Tag Archives: Howard Jarvis Taxpayers Association

What Are the Crucial CA Proposition 19 Property Tax Benefits?

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CA Property Tax Benefits, 2022 Onward

Despite confusing, often deceptive messaging, designed at all  costs to get Proposition 19 voted into law in The Golden State of  California – it’s clear to most Californians that Proposition 19 property tax breaks really will increase property tax relief measures for homeowners over age 55, plus add exclusions from  property taxes for homeowners who are victims of wild-fires and other natural disasters – plus homeowners who are seriously disabled. 

Despite a little juggling with the facts, the slick promotion to get this tax measure voted into law, with attractive promises of improved tax exemptions… it did in fact appear to be a legitimate, believable package of property tax relief benefits for residents of the state of California — as long as you ignored the fine print.

What used to be Proposition 60 (voted into law in 1986, the same year Proposition 58 was passed), helped homeowners over 55 to sell their house and move into another home valuated at the same amount or less – in the same county – maintaining a low property tax base… This has been rolled into Proposition 19, and can be taken at face value… as long as the  California State Board of Equalization (BOE) continues to function as a non-political, fact-based source of CA property tax info – which, according to experts and state economists, it does appear to be doing. 

Experts Weight in on Proposition 19

Gaye Chun, the City National Bank wealth planner confirms, telling us: “The idea was to make it easier for seniors to move without worrying about a huge jump in their property tax bill that might be difficult for them to pay.”

Bruce M. Macdonald, an attorney with Carico Macdonald Kil & Benz LLP in El Segundo, CA agrees, stating, “If someone over 55 sold a house for $5 million, but they were paying taxes on a lower assessed value based on their original purchase price, they could buy a new house for $2 million and still pay taxes at their original, lower tax assessment.” No doubt, a truly significant improvement to a tax hike reflecting current or “fair market” property reassessment.

Tax Assessments and Property Tax Breaks in California

Property taxes are typically based on assessed value rather than current fair market value.  In most states, tax assessments are conducted every one to five years and are not changed when a property is sold or transferred as a gift or inheritance.

In California, to everyone’s relief, property tax relief measures have been voted into law to limit tax assessed value of property, as well as capping property tax rates, plus enabling beneficiaries inheriting property from parents to avoid high property tax reassessment – establishing a low property tax base right away, when inheriting a home from parents.

Much has been said about property tax relief on the critical side, by realtors and high net worth business people that benefit from tax increases… However, if you talk to working families, middle class Californians, and even upper middle class homeowners – you will hear nothing but praise for property tax relief laws such as Proposition 13, passed in 1978; and Proposition 58, passed in 1986 – enabling middle class families to avoid CA property reassessment… making tax breaks available to homeowners and beneficiaries such as property tax transfer; with the ability to transfer parents property taxes when inheriting property while keeping a low property tax base; with the right to keep parents property taxes basically forever… inheriting property taxes without issue from Dad or Mom whenever they pass. 

Giving beneficiaries the ability to avoid CA property reassessment through parent to child transfer and a parent-to-child exclusion is a major asset to middle class residents in California; as well as being able to  take advantage of Proposition 19, in conjunction with a loan to an irrevocable trust to buyout siblings’ share of inherited property – keeping a close eye on mistakes to avoid when transferring a property tax base.  Now, the ability to avoid CA property reassessment and other property tax relief  benefits are under serious threat.  

All of  this was planned, launched and protected by Howard Jarvis and his famous  Taxpayers Association, as well as others who joined in the effort beginning in the mid 1970s, when property tax increases were basically out of control… often forcing elderly widows and others living on a fixed income, literally onto the street with their furniture piled up around them on the sidewalk!

Not the way anyone with a conscience would want elderly Californians to end up, in the Autumn of their life – simply to benefit a few real estate firms who will make more money from increased sales (with more homes for sale due to increased inability to pay rising taxes), with the CA Legislature piling up tax revenue higher and higher as property tax revenue increases. Perhaps helpful to a few in the short term… but with dire consequences in the long term for the entire state.

