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The great California Exodus

manhattan-institute.org

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Re: The great California Exodus

#51

Post by thrownaway2424 »

prostoalex wrote: post #34
seiji wrote: post #22

Earlier quoted context omitted.

Quite true. Prop 13 is an abomination. Instead of only homeowners paying reasonable real estate tax, they've essentially made everybody in california subsidize low-tax-locked real estate owners. Now you get to have the fun of paying virtual real estate tax without owning property. It turns out, we have the ability to not live there! It's not quite sane to take a multimillion dollar exit in California when Seattle has…

>>> they've essentially made everybody in california subsidize low-tax-locked real estate That's not true - your tax base is set at the time of the purchase. And California real estate market is quite vibrant compared to other states.

I think the point was that Prop 13 was a gambit by incumbent asset owners to disproportionately tax newcomers. This worked perfectly well (for the incumbents) as long as California enjoyed robust net population growth, because the disproportionate tax burden was primarily born by newcomers. However, now that net migration has slowed, the disproportionate burden is now mainly born by natives of the state. It just doesn't make sense to continue this scheme, unless you are just a bitter old Boomer who hates your own children.

The problems of getting rid of Prop 13 will in the details. If you just eliminate it, you will drop housing prices across the board, and every homeowner will be hit (just as every homeowner reaped an unearned windfall at the time 13 was enacted.) There may be some way to phase it out over many years, or to get rid of the more ridiculous protections for corporate-owned real estate and inheritance transfers.

Re: The great California Exodus

#52

Post by thrownaway2424 »

tsotha wrote: post #50
thrownaway2424 wrote: post #14

Earlier quoted context omitted.

"In other words, the highest-income Californians were less likely to leave the state after the millionaire tax was passed." http://www.stanford.edu/group/scspi/_media/working_papers/Va... By the way, the reason the state is "budgetfucked" as you eloquently put it is because of low taxes, not high taxes. You may be interested in reading about Proposition 13, a scheme under which people who are sitting on massively val…

>By the way, the reason the state is "budgetfucked" as you eloquently put it is because of low taxes, not high taxes. This is utter nonsense. California has both a high income tax and a high sales tax, and while property tax rates are low, property prices are high. Where I live you can pay seven figures for a tract home. Tax receipts in the state are quite healthy - the problem is on the spending side, specifically a…

24 states spend more per capita than does California, so I think your argument fails on the facts.

Re: The great California Exodus

#53

Post by tsotha »

saosebastiao wrote: post #41

Their conclusion about density is bullshit, supported by bullshit assertions. Population-Weighted Density is what people experience, not geographic density. Nobody moves out of their 10 acre farmhouse in San Bernadino county because Long Beach is too crowded. Even the Census acknowledges as much. http://www.theatlanticcities.com/housing/2012/10/americas-tr... Furthermore, there are plenty of dense cities that are gro…

While it's true nobody moves out of a 10 acre farmhouse in San Bernadino because Long Beach is too crowded, the low density parts of the state don't have any jobs and aren't particularly nice places to live to start with. So density in the nice, employment rich places matters.

San Francisco is an outlier. It attracts people who want to live in a dense urban environment and has a reasonable public transportation system. In most places higher density directly translates into less free time as a result of longer commutes.

Re: The great California Exodus

#54

Post by mjg59 »

spindritf wrote: post #36
mjg59 wrote: post #9

The Manhattan Institute is an explicitly conservative political organisation. That doesn't inherently invalidate any of the conclusions they draw, but readers should be aware that they have been made with a pro-free market, anti-big government mindset. Others may draw quite different conclusions from the same facts.

> The Manhattan Institute is an explicitly conservative political organisation. Are we going to do this for all submissions? Newspapers' leanings, political donations of blog authors...? And if so, would it be reasonable to expect examples of actual bias? Or at least credible sources for that kind of information?

We expect a certain about of editorial bias from newspapers, and we accept that individuals are going to have their own biases, but it's often not obvious whether a generically named organisation is tied to an ideology or not. This isn't a dispassionate report written by someone who incidentally holds certain political views, it's a report written with the express purpose of influencing public policy in line with a specific ideology. Knowing that is important in judging its conclusions, just as knowing whether a report on climate change has been funded by a windmill manufacturer may alter your impression of its claims.

Re: The great California Exodus

#55

Post by prostoalex »

ubernostrum wrote: post #44
prostoalex wrote: post #37

Earlier quoted context omitted.

It's perfectly fine to live in California as a salaried employee, you're likely not to get screwed. For an entrepreneur, where you might subside 7 years on Ramen noodles to (maybe) have a large windfall during the 8th year, California places an unreasonable penalty on that once-in-a-lifetime event. Therefore from selfish standpoint, if you start a business, grow it fast somewhere else, and then, when growth plateaus,…

This makes about as much sense as someone living in a trailer voting to ensure their own tax rate is higher than a billionaire's, "because I might win the lottery one day".

