter…

Jon Coupal: All of this is confusing, intentionally.  This new  2020 Proposition 13 is more or less tricking voters into thinking that the two   Proposition 13s are related. They’re not. The 2020 Proposition 13 with the Split-Roll Tax is strictly about removing all caps on commercial and industrial properties.

Property Tax Transfer: So how do folks stay on top of all this? How do they figure out what those folks are really up to?

Jon Coupal: This is all designed by opponents of the genuine 1978 Proposition 13 to be confusing and tricky. This is an ongoing educational process for Californians. The new Proposition 13 is not related to the original Proposition 13. What it is, is a $15 Billion bond measure to fund local schools, who must provide matching funds. Plain and simple, this is a tax increase that falls on property owners. Bottom line.

Property Tax Transfer: Yes we can see that. It is very tricky. Jon, what do you believe is our greatest threat?

Jon Coupal: Put simply, your greatest threat is realtors trying to end family property transfers. They would like to destroy inter-generational property transfers. Or they intend to at least limit transfers. The school bond affects the local debt caps… but it’s the realtors – they are the real threat to you.

Property Tax Transfer: A certain group of California realtors…

Jon Coupal: Yes. The media and the realtors will keep pounding away at this; and of course continue to use that one example they have of Lloyd Bridges and his sons renting out that property… to try to convince the public of all the things that are wrong with Prop 13 and property tax transfer. That is the one dramatic example they have to convince people of their point of view. That’s all they have. Nothing else.

Property Tax Transfer: The highly exaggerated, perhaps fictitious real estate crisis…

Jon Coupal: Yes. No matter how many times you ask that’s the only supposedly compelling evidence they have ever come up with to support their argument about their countless rich people  taking advantage of Proposition 13 tax shelter, supposedly renting our thousands of non-primary residences all over California, shrinking tax revenue to the government.  This, of course, is utter nonsense.

(Continued in Part Two…)

Part Six: Why California Proposition 13 and Proposition 58 Important to Californians with Different Incomes, Backgrounds and Property Values

California Proposition 13 and Proposition 58

California Proposition 13 and Proposition 58

Everyone would like life to be forever smooth sailing… Especially in California, where the sun is typically shining most of the time, with most Californians looking to be positive and to have something to smile about every day.  However… life is not always smooth sailing, and even if the sun is shining – and California residents once again have something to worry about… sort of.  The latest political move against Proposition 13, the mega-popular tax shelter that makes avoiding property tax reassessment in CA legal for home owners and businesses,  and prevents taxation over 2% of property value – is called the “split-roll property tax initiative”, and will, if passed, remove this property tax relief from business properties.

Most likely, if the “split-roll tax” succeeds, Proposition 58 and Proposition 193 will also be under fire – i.e., threatening a popular initiative that insures home owners’ ability to keep parents property taxes upon property tax transfer, affecting parent to child transfer of a home and/or land; when inheriting property, and inheriting property taxes. It would also dilute or destroy home owners’ much cherished ability to get access to fast funds through loans to trusts, from a reliable trust lender.

This so-called “Split-Roll Measure” would, if it passes into law, destroy most Proposition 13’s tax shelter protections, such as avoiding property tax reassessment in CA, for commercial properties and industrial facilities across the state… and would raise theses business property taxes by billions annually.

Businesses would be more or less forced, by economic necessity, to pass on these increased costs to California residents. This business and industrial property tax hike would affect all of us in California. It would unfortunately increase prices incrementally on all the items we purchase day to day – i.e., gas, office supplies, groceries, alcohol,  monthly utilities, and healthcare costs.

Regrettably, these anti-Proposition 13 special interest groups are so razor-focused on eliminating Proposition 13, that they will even maintain a very badly written amateurish tax measure on the ballot as backup; in the event they fail to pass their new primary tax initiative. It’s pretty clear that all these tunnel-vision opponents to Prop 13 pushing this so-called split-roll tax measure aren’t one little bit worried about what will help regular Californians! They are apparently fixed on raising property taxes no matter what – beginning with commercial and industrial property taxes increases… flawed measures and all. And from that point, we can only make an educated guess at what their next moves will be… with respect to residential property tax hikes.