Experts Weigh In on CA Property Tax Relief

“In 1978, California voters approved Prop. 13, a constitutional amendment known as ‘The People’s Initiative to Limit Property Taxation’ that was meant to protect older residents who were unable to keep up with large property tax increases”, Gaye Chun tells us; and adds, “Several propositions since then have tinkered with property taxes.”

“Homeowners who plan to transfer their residence to their children now or as part of their inheritance should seek professional advice, so they understand the impact of the new property tax rules”, asserts Bruce Macdonald, the well known attorney in El Segundo.

“Current changes in property tax rules could be significant for some families, because it’s not that unusual in California to have a house that was assessed at $150,000 when the parents bought it, to be worth $5 million 40 years later,” Mr. Macdonald, Esq. explains; adding, “When the kids could inherit their parents’ house at the assessed value of $150,000, the property taxes would be approximately $1,500. Now, if the house is assessed at $5 million, that would incur a significantly higher tax bill!”

Experts in California tell us that this points to all the more reason for repealing Proposition 19… as well as adding more concrete protections to keep Proposition 13 safe from anti-property-tax-relief realtors and the politicians that are firmly in their pocket.

Article 13-A of the California Constitution

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Protecting Californians From Arbitrary Tax Hikes

Proposition 13 once protected all taxpayers, homeowners and non-homeowners — by maintaining a 2/3 vote requirement in order to pass most tax increases, including state sales and income tax. Intentionally making it more difficult to raise taxes on residents. Particularly critical with respect to property taxes.

Unfortunately for middle class tax payers, a tax measure entitled “Proposition 39” was approved in 2000 by a thin razor edged margin after a massively budgeted PR & marketing campaign was launched by a few Silicon Valley billionaires who thought it would be advantageous to make middle class homeowners pay for their Silicon Valley corporate tax breaks. Similar to our recent tax breaks for mega-wealthy Americans and high-end corporations. Again, mainly pulled from the pockets of middle class homeowners and working families. A sad testament to tax inequality.

So-called “Proposition 39” revised the 2/3 vote requirement for certain bonds to 55% — making it way too easy to pass those bonds, since they are paid back only through increased property taxes. Again, wealthy hands in the pockets of middle class families.

Property Tax Postponement Instead of Property Tax Relief

The State Controller’s Property Tax Postponement Program allows senior or elderly homeowners, blind homeowners,  and severely disabled property owners, to take advantage of a marginally helpful “tax deferment” affecting this year’s property tax bill. When the more equitable solution would obviously be total or partial exclusion from these property taxes; especially in the midst of a severe Pandemic — with subsequent economic failings and short-comings, with no real end in sight.

Over the past 44 years, the Howard Jarvis Taxpayers Association has battled and confronted California based special interest organizations, such as the CA Association of Realtors, groups, bureaucrats, and public-employee unions, among others, who benefit from government spending.

Beginning in 1978, Proposition 13 was determined to protect home ownership from overly greedy, destructive taxation. Therefore California property owners strive to continue enjoying the $528 billion that the Proposition 13 and Proposition 58 (now Proposition 19) Howard Jarvis Tax Revolt has saved homeowners by helping them, overall, to avoid property tax reassessment; allowing families to transfer  property between siblings without a crippling property tax reassessment, avoiding a sibling to sibling buyout.  Enabling beneficiaries to transfer parents property taxes to themselves through property tax transfer relief, when inheriting property, and subsequently inheriting property taxes from a parent — thereby inheriting property while keeping a low property tax base.

Hence, allowing inheritors to keep parents property taxes basically forever… generally with property tax transfer relief from a parent-child transfer — ultimately, through an established parent-to-child exclusion.  Something no California homeowner or beneficiary wants to lose.

How Secure is Property Tax Relief for Californians?

