Proposition 58 and Proposition 13 in California
Even as property tax transfer increases in popularity, and Californians continue to take advantage of Proposition 13 and Proposition 58, for residential and commercial property tax relief, critics of these property tax shelters continue to be rabidly, and in many ways irrationally, irate with the same basic tax relief afforded to agricultural and industrial facilities, as well as other commercial properties, throughout California.
Moreover, all tax shelter benefits made possible by California Proposition 58 and Proposition 193 are equally unpopular with critics, with respect to parent to child exclusion (from property tax reassessment, Prop 58) and grandparent to grandchild transfer rights (avoiding property tax reassessment, Prop 193).
On the other hand, countless property owners across California with different levels of income and property values, all enjoy the same ability to avoid property tax reassessment; so naturally property tax transfer increases in popularity, as Californians never have to pay property taxes based on present day property evaluations.
California home owners and business property owners are equally thrilled with Proposition 13 and 58 tax shelter protection… and frequently take advantage of these tax benefits by engaging with a trust lender, for a trust distribution loan, a trust loan made only possible by this type of tax relief. Loans to trusts, loans to irrevocable trusts in many cases, under protections afforded by Proposition 58, with parent to child, property tax transfer, tax relief; and Proposition 193 tax benefits, covering grandparent to grandchild property tax transfer.
Despite critics working off opinions, bias, and a lack of data other than purely anecdotal evidence, they frequently claim to the media that property tax relief is the sole cause of state and local government tax revenue shortages, local California government pension under-funding, the shrinkage of homes being available in the real estate market… and several other related items.
However, economists working off of verified data and statistics have looked this issue from a local and state tax-revenue-to-government perspective, and have stated repeatedly that the reason for any real estate market shrinking is largely due to economic trending; although they also concede that some shrinkage in the home market is also somewhat affected by property tax shelters, although to a lesser degree.
Analysts and economists, addressing claims of government revenue shortages, note that California city municipal workers, and state government employees, are actually at a higher salary rate than equivalent government workers in other states are. They say many California government jobs base rates, bonuses, raises and pension plans are way above national averages… and that this is the cause of any under-funding or shortages in government public funding and spending.
Some California economists have said, in compiling studies on the subject, that California government employees are the highest paid state and city employees in the country, with the most comprehensive benefits, as well as retirement benefits, and the most expensive pension plans in the country.
California state budgets, year after year, consistently surpass state spending records – and the California educational system is now enjoying a 66% increase, reportedly over the next six years. Public services are inferior in California, not because of Proposition 13 property tax decreases and tax relief for residential and commercial property owners – but because of political preferences, special interest groups and internal over-spending. Over-spending is the realistic cause of any problems arising from under budgeting and under-funding.