Is California overtaxed?

February 22, 2013
Jon Coupal

Jon Coupal

President of the Howard Jarvis Taxpayers Association Jon Coupal spoke before San Luis Obispo property and business owners Thursday about the level of taxation they face in California and how it may continue to increase.

Speaking at the San Luis Obispo Property and Business Owners’ Association luncheon, Coupal discussed the California tax increases resulting from the passage of Proposition 30, as well as the current threats to Proposition 13.

“We now have by far and away the highest income tax rate in America, and we have the highest sales tax rate,” Coupal said. “This is a very hostile place to live if you are a taxpayer or a business.”

California voters approved Proposition 30  by a margin of more than 10 percent. San Luis Obispo County voters also approved of the measure by a nearly 8 percent margin.

Just as Proposition 30 proponents used education funding to gain support for new taxes, Coupal said potential tax dollars for schools serve as a threat to taxpayers who wish to keep the proposition’s two-thirds vote requirements intact.

“If a school district is to put a parcel tax on the ballot, they need a two-thirds vote,” Coupal said. “If we lose a two-thirds vote at the local level for parcel taxes, I think property taxes in California will explode.”

During Tuesday’s San Luis Coastal school board meeting, one trustee pled for a lowering of the threshold on parcel taxes to 55 percent as a way to combat the growing district deficit.

Coupal said the current Democratic super majority in the California legislature may move forward with similar proposals that “chip away” at the tax suppressions built into Proposition 13.

Founder of the Howard Jarvis Taxpayers Association, Howard Jarvis, authored Proposition 13, which passed with more than 60 percent of the vote in 1978.

 


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mrcyberdoc

Prop 13 is good for people who got in on the ground floor in 1978. Keep in mind though only a small percentage of properties in California are being taxed at that rate. Most have been resold, perhaps many times. I believe I read once that on average California homes turn over (resold) every 7 years. And when they are resold, they are taxed at a new rate, usually close to the selling price. I do believe that that without constraints like Prop 13, our representatives would have taxed us out of our homes long ago.


Mr. Holly

That is certainly the truth. I think Prop. 13 also limits the appraised value of your property to be increased only 2% a year.

Can you imagine what the government would be doing to all of us if these restraints were not in place. I think that we the people need to put more restraints on government. Just recently we have all seen how government has cried poverty and then we find million of dollars that they are hiding from us. If we did that with our income it’s called tax evasion and someone usually has to pay up or go to jail.


FineWine

The uninformed voter who thinks liberals are for the working class have been duped. No where in the country does liberalism reign more than in CA and no where in the country is it harder for the working class to live. There is a reason Buffet and Gates are liberals, because it’s liberals that protect there wealth and keep all the competition off their backs. The barriers to entry in any industry in CA are daunting. Just try to get a license to do anything, then check what it would take in other states. All of these policys favor big business because they have the resources to comply and the pricing power to pass it along. It’s the small business that gets the shaft every time. Even the average government worker can’t make it here. If your not making 100+ grand a year you better just leave there is nothing here for you. If you are than there going to take it until your just scraping by too.


OnTheOtherHand

I think a lot of “liberals” would take issue with your definition of “liberal” and say that you are the one who has been duped into thinking “liberalism” is about protecting the wealth of the corporate fat cats. I am only partly a liberal but I think that what you call “liberal politics and politicians” are really plutocrats who have fooled real liberals into supporting them.


Your criticisms are correct, it’s your definitions that are wrong.


Rambunctious

I don’t get it…we have witnessed two different California state agencies hiding money from us. Every state truck and car I see is brand new or nearly new. I’m driving a 9 year old car. State employees have benefits way beyond anything I will ever see as a self employed person. We see now that the people we send to Sacramento have been traveling on the tax payers nickle. I could go on and on. Do we really need to ask if we are over taxed? The answer is yes. We’re suckers and we’re being played like fools. Not only on a State level but also on a Federal level.


racket

Funniest thing I saw last week was CalTrans spreading wood chips at an off ramp. (The chips were already there, courtesy of a tree company I presume.)


Took two dump trucks, a loader and at least four guys to push a pile of chips around. My kids could have handled it with a couple of rakes and an afternoon, but not CalTrans.


tomsquawk

how many shovels were being leaned on?


JeanW

probably all of them.


tomsquawk

and, to be fair and balanced; it’s true in every country i’ve been to! must be a job requirement


Rambunctious

I have a joke…There are two Cal Trans workers standing on the side of the road one of them lifts his foot and smashes a snail. The other worker says…hey why did you do that? He replies…that little sucker has been following me around all day.


DirtCheapHydroponics

This happens because people like you won’t get involved to stop it! Because you don’t care you have ended up with the CORRUPT government YOU DESERVE!