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Property Taxes in California

Property Taxes in California

Despite Critics, CA Property Tax Relief Is As Popular As Ever  

What all homeowners, property owners and working families inheriting property in California want to know – is whether or not property tax breaks from Proposition 13 and Proposition 19 are guaranteed, during our lifetime, to all California homeowners and beneficiaries inheriting property.

Naturally, this encompasses the ability to transfer parents property taxes, with a protected property tax transfer; the right to keep parents property taxes when inheriting property  property taxes, most frequently through a parent-child transfer, otherwise known as a parent-to-child exclusion.  Always to avoid property tax reassessment, even when it involves a loan to an irrevocable trust, in conjunction with Prop 19 for the transfer of property between siblings, commonly called an “inherited property buyout”, which is often implemented in concert with the right to keep parents property taxes.

So after 44 years of capping property tax increases at 2%, Prop 13 continues to be wildly popular with Californians. And due to the fact that Proposition 13 is a CA Constitutional Amendment, it can only be revised by voter approval.

Howard Jarvis Taxpayers Assoc president Jon Coupal tell us:

“Without the two-thirds vote requirement, one of these second-mortgage bonds can now be passed by people who won’t pay the tax and in fact are getting more from the government than they pay in taxes.

After Proposition 39 took away the two-thirds vote protection for these bonds, localities quickly passed almost $30 billion in such bonds — debt that homeowners will be burdened with long after they’ve paid off their homes.  Since then, the two-thirds vote has been repeatedly attacked by a pro-tax coalition that wants to eliminate this protection for more and more kinds of bonds and taxes.

Currently, several proposals are active in the State Legislature to change the state constitution to eliminate the two-thirds vote requirement for other kinds of bonds, and for certain sales and property taxes. If enacted, it will become far too easy to pass all kinds of tax hikes, so the Howard Jarvis Taxpayers Association is actively fighting this legislation.”

Special Interest Groups Intent On Unraveling Tax Relief

Wealthy special interest organizations are out there scheming and planning, especially like-minded people in the realtor community that are secretly, and not so secretly, aiming to unravel California property tax breaks – such as the CA Associations of Realtors, who bankrolled Proposition 19,  replacing Proposition 58 in 2021. 

The CA Associations of Realtors donated $40.4 million to their crusade; and $47.57 million total bankrolled this effort to convince Californians with deceptive yet clever public relations and marketing.  Naturally, there were other organizations that chipped in, that do well with state government cash and don’t want homeowners to save big on property taxes, as property tax revenue feeds those organizations and their financial interests.

Proposition 15, the property tax measure, also promoted by the realtor community, was designed to overturn Proposition 13’s commercial property tax protections, and was defeated by a hair. Had it passed, most residential rentals and business rentals, thanks to inflated commercial property taxes from an unraveled Proposition 13, would have gone sky high – taking prices of all goods and services in California with it…and would have carried the future of California with it…. downhill!

Special interest groups such as the Realtor organizations pushing these anti property tax relief efforts, have got to learn that you can’t weaken and in many cases destroy the lives of millions of the  39,538,223 citizens residing in California – simply to benefit 131,551 real estate brokers. Weakening the financial life of millions just to make some realtors and real estate brokers a little wealthier just doesn’t even out.

CA Property Tax Relief Heroes ~ Fighting the Good Fight

This is precisely why folks such as the Howard Jarvis Taxpayer’s Association; Assemblyman Kevin Kiley and his ACA-9 Bill to repeal Proposition 19;  Commercial Loan Corp led by president Kerry Smith; and others – maintaining an especially courageous effort to control property tax hikes; and keep crippling property taxes capped and equitable for California working families, for both middle class and high net worth homeowners – to keep the California American Dream of home ownership alive, fair, and affordable.

Repealing California’s Death Tax

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Repealing California's Death Tax

Since the passage of California Proposition 19, more and more families are receiving notices that the death of a parent has triggered reassessment of a family property and sharply increased their property tax bill. In an attempt to stem this, the Howard Jarvis Taxpayers Association has filed a ballot initiative with the Attorney General’s office to repeal California’s Death Tax.

