PART ONE: Property Tax Relief Fights for Its’ Life in California…

Jon Coupal, articulate and persistent president of the authoritative and well respected “Howard Jarvis Taxpayer’s Association”, has been leading the charge in California to keep property tax relief safely in place.

There are a few other notable property tax reduction leaders, like Michael Wyatt, “Property Tax Consultant”; and Kerry Smith, courageous and visionary president of the “Commercial Loan Corp”, that furnishes trust loans tied into Proposition 58, making the transfer of property between siblings and buying out a sibling’s share of a house possible.

All of this, of course, ties into the process of inheriting property taxes, ones ability to keep parents property taxes, and property tax transfer as it pertains to the parent to child transfer (which Proposition 19 seeks to unravel) — commonly known as parent to child exclusion or a parent to child exemption.  Plus, there are high end tax reduction specialists, like noted Paramount Property Tax Appeal president Wes Nichols,  who  specialize in personal business tax reduction and property tax assessor appeals.  These folks have all been on the front lines of these issues for many years.

Not known for soft ball opinions, or for taking it easy on property tax relief opponents, Mr. Coupal was extremely candid in an interview with this Blog; and had some interesting things to say recently, in a particularly hard-hitting article in The Tahoe Daily Tribune, on Oct. 9, 2020 “Explaining the Confusing Prop 19 to Californians” and in his own column on the http://www.hjta.org Website, “Prop-15 Backers Try to Mislead Homeowners”  where Mr. Coupal stated, on Oct 21:

“Prop-15 backers try to mislead homeowners. It’s a sign of desperation. When anyone in politics starts making wild claims less than a month before an election, you know something is amiss. So it is with the proponents of Proposition 15, the “split roll” initiative which would impose the largest property tax increase in California history.

Throughout this campaign, proponents have consistently argued that the measure won’t impact homeowners because it just raises property taxes on commercial and industrial properties. But now, they claim that Prop. 15 actually saves homeowners money.

This is absurd on its face. Recent polling suggests that support for split roll is sinking fast, especially among homeowners. This might explain why proponents have, at the 11th hour, countered with the argument that, as corporations have to pay more, the tax burden for homeowners goes down. Nobody believes this.”

Mr. Coupal also brings to our attention the deliberate confusion around proposed Proposition 19; as he reiterates,

“It’s no secret that ballot initiatives can be confusing, but Proposition 19 takes obfuscation to a whole new level. Voters can’t be blamed if they can’t remember whether Prop. 19 is the initiative that is a massive property tax hike or the measure that actually has something good for homeowners or the initiative that has something to do with firefighting. The fact is, all three are at least somewhat true — especially the part about the big tax increase.

Let’s clear up the confusion: Proposition 13, passed in 1978, gave California homeowners certainty about their future property tax liability because increases in the “taxable value” of property would be limited to 2 percent per year. Property would be reassessed to market value only when it changed hands. But that tax hike even applied when property owners transferred a property to their own children.

Prop. 19 would repeal Proposition 58 and force the reassessment of inherited or transferred property within families. The only exception is if the property is used as the principal residence of the person to whom it was transferred and even that exclusion is capped…”

If you repeal Proposition 58, the uniquely Californian funding process involving trust loans tied into Proposition 58 may have to be revised. And by the way, the ‘principal residence’ ruling must take place within one year of the passing of the decedent who left behind the property in question.  This in itself creates a myriad of problems, if you have an additional mortgage thrust upon you, plus the expenses that very well may accompany  another residence if you’re also a homeowner at the time you inherit this additional property. 

You may have a large family that won’t fit into the inherited property, noo that you’re forced to move in within a year.  The inherited home may be a much longer drive from your job or your spouses’ job.  Your children may attend a school in a totally different district, causing additional problems; etc. so on and so forth.  Otherwise, you may be forced to sell your inherited property, and that can bring inconvenient and expensive issues along with it as well.  It may not be so simple.

At any rate, Mr. Coupal added, “The non-partisan Legislative Analyst’s Office estimates that the repeal of the “inter-generational transfer protections” will result in tens of thousands of California families getting hit with higher property taxes every year. The LAO acknowledges that Prop. 19 imposes an additional tax burden in the “hundreds of millions of dollars”.

>> Click Here to go to Part Two…

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…

 

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…)

Polls Confirm CA Proposition 13 Continues to Provide Middle Class Homeowners in California of all Ages with Real Tax Relief

Despite Media Claims that Prop 13 Favors   Older, Wealthier Long-Term Property Owners

In a powerful article entitled, “No It’s Not Just for Seniors — Prop. 13 Has Something for Everybody” (Click Here to Read Entire Article)… written by the talented writer Jon Coupal for the legendary Howard Jarvis Taxpayers Association, Mr. Coupal wields the truth about how  Proposition 13 continues to provide tax relief to regular middle class Californians, not just the rich; the way a knight in shining armor wields a glistening sword in battle.