And so a new, this time different, anxiety has begun to emerge and grow… affecting large numbers of residential and business property owners, as well as renters, in the great state of California. Home owners, business property owners, industrial facilities, and even renters – are frightened, and not unreasonably so, that once this door has been opened, so to speak… to remove Proposition 13 tax relief protection from commercial and business properties – home owners are very likely next. And it wouldn’t be unreasonable or unrealistic to assume this would happen right away, if this measure passes.

Many movers and shakers in California believe this would be a likely scenario, if split-roll passes… with California property tax payers sliding down the proverbial “slippery slope” back to the bad old days before avoiding property tax reassessment in CA was possible, for a home owner or a business; before Proposition 13 property tax transfer tax relief allowed home owners to keep parents property taxes and actually transfer parents’ property taxes over to themselves, thereby avoiding property tax reassessment associated with inheriting property taxes.

Californians who are frightened of this slipper slope scenario are typically going on the assumption that once you open the door to a counter-effort, to weaken Proposition 13 protections for businesses… how are regular middle class California residents going to stop the new anti-Proposition 13 juggernaut from continuing on in the same direction, until the ability to avoid property tax reassessment has been watered down, and watered down… until you’re right back where you started.

Hence, the vocal and very motivated effort all across California to stop new measures like this, designed to destroy Proposition 13. And it looks like this type of battle will continue to be waged in this state until theses rabid, obsessive opponents to Proposition 13, and Proposition 58 and 193 either “see the light” on this issue – or are stamped out once and for all, with iron clad long-term statutes that lock down these property tax protections, and other protections for Californians as well within the Prop 13 initiative… that stretches 50 years out into the future. With no loopholes these opponents can grab onto, to water anything down.

If this new split-roll measure is defeated, Proposition 13 will need to be re-established as rock solid and rock steady, for the next 50 years, before these rabid critics will simple throw up their hands and “give up the ghost”.

Part Five: Why is Proposition 13 so Important to so Many Californians with Different Incomes & Property Values?

California Proposition 13

California Proposition 13

It was a decisive majority that voted in California Proposition 13 on June 6, 1978. The joy and relief sweeping through the state, they say, was palpable. You could cut it with a knife. The anxiety over property tax instability and arbitrarily increasing financial demands on property owners had reached a genuine tipping point by that time, and voters knew that a change was needed, and on the horizon. Instability and anxiety was about to be replaced with the ability to avoid property tax reassessment in California… and a host of other tax relief benefits.

With Howard Jarvis and his mega-motivated colleagues leading the charge, this modern day tax revolt was one of the very few in American history that wasn’t a thinly disguised “tax cut” for top conglomerates and the wealthiest Americans, falsely entitled “tax reform”. It was a genuinely revolutionary “tax reform” initiative, passed by nearly 66% of the voting public in California. Beneficiaries and heirs inheriting land and homes, and naturally inheriting property taxes, were now able to keep parents’ property taxes and avoid property tax reassessment in California.  Parent to child transfer of a house and/or land had become legal parent to child exclusion from present day property value assessment, or property tax reassessment. And the numbers added up for home owners all across California.

Both businesses and residents were pleased with the money they would be saving every year. Naturally, the wealthier the property owner the larger the savings by having the ability to avoid property tax reassessment every year, year in, year out. And most likely the stark difference between the savings experienced by families in the six-figure range, for example, and families with homes in the seven-figure range, started the ball rolling on the conspiracy theory that Proposition 13 was all about savings for the rich, and no one else.

Naturally this was, and is, a misrepresentation of the benefits all Californians enjoy from Proposition 13, and Proposition 58, tax relief.  Certainly, the wealthy were saving more, in aggregate numbers, however 2% maximum tax rate forced property taxes become predictable, and manageable, for all Californians who owned their own home. The numbers affected by property tax transfer are simply relative. The rich pay more and save more, while the middle class pays less and therefore saves a little less.

Bringing us all the way up into the present, there in now a new threat to Proposition 13, egged on by the same critics that have been spouting false conspiracy theories and rumor campaigns since Prop 13 passed in 1978, and other special interest groups. It is called a “split-roll” property tax initiative, backed by some of the most powerful public employee unions in California, including Service Employees International Union, the California Teachers Assn. and the California Federation of Teachers. And it is now threatening to limit, and destroy, various tax relief benefits for a variety of business owners.