In November of 2020, many voters were unaware that California Proposition 19 included a provision that affected inter-generational transfers of homes. Prior to California Proposition 19’s passage, a parent could transfer a home of any value plus up to $1 million of assessed value of other property to their children, without reassessment to market value. However, effective February 16, 2021, this is no longer the case.

The Howard Jarvis Taxpayers Association is fighting to modify Prop 19 and restore the ability of parents to pass property to their children without any change to their tax bill. Commercial Loan Corporation is working with them to gather the signatures required to get it on the ballot. The new initiative is titled the Repeal the Death Tax Act. It would reverse the Proposition 19 changes to the rules affecting inter-generational transfers. To further protect California families, the measure includes an inflation adjustment for properties in addition to the primary residence. Up to $2.4 million of assessed value would be excluded from reassessment upon transfer, offering significant tax benefits to families that own small business properties or rental units for income. A primary residence of any value would be excluded from reassessment.

If you are interested in helping collect signatures and think that you can collect several, you can have a petition mailed to you along with complete instructions on how to do so. The deadline to collect the necessary signatures is April 29, 2022 so the time to act is now to repeal California’s Death Tax!

You can request a petition online here, or call Commercial Loan Corporation at 877-464-1066 for more details.

Proposition 19 Tax Hike Versus Proposition 58 Property Tax Breaks

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Proposition 19 Tax Hike Versus Proposition 58 Property Tax Breaks

Proposition 19 Tax Hike Versus Proposition 58 Property Tax Breaks

The slim-margin success of California property tax hike Proposition 19 has been due to an odd combination of elements. Not held up by a great deal of media support – yet enjoying all the benefits of a massive promotional budget, with first-rate brand awareness and PR; etc. – allocated by several established high-profile organizations lending a great deal of credibility to the Proposition 19 campaign.

Proposition 19 concentrated on the (supposed) well-being of seniors; on the enhanced profitability of the California realtor community, and on the escalated financial health of the state educational system.  Although  all the Proposition 19 public relations language supported all those focus points… how sincere it was remains to be seen.  Oddly enough, press and media support never mirrored the robust financial support that Proposition 19 enjoyed.

Only a handful of organizations such as ACLU of Southern California, the Family Business Association of California,  the Howard Jarvis Taxpayers Association, and League of Women Voters of California supported the effort to defeat Prop 19 – coming up with a mere $58,000 to support and protect Proposition 58, Proposition 13, and the right to continue transferring property taxes…

Meanwhile, a  tremendous parade of well heeled organizations backed the Proposition 19 tax initiative, and fought hard to get it passed, donating  some  $46,458,168.88… The astounding amount of capital raised to get the proposition passed was led by the California Association of Realtors, donating a stunning $35,710,000;  National Association of Realtors, with $4,823,500; California Professional Firefighters Ballot Issues Committee with $100,454; and the Operating Engineers Local Union No. 3 Issues Advocacy/Ballot Initiative PAC with $10,000.

Other supporters were California Senior Advocates League, California Statewide Law Enforcement Association, Californians for Disability Rights, Congress of California Seniors, California State Federation of Labor, CalAsian Chamber of Commerce, California Black Chamber of Commerce, California Business Roundtable,  California Forestry Association, California Hispanic Chamber of Commerce,  and  the California NAACP State Conference – just to name a few.  The full list of supporters is extraordinary. 

The California Legislature boldly claims that local governments and schools could “gain tens of millions of dollars of additional property tax revenue every year…” These extra revenue gains, they anticipate,  “might grow over time… to a few hundred million dollars per year.” “Might” and “could”…  But no one knows for sure.  Many feel these numbers are exaggerated.

Did those politicos running California, along with the real estate  organizations who had enough in their war-chest to throw $40,000,000 at this tax bill – ever consider that a large number of family farms and other companies will go under, as they have said they are in danger of doing due to overly high taxation, Covid, and poor sales… and will stop paying taxes altogether at that point. 