Mr. Coupal points out the following benefits Proposition 13 continues to provide for mainly middle class homeowners in the state of California… despite unfounded claims from several sectors in California that insist, without convincing data to back it up, that wealthy homeowners have been the true recipients of real property tax break benefits from Prop 13, since 1978, Click here for more discussion on this false claim. Mr. Coupal tells us:

“…By lowering the tax rate from nearly 3% to 1% and restricting annual increases in assessed value to 2% – Proposition 13 has provided a stable system for all – including government agencies that depend on property taxes.  Still, the opposition continues to gin up discontent against the tax-limiting measure – using absurd and sometimes insidious arguments. Critics whine about fairness like children in a school yard shouting “Not fair! Not fair!” They point out that in some neighborhoods a recent home buyer is paying more in taxes than a neighbor who has owned their home for thirty twenty or even ten years.

This they claim shows that the tax burden is being born by the young while older property owners reap the benefit. Of course this is nonsense. The longtime owner has been paying property taxes for years — property taxes that built the infrastructure the new buyer now enjoys — and they began paying based on what they could afford to pay for their home at the time of purchase. The new buyer is in the exact same position in that his or her taxes are based on what they can afford now and they too enjoy the benefit of knowing what their taxes will be in the future.

What Proposition 13 provides to both new and longtime homeowners alike whatever their age is certainty and security in taxation. And the critics of this system are not in the least bit concerned about “fairness”; they are looking for more money from the older owners.”

Opponents to Proposition 13 claiming that new home buyers moving into the same neighborhood as home owners that have been living there for 20 or 30 years are always young – is an absurd claim to begin with.  How can these critics possibly make an assumption that all these new home buyers are young ?

Secondly, how can they possibly make the jump from there that young home owners therefore carry the bulk of the property tax burden in California… when in fact Proposition 13 continues to provide tax relief to younger property owners, or, more realistically, new home buyers, with the same tax relief benefits as older home owners receive, or as long term home owners that have been living in the same home for decades, receive.  It’s an even playing field. To claim this is not so is simply out of step with reality.

As a matter of fact there is no factual data to back up either argument – long term dwellers or elderly home owners. Hence, this is yet another unfounded claim to back up a clearly biased argument to denigrate and tarnish Prop 13… built on a stack of cards. Not facts. As a matter of fact, we’d go so far as to suggest that this entire point of view, for some, is built on an obvious bias against older folks. It’s called “age-ism”, a bias we’re all familiar with.

For others, who make a living in the real estate game, and are presently grappling with a decrease in homes available for sale in certain areas in California – it wouldn’t be entirely unrealistic to suggest that this critical argument is merely an effort to get more properties on the market, to help realtors and brokers generate more revenue! And for newspapers who take this side of the argument, to generate more revenue from real estate ad sales. These issues go hand in hand.

Certainty and security are important matters to elderly Californians; so in fact (alluding to Mr. Coupal’s article title), the Proposition 13 tax break actually does benefit seniors in particular, not only due to the ability to avoid property tax reassessment – but due to the fact that many seniors see a slow-down in income in their mid to late 60s… Therefore a program that prevents their property taxes from going up and in fact sustains a very low rate, when you add it all up, at 1% to 2%, is going to be beneficial to, and popular with, elderly property owners who tend to live on more of a fixed income than many people do who are in their 30s, 40s and early 50s, for example.

So with all due respect to Mr. Coupal, it’s not a negative matter to point out that Proposition 13 does help to provide older property owners with a more predictable and affordable future. As a matter of fact, this applies to anyone living on a fixed middle class, or even upper middle class, income. We could look at veterans, retired police officers, post office and other municipal or govt. workers; as well as retired white collar folks living on retirement benefits from a former job, although, regrettably, that appears to be a fading prospect for most Americans these days. However… just the same.

The point is, Prop 13 contributes predictability for people who need a predictable future, economically. Certainly, some of these folks may have some stock here and there, but as we can see from recent events, Wall Street investment outcomes are not exactly something we can depend on these days – no matter how many analysts and financial advisors claim to have a financial crystal ball.

At any rate, let’s revisit some of these critics of Proposition 13, shedding crocodile tears and feigning interest in being “fair” to all homeowners… while at the same time really wanting more money from home sales, from buyers of all ages, in particular older buyers – as well as more cash from higher rentals. More expensive home values typically equal higher rentals. Which further feeds the bias against older home owners.

