I am in the bay area and my major gripe is prop 13 which seems to be a first come first serve law. Which seems to be the basis of most tax laws in CA.
There's more to prop 13 than you may realize. It does protect people who have owned their home longer, but it also helps new homeowners.
"California's Prop. 13 limits the property tax rate to 1 percent of a property's assessed value. Prop 13 also limits how much a property's assessed value can rise annually to the lesser of 2 percent or the state's inflation rate."
So yes, two CA houses side-by-side can have wildly different tax bills. But many states have much higher rates than 1%. Under Prop. 13, if you own your home long enough, one day you will be the one the new buyers are complaining about.
Sorry for the sidebar. Congrats to you FOBStash! Great job reaching this milestone so quickly. The next mil will be easier.
Yeah I am aware of all the aspects of the law and its creating separate classes.
This is basically how I feel....
http://www.sfgate.com/politics/article/Buffett-s-Prop-13-comments-cause-stir-2595878.php
One thing people fail to realise is if they bring in the required income from all housing in CA...without tax preferred treatment they can probably reduce sales/income taxes. Currently I am paying 10k+ in state tax (to live in a 500sq ft studio) while my friend inherited a 2.3 mill dollar house and pays 2k of taxes a year on it. Who uses the fire/police/schools more?.
If it makes you feel any better, our taxes are nearly 12k/year, so I know your pain. I suspect your friend is in a very unusual situation and I have no guess as to why he/she is getting a pass. I hope another mustachian who knows will chime in.
I have no problem with the plan as it is. It helps older folks with fixed incomes stay in their homes. Sadly, eventually they do die, their homes are sold, and the state's coffers increase by a big fat margin. Also, sales tax is, IMHO, a more equitable tax than property tax. Being mustachian, I don't buy a lot of unnecessary crap, and groceries are not taxable, so I suspect I pay less sales tax than most. Finally, due in part to home ownership and to other legitimate tax deductions, my effective state tax rate for 2013 was 0%. Pre-FIRE, 2012 was 4.6%. Can't complain about that.
As to your question of fire/police/schools, it is important to understand that these services must be funded in advance so that they are available when needed. The fact is you may only need them once, but it it's a life- or home-threatening emergency, you damn well want them to be there for you. You can't know in advance when that will be, so you pitch in to the pool along with every one else, and hope you never need it. And yeah, old people don't have kids but they still have to pay for schools, so it does tend to balance out.
And now back to our regularly scheduled programming...