Did they ever consider that  if you unravel California’s right to transfer property taxes when inheriting property taxes from parents… or limit beneficiaries’ ability to keep parents property taxes, nothing but economic trouble will follow. Tampering with the right to take advantage of property tax transfer benefits, or the transfer of parents property taxes upon inheriting property taxes… or limiting a families’ ability to get a trust loan to buyout a co-beneficiary’s inherited property, to take advantage of Proposition 58 to avoid property tax reassessment… will do nothing but confuse  the tax system. 

Property tax transfer, namely the right to transfer property taxes, parent to child transfers and parent to child exclusion, is always dangerous to play games with; or to try to  “fix”  a system that isn’t broken… that has been in place for decades, working well for property owners and requiring no need of fixing.  

Many who are not in danger of going under have claimed they are fed up with  the high cost of doing business in California — and tax hikes of any kind would push them over the line, forcing them to leave California for more corporate-friendly states, with lower taxes in general.  They may not have the right to transfer property taxes in a new state, however their income tax and living expenses in general are likely to be far less expensive than in California.

Did any of the short-sighted folks pushing property tax increases like Prop 19, limiting and even removing the right to transfer property taxes as well as high income tax, ever stop to consider that in the final analysis California loses out on a lot more tax revenue going down this avenue.  In fact, if you examine the ten highest income tax states (or legal jurisdictions) you see right away how high taxation already is in California, even  before property tax increases…

  1. California 13.3%
  2. Hawaii 11%
  3. New Jersey 10.75%
  4. Oregon 9.9%
  5. Minnesota 9.85%
  6. District of Columbia 8.95%
  7. New York 8.82%
  8. Vermont 8.75%
  9. Iowa 8.53%
  10. Wisconsin 7.65%

Not only that, if you factor in the thousands of good white collar and  blue collar jobs that exit with those companies when they leave the state, take note of the fact that those jobs are gone forever!  Moreover, all those workers put an additional strain on the system, collecting   unemployment checks plus no longer themselves paying out taxes on the level they were before… Many of them in fact leaving the state to find work in nearby states with lower taxes and lower living expenses. Again, less tax revenue going to the California.  Did this not occur to anyone in the State Government, smart folks with PHDs and MBAs and law degrees…? You would think it would have.

Opposition in the Press

Yet with all that financial support – press and media support was stunningly low, in terms of support for Proposition 19.  Editorial Boards opposing this property tax ballot looked something like this:   

• The Orange County Register Editorial Board: “But Prop. 19 is best understood for what it is: an attempt by real estate interests to accomplish what they couldn’t accomplish two years ago by pandering to the state’s firefighters union. This is a special-interest measure that seeks to raise hundreds of millions of new tax revenues to appease yet another special interest. Prop. 19 has one good feature — portability. Counties ought to enable it forthwith, as a few already have done. But Prop. 19 is a cash grab, not tax reform; it’s not fair to property heirs, and it buys off a union so it has a better chance of passing. Vote it down.”

• Mercury News & East Bay Times Editorial Boards: “Prop. 19 merely plugs one hole in the state’s porous property tax laws while creating another. It’s time for holistic reform that simplifies the system and makes it more equitable. This isn’t it.  The longer a person had owned their current home, and already benefited from inordinately low tax bills due to Prop. 13, the greater the tax break on the new property. And those who downsize would often be competing with first-time buyers for more-affordable smaller homes. The real reform would be to abolish the tax-transfer program, not expand it. Vote no on Prop. 19.”

• The Bakersfield Californian Editorial Board: “Proposition 19 is another do-over on the ballot. Two years ago, the real estate industry spent $13 million on a similar initiative campaign to expand the program statewide and enhance the benefit for eligible homeowners. Sixty percent of voters rejected the initiative. They should do the same this year.”

• Los Angeles Times Editorial Board: “But Proposition 19 would just expand the inequities in California’s property tax system. It would grossly benefit those who were lucky enough to buy a home years ago and hold onto it as values skyrocketed. It would give them a huge tax break and greater buying power in an already expensive real estate market. It would skew tax breaks further away from people who don’t own a home or who may be struggling to buy one.”