Except moving to another state is not "living in a trailer", it's more like living in a house next door, unless you feel particularly superlative about California.

Re: The great California Exodus

#56

Post by tsotha »

thrownaway2424 wrote: post #52
tsotha wrote: post #50

Earlier quoted context omitted.

>By the way, the reason the state is "budgetfucked" as you eloquently put it is because of low taxes, not high taxes. This is utter nonsense. California has both a high income tax and a high sales tax, and while property tax rates are low, property prices are high. Where I live you can pay seven figures for a tract home. Tax receipts in the state are quite healthy - the problem is on the spending side, specifically a…

24 states spend more per capita than does California, so I think your argument fails on the facts.

Where are you getting that? It's hard to believe, given that California has the 4th highest per capita tax burden:

http://www.usatoday.com/story/money/personalfinance/2012/10/...

Re: The great California Exodus

#57

Post by prostoalex »

thrownaway2424 wrote: post #51
prostoalex wrote: post #34

Earlier quoted context omitted.

>>> they've essentially made everybody in california subsidize low-tax-locked real estate That's not true - your tax base is set at the time of the purchase. And California real estate market is quite vibrant compared to other states.

I think the point was that Prop 13 was a gambit by incumbent asset owners to disproportionately tax newcomers. This worked perfectly well (for the incumbents) as long as California enjoyed robust net population growth, because the disproportionate tax burden was primarily born by newcomers. However, now that net migration has slowed, the disproportionate burden is now mainly born by natives of the state. It just does…

I'm having a tough time buying it. Imagine someone who's old and in the (lucky) position to sit on a highly appreciated real estate lot. Their potential behavior:

(a) enjoy the low property tax they have to pay, while patting themselves on the back

(b) sell to downsize and pocket the difference, retire to greener pastures

I think (a) is more rational if you're on a giant farm, and this way you don't have to sell the pieces to pay the property tax bill any time the land value fluctuates because of external economic cycles.

(b) is more rational with any residential estate. That's why a San Francisco magazine would complain about the influx of young tech workers, not the influx of little old retired ladies, and most older houses in Atherton and Palo Alto are bought for teardown value.

Re: The great California Exodus

#58

Post by thrownaway2424 »

tsotha wrote: post #56
thrownaway2424 wrote: post #52

Earlier quoted context omitted.

24 states spend more per capita than does California, so I think your argument fails on the facts.

Where are you getting that? It's hard to believe, given that California has the 4th highest per capita tax burden: http://www.usatoday.com/story/money/personalfinance/2012/10/...

http://www.nasbo.org/sites/default/files/State%20Expenditure...

See page 7 for the spending amounts. I don't see how tax revenues as a fraction of income (your link) has anything to do with spending per capita.

Re: The great California Exodus

#59

Post by johnohara »

ubernostrum wrote: post #49
johnohara wrote: post #20

This exodus is occurring in Illinois as well (shown). Both states share similar budget problems along with predictable leadership responses -- higher taxes and reduced services. What Illinois needs is genuine growth and that doesn't happen overnight. In the meantime, people get fed up and leave -- unless they have to sell their home or business.

I would disagree with your assertion that "growth" is what's needed. The problems we're seeing, in many places, are the result of pursuing "growth" -- some seemingly-smart people show up and say that if only the local government will provide, up-front, a bunch of infrastructure and tax breaks right now, it'll all be made up in "growth" from businesses and people moving in and creating jobs and wealth. Of course, what…

Illinois is 13B+ in debt with 80B+ in long term obligations that take the form of pensions and entitlements. The social contract is there -- and constitutionally protected.

The scales are out of balance, the corn crop has failed, Caterpillar wants to move, gas is the highest in the nation, gang violence is increasing, the schools are struggling, and everyone feels the weight.

We need to grow, we need to export, and we need to sustain it for a prolonged period of time.

Re: The great California Exodus

#60

Post by subsection1h »

w1ntermute wrote: post #43
spindritf wrote: post #36

Earlier quoted context omitted.

> The Manhattan Institute is an explicitly conservative political organisation. Are we going to do this for all submissions? Newspapers' leanings, political donations of blog authors...? And if so, would it be reasonable to expect examples of actual bias? Or at least credible sources for that kind of information?

> Are we going to do this for all submissions? Newspapers' leanings, political donations of blog authors...? Well, this isn't an institution that most people are familiar with. For example, most people know the New York Times is liberal and that the Wall Street Journal is (moderately) conservative. We wouldn't need someone to point that out. But in this case, the OP's information is helpful in analyzing the source fo…

    For example, most people know the New York Times is liberal
    and that the Wall Street Journal is (moderately) conservative.
TIL that in the US, "liberal" means pro-war and "moderately conservative" means fanatically pro-war.
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