So if elderly home owners maintain the same primary property for decades, and possibly own additional properties as well, critics of Prop 13 insist that these homes inherited by adult beneficiaries, with current property value reassessment out of the picture thanks to Prop 13, all adds up to Proposition 13 being the sole cause of property owners keeping homes in the family… going to offspring rather than being available to as properties for sale.

Mr. Coupal really is 100% correct. These homes, going to adult children, without reassessment and a higher tax hit, would be inherited by these children of elderly homeowners regardless of Proposition 13 non-reassessment, or even California’s Proposition 58 property transfer tax break. People transfer property, or enable their children to inherit their property, regardless of whether they are benefiting from a tax relief program, or not. This is simply what people have been doing for their children for hundreds of years! Way before Proposition 13 ever appeared on the scene.

The below argument, and you can read the entire diatribe by clicking here, https://lao.ca.gov/Publications/Report/3706 is exactly the type of standard critique Mr. Coupal is talking about in his article at Taxpayer Association. These critics frequently take a wild leap to a conclusion that is merely a fear based outcome, not factual one – should you be a realtor or residential property sales executive, experiencing dwindling sales lately. They are taking some factual information, mixing it all up together and coming up with the following conclusion:

Inheritance exclusions appear to be encouraging children to hold on to their parents’ homes to use as rentals or other purposes instead of putting them on the for sale market. A look at inherited homes in Los Angeles County during the last decade supports this finding. [Data] shows the share of homes that received the [Proposition 13] homeowner’s exemption—a tax reduction available only for primary residences—before and after inheritance. Before inheritance, about 70 percent of homes claimed the homeowner’s exemption, compared to about 40 percent after inheritance. This suggests that many of these homes are being converted from primary residences to other uses…”

In actual fact, this homeowners exemption from tax reassessment does apply to non-primary (i.e., additional) properties. So this part of their premise is in fact incorrect. Advancing this type of argument, that all these homes in California are not shifting to home sales, making money for realtors; and are robbing desperate Californians of the ability to purchase lovely homes in safe neighborhoods – and that this is strictly the fault of Prop 13 tax reduction, and is just plain “unfair”…

Actually, what this is all about is not “fairness”… it’s basically indicating that shrinking home sales throughout California is specifically due to older Californians taking advantage of tax relief from Proposition 13; and that the Prop 13 tax break is somehow the main reason elderly homeowners are allowing their beneficiaries to take over their aging properties, as opposed to their property or properties going to some real estate company to generate hundreds of millions of dollars in extra revenue. That is, frankly – absurd.

Adding all this up, somehow ending up where senior homeowners would not be providing beneficiaries with inherited property if they were somehow not benefiting from property tax relief is completely devoid of logic. As we have already said, parents transfer property, or make it possible for their children to inherit their property in every state in the union, whether they are benefiting from a tax reduction law called Proposition 13 or not! Somehow also making the jump to the theory that the overall California property tax burden is now being shouldered mainly by young homeowners, while older property owners who have been holding onto their old homes for decades, are somehow reaping the benefit of a general lack of home sales. Because they can save a few dollars in taxes, plus leave property to their children?

With all due respect, these arguments, proposed in newspapers and by certain local politicians, make no logical sense. Especially if you look at most of the homes that are being held onto and shifted over to beneficiaries. A lot of these homes are middle class homes, not super fancy upscale affluent homes, and, most importantly, they have depreciated over the years, not appreciated. So most of those properties need real work.

Proposition 13 continues to provide tax relief for all California  homeowners, with zero negative impact on the real estate market. To suggest that most of these older homes owned for decades by elderly people, would somehow be snapped up in a second in the real estate market, isn’t terribly realistic, is it. Yet critics of Proposition 13 and Proposition 58 continue to insist that wealthy homeowners are still benefiting more from these laws than middle class folks or anyone else in California, and that they somehow are continuing to shrink the real estate market, in areas like Santa Barbara, and San Francisco, Santa Cruz, and Los Angeles.

Proposition 13 continues to provide tax relief for regular everyday home-owning Californians, not matter how much the critics bray  about how all these benefits are going to the old and to the rich. It’s just not so.  You can continue to try to jam a square peg into a round space for some time… But after awhile it starts to become obvious that it just doesn’t make sense. Hopefully the media and certain critical politicians in California with special interests in the real estate business will also begin to see once and for all that these square peg arguments against Prop 13 just aren’t fitting into that round space called logic.