• San Francisco Chronicle Editorial Board: “But it’s still a flawed package, designed to rev up home sales that benefit real estate agents who could reap more in commissions. It favors one narrow segment of the tax-paying public but does nothing for the rest of the state’s home buyers. The measure shows the convoluted extremes that California’s tangled property tax system produces.”

• The Desert Sun Editorial Board: “What seems clear is that the main backers of this measure — Realtors and the firefighters union — stand to gain greatly in the forms of expected increased home sales and related sales commissions and the measure’s dedication of some of the state’s ultimate new tax proceeds specifically to firefighting efforts. Firefighting must be a priority of state and local governments. Budgeting for anything so vital by this type of special interest ballot measure is the worst way to do so. Lawmakers should be making such key spending decisions in their regular budget work.”

• The Press Democrat Editorial Board: “Proposition 19 would allow people to buy more expensive homes anywhere in the state, while capping their property taxes. Moreover, they could repeat the maneuver three times. That might provide lots of business for real estate agents, but it would undercut school districts and local governments, the beneficiaries of property taxes. […] California’s tax system is overdue for an overhaul, but these measures make piecemeal changes that are as likely to create new problems as solve old ones. The Press Democrat recommends no votes on Propositions 15 and 19.”

Editorial Boards supporting this property tax ballot was slim, and looked something like this: 

• San Mateo Daily Journal Editorial Board: “This would enable people in high cost areas to move more easily, opening up room for new residents to the area.”

• The San Diego Union-Tribune Editorial Board: “While critics see this as a gift to the wealthy elderly, the great majority of older homeowners are middle-income, not rich. Allowing them (as well as disabled homeowners and wildfire or disaster victims) to downsize without suffering a huge property tax hit is a humane policy that helps people retire with much less financial stress. It would also promote fluidity in home sales, increasing the availability of larger homes for families with children.”

And so the debate continues… 

PART ONE: Property Tax Relief Fights for Its’ Life in California…

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Jon Coupal, articulate and persistent president of the authoritative and well respected “Howard Jarvis Taxpayer’s Association”, has been leading the charge in California to keep property tax relief safely in place.

There are a few other notable property tax reduction leaders, like Kerry Smith, courageous and visionary president of the “Commercial Loan Corp”, that furnishes trust loans tied into Proposition 58, making the transfer of property between siblings and buying out a sibling’s share of a house possible.

All of this, of course, ties into the process of inheriting property taxes, ones ability to keep parents property taxes, and property tax transfer as it pertains to the parent to child transfer (which Proposition 19 seeks to unravel) — commonly known as parent to child exclusion or a parent to child exemption.  Plus, there are high end tax reduction specialists, like noted Paramount Property Tax Appeal president Wes Nichols,  who  specialize in personal business tax reduction and property tax assessor appeals.  These folks have all been on the front lines of these issues for many years.

Not known for soft ball opinions, or for taking it easy on property tax relief opponents, Mr. Coupal was extremely candid in an interview with this Blog; and had some interesting things to say recently, in a particularly hard-hitting article in The Tahoe Daily Tribune, on Oct. 9, 2020 “Explaining the Confusing Prop 19 to Californians” and in his own column on the http://www.hjta.org Website, “Prop-15 Backers Try to Mislead Homeowners”  where Mr. Coupal stated, on Oct 21:

“Prop-15 backers try to mislead homeowners. It’s a sign of desperation. When anyone in politics starts making wild claims less than a month before an election, you know something is amiss. So it is with the proponents of Proposition 15, the “split roll” initiative which would impose the largest property tax increase in California history.

Throughout this campaign, proponents have consistently argued that the measure won’t impact homeowners because it just raises property taxes on commercial and industrial properties. But now, they claim that Prop. 15 actually saves homeowners money.