Myself

So how do you plan to change anything, if you call cal trans the stupid visor reads off of a play list about how good of a job they are doing, you the caller, don’t now what your talking about, and so on and so forth, right now cal trans is on Hwy 1 between Morro Bay and San Luis grinding out 3 ft wide strips and replacing that with new blacktop, within 3 weeks it will be worse than it was before, it happens every time they do this, yet you call and try to get them to understand it doesn’t work and they belittle you.


Mr. Holly

Let’s just make it plain and simple-we are being RAPED!


bobfromsanluis

Prop 13 was passed by the voters because the tax assessors were really going way overboard in raising taxes at the drop of the hat. Howard Jarvis and his minions played upon the fears of many people being afraid of being taxed out of their homes and wrote a bill that, on the surface, provided relief to those stressed homeowners. What was (and is) lacking in the provisions of Prop 13 is an oversight into how school districts go about reducing their budgets, allowing school districts to cut popular programs with no requirement for the administrations to do any “belt-tightening” by mandating any cut backs in administrative costs or budgets. The other item that was sort of a “stealth” provision of Prop 13 is the allowing of commercial property to pass from generation to generation of the same family and have absolutely no increase in the tax rates for those commercial properties, be they retail storefronts, warehouses, storage facilities or wineries and farms. Of course, if a family farm is passed on to the next generation of family, they should not be taxed out of existence, but far too many times commercial properties are moved around via various corporation agreements and possibly even using dummy corporations just as a means of avoiding any responsibility for a real world tax picture of those properties.

I am in favor of keeping quite a few provisions of Prop 13 in place just as they stand now, like the two thirds requirement for raising tax rates, but continuing to exempt commercial properties from paying for their share of public infrastructure costs and support has certainly contributed to our current situation.


R.Hodin

How would anyone here like to pay only $200 per year property taxes while collecting $4,000 per month rental income on their commercial property?


That’s just an infinitesimal example of the disparity created by Prop 13. The result of this is the rapid increase in “user fees” for basic services required by homeowners, temporary sales tax measures, and dependency on income tax restructuring, like we saw in the last election.


If you think this is just peachy, click the “Dislike” button.

If you think it stinks and it’s time to reconsider Prop 13, click the “Like” button.


Robert1

The ratio of homes to commercial properties is not even comparable.

Your example is only a opinion and none factual.


R.Hodin

The example is real and based on local tax records, available online.


By your ratio comment are you implying that Prop 13 should be reformed re: residences as well, as you state that the commercial properties are just a drop in the bucket? Very well then, make that case.


Mr. Holly

R,Hodin

What do you think might happen if government quit wasting money? If your income is fixed I’m sure that your lifestyle matches your income. If not, do you have the ability to just tell someone to pay you more so that you can keep on going living beyond your means?


R.Hodin

Are you arguing that government should tax people according to their means? Didn’t think so, but that’s exactly what you implied.


mrcyberdoc

That’s all well and good, BUT I’ve seen properties sit for months or years unrented. That means no income. Why they don’t lower rents is beyond me. It takes years to make up that rent at a higher rate when they stay vacant for months on end. The old BofA building in Los Osos has been vacant for 3-4 years. It was remodeled a couple years ago and yet, there it still sits. Someone has more money than brains.


R.Hodin

Do the math. In my real-world example, it would take 251 months of lost rent until the owner would have to cough up the property tax from another income source


caveat—this calc doesn’t include other items, like insurance & utilities, which are much more than the tax, but those fees-for-service don’t pay for city infrastructure or schools—only property tax does that.


As to why someone would let a space go vacant rather than fill it at a lower rent, I suspect that’s a tax write-off, as it’s a common practice among big property owners, such as Rossi, though I wouldn’t go so far as to imply Rob is in any way lax in the smarts department.


womanwhohasbeenthere

CA has treated ALL property – commercial, residential, whatever — as the same for over 100 years. The split roll idea, to tax commercial properties at a higher rate than residential, ignores the fact that those buildings often belong to either a mom-and-pop firm. Even if they are owned by a big bad corporation, remember, the increased costs of higher taxes will be passed on to tenants and/or customers.


Prop. 13 provided certainty for government and taxpayers. While other revenue sources go up and down, property tax revenue is more stable. It was the best thing that ever happened in CA and I am shocked that other states have not followed suit.


Changes to Prop. 13 are just another way to grab more money to pour into the sinkhole that is Sacramento.


By the way our own Assemblyman Katcho Achadjian got a D from the Howard Jarvis Taxpayers Assn. for supporting so many tax increases. Nice to know you have our back -NOT!


Robert1

Flip side of that is I bought a piece of commercial property from a old retired gentlemen.

He paid $165,000 for it 20 years ago and was paying property taxes based on that value.