This 2020 ballot initiative has a misleading name, which supporters and critics of Prop 13 call “The California Schools and Local Communities Funding Act of 2020” Better known as the “split-roll tax initiative”, this plan would reassess and wage a tax hike war on all commercial and industrial properties – including retail stores, manufacturing plants, and popular malls all over the state. This so-called split-roll property tax measure would also remove Proposition 13 benefits protecting farmers, and return to the hated, dreaded yearly present-day tax reassessments measured by present-day market value – targeting all agriculture-related facilities.

Supporters of Proposition 13, Proposition 58, involving parent to child property transfer; and Proposition 193, supporting grandparent to grandchild property transfer… are afraid that this new “split-roll” ballot measure is likely to open the door to unwanted special interest backed tax hikes… and create a rather negative slippery slope affect. In other words, people are frightened that once you open the bottle, you can‘t put the genie back in again!  And that all the folks who want property taxes to return to the bad old days will have a foothold again. This is what nearly ¾ of the state does not want.

Most people are hoping the majority of the state will remember the bad old days before the 1978 ballot initiative to cap property tax increases for both residential and business properties began providing the public with a sense of security and consistency, insuring that property owners would not be literally taxed out of their homes and businesses ever again.  Proposition 13 has consistently provided middle class home owners in California, of all ages, with real tax relief. However, it is true  that before this initiative was passed, many elderly and senior Californians that were living on a fixed income were actually pushed out of their homes due to out of control property tax rate hikes. And most people in California are voicing their opinions telling their representatives that they never want to see this type of tragedy ever occurring again in their state.

Part Two: As Attacks on Proposition 13 Falter and Weaken, Critics Continue On…

The realtors that Taxpayers Association CEO Jon Coupal mentioned in Part One of this article, committed critics of Proposition 13, enabling home owners to avoid property tax reassessment, and Proposition 58, enabling property tax transfer and parent to child transfer of real property – with the ability to avoid property tax reassessment, and to receive a 3rd party trust loan or estate loan,  which is needed for an equal distribution to be made.  These critics of Prop 13 and Prop 58 often conduct inaccurate and frequently wildly overblown interviews in high-profile California newspapers and online media.

These critics of Proposition 13 and Proposition 58 repeatedly point out that California state and local city government budgets in general and pensions in particular are vastly under-funded, when the opposite is actually the case… With public services suffering in the bargain.  Yet critics repeatedly insist, year after year, that CA Proposition 13 tax relief and the Proposition 58 property transfer tax shelter, for California residential and commercial property owners, is the main cause of local and state government under-funding. Yes, Californians transfer parents property taxes, and avoid property tax reassessment. However, this is certainly not the cause of under-funding for public services.

Critics still can’t seem to see or accept the big picture, or accept that Californians transfer parents property taxes. It is their right.  And it is California  property owners’ absolute right to avoid property tax reassessment – the ability for  home owners’ to keep parents property taxes, upon the transfer of parents property taxes associated with the transfer of real property from parent to child, or grandparent to  grandchild.

Commonly referred to as parent to child transfer (of a home and/or land), this boils down to folks inheriting property taxes associated with an inheritance featuring property, for example – also known as parent to child exclusion (from property value reassessment). Critics insist that California government budgets are being starved of cash; and that government pensions, for example, are vastly under-funded – strictly due to property tax relief benefits.

Naturally, that opinion is just as inaccurate as certain realtors and politicians pointing out that Proposition 13 and Proposition 58 are  the entire reason behind an apparent home sale shortage in the state. Prop 13 may contribute to a slight degree to the shortage of homes for sale in the state, however rising cost of living, sluggish salaries and expensive mortgages are more often than not the reason for a flat real estate market. Moreover, there is no proven statistical data that proves anything to the contrary.

As for the pension argument, this is also inaccurate, on the face of it. If there are any local government pensions that are under-funded, it’s due to over-spending on local government salaries and benefits, as well as long term projects generally attributed to political or industrial special interests, Certainly not residential property tax shelters. The facts actually point in a different direction, as many of these California government pension plans are statistically some of the most expensive, and in some cases the most expensive and elaborate government pensions in the country.

 

Part Five: California Proposition 58, How to avoid property tax reassessment on an inherited home.

