Earlier quoted context omitted.
Hi, welcome to the conversation, I can tell this is the first time you've engaged with this topic, so I'd love to introduce you to the economic dynamics at play. When property taxes don't rise, people are disincentivized from selling their home because if they buy a new home they must pay property taxes at the new rate, not the grandfathered one. This creates a bottlenecked supply of housing because no one sells. Gro…
Do a little research. If you move in CA and you're over 55, you can now keep your property tax bill. Previously it was only certain counties that honored that; now it's all of them. https://www.financialplannerla.com/transfer-california-prope... > All because they happened to have bought a home before this law passed. Again, do some research. Prop 13 passed in 1978, 45 years ago. The number of current homeowners who…
Prop 13 freezes your tax rate when you purchase the property. So the subsidy isn't given only to those who buy before the bill was passed -- it is given to anyone who buys before housing goes up, at any time while the law is in place.
It's extremely common for people to borrow against the equity of their home (even moreso if you are very wealthy). I think the parent is arguing that those who own property are borrowing against the value of their (subsidized) asset. Another thing to consider is that a yearly tax on an asset can significantly affect the valuation of that asset, far in excess of the amount of the tax itself.
Of course there's many reasons for the embarrassing lack of ability to solve the housing problem. Prop 13 is a big reason, certainly one worth looking at when considering solutions to this problem.
It's also just unfair. Most people who are subsidized by prop 13 are subsidized for no reason at all, just market timing. And there's another layer to it, which is that the earlier you have bought, the more you are subsidized. Guess what was more difficult for minorities to do 30 years ago? That introduces an additional dimension of racial unfairness to this. Not to mention, it's a subsidy for the rich (homeowners) paid for by the poor (everyone else).
Prop 13 is an anchor around our neck. It's kind of like that excruciatingly painful disease that causes your bones to fuse together, except for growth and prosperity in the state of California.