I paid him $1,140,000 for the property, and before I sold it 2 years ago I was paying almost $14,000 a year. Your straw man argument does not hold water, most properties

change hands often and the new owner gets the new value set with the new increased taxation. I have owned several commercial properties in this county since 2003 and everyone of them has had a new value and a huge increase from the previous tax base.


tomsquawk

and here’s another thought. my mother, a widower, owns a large home purchased in 1973. it is the site of our family gatherings. when she passes, between death tax and property tax increase the children will have to sell the property. no more place to gather but the taxman gets his.


JeanW

tomsquawk, please read this: California law allows parents to pass their personal residence to their children without a reassessment for property taxes, but you really do need a good estate attorney to make sure the transfer is done correctly and in a timely manner. It worked for me and my siblings when our parents passed. The required transfer forms are not difficult or lengthy, but you have to do it right. So get yourself a competent estate attorney ASAP..


tomsquawk

thank you for the advice. someone else had to berate and insult me on another comment.


bobfromsanluis

Death tax? Oh yeah, the conservative name for the estate tax. For the wealthy to be able to pass on their extreme wealth without any taxes placed upon them at all is a means to establish a class of people who most likely will never have to work a day in their life, have no connection to the reality of what a real, common person endures as their day-to-day existence. If your Mother’s “large” home is part of an estate that is going to worth more than five and half million dollars, then yes, there will be as assessment of an estate tax on the portion above the five and a half million. Anything, everything below that five and a half million dollar mark, that estate is exempt from an estate tax. If the property stays in the possession of a family member, I don’t believe that they will be reassessed for a higher property tax bill. You really should investigate this and get your facts straight; if you are correct about a reassessment, that would be a real shame, but if her estate is more than five and a half million, I really cannot feel you are being picked on unfairly to have to pay an estate tax. Your talking points may make a great confrontational comments here, but the facts probably don’t back up your assertions.


tomsquawk

well, i read through the first five sentences of your rhetoric and forget the rest, you are off-base


R.Hodin

Allow me to help you out, I’ll keep it under 5 lines.


If your family estate is valued at under $5.25 Million there is no estate tax.


http://tinyurl.com/cgh27ch


If it’s over 5.25 Million, I will shed a tear for your loss. NOT.


tomsquawk

you’ll lose no tears, save ’em


Robert1

Sounds like you come from a long line of entitlement receivers, if you don’t earn something you are entitle to nothing, period.


tomsquawk

guess the headline is a rhetorical question. and, of course govt wants to chip away at prop. 13. And why in _ _ _ _ de we pass prop. 30? because of free stuff. California, the welfare state.


Jorge Estrada

Pro 13 created an abundance of tax revenue during the inflationary years. As a result of that surplus, our government chose to give themselves greater structure and compensations.


Now that we have a real-estate correction, government needs a hedge to cover their overspending. This has resulted in more fees, more required permits/licenses and more tax increases to fund their under-funded staff income and pensions. Never mind budgeting for the benefit of government, that redirected liability is already an extra cost to you!


There is no justification, none, for our government to have a blank check that the tax payers are required to sign. For this reason, there was the voter passage of Pro 13, a management tool for all. Again this came about because of the lack of spending control that govenment exhibited at that time. Today, this talk of underminding Prop 13 is a slap in the face of America and exemplifies a grave disrespect to, “We The People”.


rogerfreberg

California has always been used to paying their fat administrators more than most would consider reasonable. California’s looming tsunami of unfunded retirement obligations is testament to our state’s ‘generosity’ … or shortsightedness.


The real measure of one’s relative affluence is asking yourself the question: what can you do after King George takes his share of your paycheck? This answer depends on the individual… but we can look at the lifestyles of other Americans to gain perspective. In many parts of the country there are citizens who make what Californians make in salary but seem to have a lot left over when all is said and done.


Young adults starting out on their own have to look at the entire country for opportunities that will allow them to make an independent and happy life… or they can continue to live with Mom and sling coffee until they are 40.


Unfortunately, California has ceased to be the Golden State some time ago…


Zuma7

Roger, I can relate to what you are saying. Just two nights ago, my son, who graduated from CalPoly a few years ago, said he and his wife are thinking of moving out of California. If they go, I would miss them….but I’m going to tell them to go for it. He and his wife live in ThousandOaks, and both work full-time and make a decent living. But, like you said…they can’t get ahead. They want to have kids, they want to own a home…but they don’t want to do it in California anymore.

What has changed? When my husband and I were my son’s age, (mid 30’s) we owned a home, our cars were paid for. I got to stay home and take care of the kids when they were young. My husband wasn’t a college graduate.

All I see now in this area of California, are people that are struggling. I see a changing demographics, I see higher taxes, I see schools going down the tubes. And I see people leaving California…..I might follow them.


Rambunctious

Been there and done that Zuma7…my kids and grandchildren live in AZ. If we’re lucky we see them 3 times a year. It’s sad.


Robert1

Saw a car license plate frame the other day that said,”If you like SLO now you should have seen it before you got here”


tomsquawk

true of anyplace!