Bringing us up into the present, critics such as Assemblyman  David Chiu, of the San Francisco Assembly’s housing committee, continue to ignore how wildly popular avoiding property tax reassessment is in California… and  they are still repeating the same litany that is echoed by a thin minority throughout the state, insisting that, “The inheritance tax break has exacerbated [wealth] inequality and is symbolic of that inequality. The idea of the American Dream of everyday people being able to make it is completely impacted when the haves get more, and the have-nots have no chance of benefiting from property investment windfalls.”

We hear this litany all the time… indicating that wealthy Californians are the only people in the state that benefit from the Prop 13 tax break, avoiding property tax reassessment.

This misinformation is, of course, nonsense…. twisting the truth to fit a certain point of view; which in itself is, essentially, untrue on the face of it. All those people Mr. Chiu is actually referring to are renters not owners… and yet – without knowing it he is actually making the point that needs to be made – that, bottom line, most landlords are able to save on property taxes, thanks to Prop 13, and in turn this allows them to keep rents low for renters. However, that’s the part of the equation that folks like Mr. Chiu forget!

And if indeed property owners, i.e., landlords, throughout California, did not have the Proposition 13 tax break, obviously they would be motivated to raise their rents. So, in fact, without knowing it, Mr. Chiu and others voicing the same opinions are surfacing the critical point that proponents of these tax shelters have been trying to make – since you could avoid property tax reassessment with Proposition 13, after it was passed overwhelmingly by nearly 66% by voters in 1978, and subsequently, in 1986, when the popular Proposition 58 parent to child transfer of property taxes passed, providing parent to child exclusion from property tax reassessment; plus Proposition 193, a constitutional amendment approved by voters on March 27, 1996, which allows grandparents to transfer property to grandchildren – with the ability to avoid property tax reassessment all on their own as grandparents and grandchildren.

The main point being, it’s not only property owners that are benefiting financially from Proposition 13 tax relief – we have also found Prop 13 and Proposition 58 benefits strengthening family bonding and overall net worth, providing an enormous blanket of peace of mind for home owners of all stripes, cultures, ages and incomes…. as well as those expecting to inherit CA property, or looking to become happy home owners. Moreover, renters are paying far less in rent, thanks to the property owners they pay rent to being able to continue avoiding property tax reassessment, and therefore spending less every year on property taxes that they would otherwise be passing on to their renters. Clearly, this savings trickles down from owner to renter for thousands of renters in California. Whether the David Chiu’s of this world care to admit it, or not.

Part Three: Why is Proposition 13 & Prop 58, Avoiding Property Tax Reassessment & Property Tax Transfer Relief, Attractive to so Many Californians?

There was so much instability within the real estate tax system in California before Proposition 13 and Proposition 58, that it had become downright dangerous and unhealthy – with severe anxiety spreading throughout the state, with home owners worrying constantly about losing their home, and with some people actually losing their beloved home. This was pre-1978, before Proposition 13 and Proposition 58 revised tax law so that Californians can keep parents property taxes.

Consider if this was you.  What do you do if state tax collectors put a lien on your home, or actually take your home? Your life spirals downward, you go and live with relatives, which is typically not an attractive direction to go in – or, worse, you become homeless… or reside in some other circumstances that are not to your liking.

This property tax relief called Proposition 13 finally brought a close to the chronic instability, fear and terrible yearly financial pressure on residential and commercial property owners throughout the state that was causing California property owners to literally buckle under. It was affecting peoples’ health… especially older folks – as severe stress tends to be more difficult to handle  as people grow older. The most obvious financial benefit Californians could see, and experience right away, was “property tax transfer” – that is, consistently eliminating property tax increases from present-value property tax reassessment.

All of a sudden, Californians had (and still have) a reliable and predictable system in place, serving them not the tax collectors. Californians finally had the ability to avoid present-day property   tax reassessment, directly after Proposition 13 was in effect. And   a decade later after Proposition 58 and Proposition 193 came on board, property owners had a tax shelter with Proposition 58 – protecting property transfers, for parent to child transfer, with parent to child exclusion of tax reassessment… as well as grandparent to grandchild exclusion  of tax reassessment from Proposition 193.  All of these tax benefits were suddenly in effect for all Californians – regardless of income, age or total property value.

