DA, those numbers are horrifying. Basically you could rent a modest apartment in many fairly desirable locations in southern Europe for the same price as your monthly property tax. Btw, if California had not passed Prop. 13 in 1978, I have no doubt that we'd have many similar stories. (not that its a perfect law by any means, but its saved countless homeowners from massive property tax increases).
But doesn't this just shift the tax burden on the younger generation/new buyers?
Yep, prop 13 really distorts things in unfair ways. Neighbors with identical houses can pay drastically different taxes for identical services. The money has to come from somewhere, so the new arrivals and young folks get the shaft. Somehow you'd think that would run afoul of the equal protection clause, but apparently it does so only by the spirit of the law.
Here in Oregon we have a somewhat more sane system. The taxes don't reset after a sale, so only new houses get the full brunt of full property taxes in a hot market rather than just new buyers (property taxes for the prior year are listed in the adverts). Our 35 year old house is assessed at about 80% of fair market value for property taxes, so the relative disparity is much less than California.
On the downside Oregon has much less progressive income tax, only the first $5k is taxes at the lower 5%, the rest is 9% (9.9% for very high earners). I'll pay 1/4 the state income taxes if I retire to California instead of Oregon, but properly taxes might make up for the delta.
On the whole I don't mind paying my fair share of taxes, I just wish the system we had was more uniform and progressive.
Sounds like I'm in the minority in support of 13.
I figured an early retirement blog would really be in favor since it prevents your property taxes from exploding in a bubble. I'm part of the "younger" generation and would prefer to have my property tax set when I buy my house rather than see what happens in the future. Seems comparable to the certainty of a fixed rate mortgage vs. an ARM.
I'm torn, as a Californian.
I think originally it was intended to prevent the elderly from being priced out of their homes. I don't necessarily think that's a bad thing. When you are on a fixed income, taxes can easily start to eat up what you need to live on. (My husband is from NY state, and houses in his home town are CHEAP but taxes are not. I've done some back of the envelop math, and taxes would make being a real estate investor difficult.)
So, that's a positive thing - a limit on the increase of taxes.
On the other hand, there are negatives.
In my area, you will have two houses right next to each other with vastly different taxes. I will give an example of two friends who are next door neighbors. Same size houses, both currently worth about $1.2M.
House #1, taxes in 2006 (peak, which is when they bought the house): $12,000. Taxes now (because the county / city reassessed): $8000.
House #2, taxes in 2006: $918. Taxes now: $1149.
Uhhh...that's a big difference. And it really REALLY hurts the schools. I just had a conversation with the old guys at the gym this morning, about how their "property taxes are outrageous and they are voting against the school bonds." I said "that's nice, do you realize the state of the schools? Backed up plumbing, leaking roofs, deteriorating portables, broken windows, etc." As expected, when schools get old, things break. But maybe a guy whose "outrageous" property taxes at $3500 a year doesn't want to pay an additional $400 because his kids are grown - and the state of his grandkids schools? Eh, who cares.
(Not to say that there shouldn't be transparency in budgets and how money is spent, both on infrastructure, administrative salaries, etc. There should be.)