As we all know,  with these remarkable changes in effect, Californians can keep parents property taxes, and can transfer parents property taxes when inheriting property of any type  (commercial or residential) or value – legally avoiding property tax reassessment… which is where all the trouble stemmed from in the first place.

As residents recall, you could actually see the relief in peoples’ faces, all over California, from Los Angeles up to San Francisco. Even renters, who don’t own property, noticed that their rents remained low – and can see the same difference now, 24 years later – due to Proposition 13 relieving landlords of tax increases that would otherwise motivate them to raise rents on their tenants.

Part Two: Why are Proposition 13 & Prop 58 Critical to Californians?

Before Proposition 13 was passed by voters on June 6, 1978, average tax rates in California were close to 3% of market value, without any guardrails as far as property tax or property value assessments were concerned.  This is why Prop 13 & Prop 58 are critical to Californians.

In fact, right before Proposition 13 was passed, things has gotten so bad that there were homes being reassessed by fifty percent… to a hundred percent from one year to the next, literally within a 12-month time-frame. Home owners’ tax liabilities were going through the roof! So much so, that many middle and even upper middle class property owners were actually unable to pay the tax hit on their home consistently every year.

Folks who resided in California at that time, and still live in California to this day, tell us that you could see the anxiety and fear etched into the faces of property owners all across the state. There was no predictability, regarding property taxes, from year to year. People never knew what increases would be eating into them from year to year.

There was a point, before 1978, when these tax-increase issues were so severe and problematic, that over 400,000 home owners in LA County were actually not able to pay their property taxes due to particularly egregious tax increases. With many people coming very close to losing their homes, and some literally losing their primary residence where they have lived for years; many for decades, such as elderly Californians, who were particularly badly affected.

Many seniors were free of mortgage debt, and yet were forced out of their home because they couldn’t afford to pay their property tax… and many became literally sick with anxiety and worry over the fear of losing their home.

Millions of Californians were on the edge of that cliff, facing the catastrophic loss of their home to the taxman. It was around that time, in the late 1970s, when things had gotten so bad that home owners were urgently looking around for some sort of solution to all this instability and fear that was basically ruining their lives… when a knight in shining armor appeared… and all he needed to fit the mold of hero was the white horse. This man breezed past the taxman, refusing to be intimidated, as he gathered support for a solution to this disastrous situation – and assembled over one and a half million signatures on a petition.

That knight in shining armor was Howard Jarvis who, with his Taxpayer’s Association, helped generate literally hundreds of thousands of signatures, and qualified for a statewide initiative that would finally end “excessive taxation” and would finally provide an initiative to create security and predictability for California home owners. And that initiative was called California Proposition 13, which remains vastly popular across the state, to this day.

Interestingly enough, Prop 13 has also spawned the wildly popular home & land transfer initiative Proposition 58, making parent to child transfer of property more affordable by avoiding  property tax reassessment; i.e., parent to child exclusion; with respect to  property tax transfer – allowing adult children/beneficiaries to transfer parents property taxes.  In other words, to keep parents property taxes when inheriting property taxes associated with home or land transfer, often as an inheritance.

All which has, in turn, spawned an extremely successful yet small niche trust loan services industry in California, furnishing loans to trusts, specifically loans to irrevocable trusts… spearheaded by trust loan industry leader Commercial Loan Corporation, a trust lender of wide renowned in both southern and northern California. The point being, that the Proposition 59 & Prop 13 initiatives, as well as trust loan services, have all revolutionized residential and commercial real estate in California, and residents will fight hard to maintain that status quo. Because  Prop 13 & Prop 58 are critical to Californians.  Now that they have it, they won’t want to live without it.

It is just unfortunate that the rest of America can’t also enjoy the tax relief benefits stemming from these property tax initiatives  and, ultimately, from California Proposition 13 itself.

 

 

Part One: Why is Proposition 13 so Attractive to so Many Californians?

In examining and analyzing tax relief from Proposition 13 property tax transfer, as well as the financial and political drama surrounding the initiative – with all the on-going conflict between detractors and supporters; between critics and advocates – it is important to note that prior to Proposition 13 in California, from one end of the state to the other, property taxes were pretty much out of control, and tended to increase arbitrarily, whenever it was deemed appropriate to do so, for the benefit of one local city or town government or another.

Anytime local townships and city governments needed extra money to fund this or that, they felt free to increase property taxes, and take large amounts out of “redevelopment agencies”, or RDA – particularly when it involved commercial land development, questionable funding for certain school programs, and possibly tax rebates for certain business verticals aligned politically with local government. Frequently spearheaded by special interests.

Specifically, property tax revenues were, and still are, distributed to K-12 schools and community colleges; various counties, cities & “special districts”, generally with redevelopment agencies at the bottom of the list.

The irony was that redevelopment agencies that were the most critical for local residents received the least amount of money from property tax revenues… And this trend still continues, to this day. We’re talking about redevelopment agencies that purchase property for local government; that raze and build non-residential structures; that provide municipal infrastructure like bridges, city or town streets, rural roads, and lighting, for public safety; that develop affordable housing (at the very bottom of their list) as well as renovating local commercial areas.

Before Proposition 13 property tax transfer tax relief was in effect it was particularly obvious how paltry funding was from property taxes that were supposedly going, in equal parts, to support local infrastructure needs – generally to help middle and lower middle income residents with public safety, health and welfare.

Finally, years later, the excellent organization PPIC.org provides in a recent study – four recommendations to local California law-makers that should help resolve the controversy surrounding redevelopment agencies:

a) The legislature should formally clarify the goals of re-development.
b) The definition of blight should be aligned with the goals of redevelopment and should be made more precise.
c) Some form of oversight authority should be established to monitor RDA behavior.
d) If the legislature intends redevelopment to be self-financing rather than heavily subsidized, the pass-through rate should be increased significantly.

At any rate, these issues obviously continued to breed resentment prior to 1978, from residential property and small business owners… and eventually that collective resentment morphed into a rush of significant public support for a solution – and that solution turned out to be Proposition 13, promoted and driven forward mainly by Howard Jarvis’ Taxpayers Association.

Is Property Tax Transfer Causing CA Real Estate Shrinkage? Or is it a Normal Economic Trend?

Despite what critics say, there is no factual data or compelling case study that supports the frail argument that the main reason for home sales shrinkage, as well as sluggish price gains that have been  consistently hampering the California real estate market, is mainly due to property tax transfer and tax relief provided by Proposition 13, with Proposition 58 and Prop 193 thrown in for good measure.

When, in fact, generic economic statistics and anecdotal data actually tells us that shrinkage in the real estate market in California is clearly an outcome of normal fluctuations, up and down, in the real estate market and more importantly, severe fluctuations in the overall economy in California. Click Here to explore this point of view, which does appear to be logical… factoring in sky-rocketing gas taxes, and the particularly high cost of living overall in California these days. And, as many realtors insist based on nothing more than opinion and bias, not the fault of families keeping their family home “in the family”.

The leveling off of home prices, economists insist, is a national trend. And a 20-city composite index as well as the National Index have been recording the smallest price gains on home sales since 2012. David Blitzer, chairman of the S&P Dow Jones Index Committee, has said, “The patterns seen in the last year or more continue: Year-over-year real property price gains in most cities are consistently shrinking. Double-digit annual gains have vanished…”

For the broad picture, Blitzer says, “The difficulty facing housing may be too-high price increases”.  Not, we must point out, the absurd notion that the blame for California real estate market shrinkage or faltering home sale prices, lies with property tax transfer, avoiding property tax reassessment, or the ability to keep parents property taxes intact, with the ability to transfer parents property taxes when inheriting property taxes associated with real property transfers. This argument simply doesn’t hold up under scrutiny.

Moreover, many of these properties in question are quite old, and, frankly, usually require quite a bit of work involving a great deal of time and money… and would certainly not be selling at the fabulously high prices many investors and other real estate professionals claim they would be. To insist otherwise raises questions regarding the grasp many of these realtors and brokers have on the reality of the residential home market in California.

The bottom line is – California real estate investors would prefer to have as many homes on the market to buy and to sell solely to increase their profits; and the brokers and

realtors that are critics of Prop 13 and Proposition 58, or Proposition 193 (involving grandparents’ property transfers to grandchildren) prefer to have more homes to sell strictly for the additional commissions… Click Here: for more on the critics of these popular tax relief initiatives.

Click Here: for more on the critics of {Not, as they insist in the media, to maintain “fairness for families looking to buy property in California”. The “fairness” argument just isn’t holding water any more… Not that it ever did.

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