This is absurd on its face. Recent polling suggests that support for split roll is sinking fast, especially among homeowners. This might explain why proponents have, at the 11th hour, countered with the argument that, as corporations have to pay more, the tax burden for homeowners goes down. Nobody believes this.”

Mr. Coupal also brings to our attention the deliberate confusion around proposed Proposition 19; as he reiterates,

“It’s no secret that ballot initiatives can be confusing, but Proposition 19 takes obfuscation to a whole new level. Voters can’t be blamed if they can’t remember whether Prop. 19 is the initiative that is a massive property tax hike or the measure that actually has something good for homeowners or the initiative that has something to do with firefighting. The fact is, all three are at least somewhat true — especially the part about the big tax increase.

Let’s clear up the confusion: Proposition 13, passed in 1978, gave California homeowners certainty about their future property tax liability because increases in the “taxable value” of property would be limited to 2 percent per year. Property would be reassessed to market value only when it changed hands. But that tax hike even applied when property owners transferred a property to their own children.

Prop. 19 would repeal Proposition 58 and force the reassessment of inherited or transferred property within families. The only exception is if the property is used as the principal residence of the person to whom it was transferred and even that exclusion is capped…”

If you repeal Proposition 58, the uniquely Californian funding process involving trust loans tied into Proposition 58 may have to be revised. And by the way, the ‘principal residence’ ruling must take place within one year of the passing of the decedent who left behind the property in question.  This in itself creates a myriad of problems, if you have an additional mortgage thrust upon you, plus the expenses that very well may accompany  another residence if you’re also a homeowner at the time you inherit this additional property. 

You may have a large family that won’t fit into the inherited property, noo that you’re forced to move in within a year.  The inherited home may be a much longer drive from your job or your spouses’ job.  Your children may attend a school in a totally different district, causing additional problems; etc. so on and so forth.  Otherwise, you may be forced to sell your inherited property, and that can bring inconvenient and expensive issues along with it as well.  It may not be so simple.

At any rate, Mr. Coupal added, “The non-partisan Legislative Analyst’s Office estimates that the repeal of the “inter-generational transfer protections” will result in tens of thousands of California families getting hit with higher property taxes every year. The LAO acknowledges that Prop. 19 imposes an additional tax burden in the “hundreds of millions of dollars”.

>> Click Here to go to Part Two…

Part One: As Attacks on Proposition 13 And Prop 58 Weaken, Critics Continue on with Split-Roll Tax Effort – Featuring Jon Coupal, CEO, Taxpayer’s Association

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Property Taxes Proposition 13 and 58

Property Taxes Proposition 13 and 58

As we all know, for many years, critics of California Proposition 13 have been blaming property tax relief, the right to avoid property tax reassessment, for overall under-funding of public services…

The critics also blame parent to child transfer of a home and/or land, in other words simple parent to child exclusion from present-day property revaluation, however they mainly place the blame on the  1978 California Proposition 13 property tax relief measure, and the 1986 Proposition 58 property transfer tax shelter, for the under-funding and watering down of critical statewide public services – without any believable data or statistics to back up these accusations.

These claims, largely false and overblown, are still bandied about    in the media by critics, even though they have been debunked and discredited countless times – as the facts repeatedly point, again ad again, at state and local government over-spending on high salaries, reportedly extravagant pensions and benefits, as well as ruinous special-interest construction, building projects, and so forth.

Not, as economists and analysts have said repeatedly, property tax shelters made possible by Prop 13 and Prop 58; which merely benefit offspring when it comes time to transfer parents property taxes when inheriting a home from parents, for example,  and inheriting property taxes… Allowing the family to avoid property tax reassessment, enabling any property tax transfer to be less costly.

All things considered, from an objective standpoint, this is brazen misinformation. In fact, there is a mountain of data revealed in various charts and tables, with arrows pointing up, not down, showing us that total inbound revenue from property taxes has gone up since Prop 13 went into affect in 1978 – not down; despite residential and commercial property owners’ ability to avoid property tax reassessment.

In a recent interview with Mr. Jon Coupal, Chief Executive Officer of the Howard Jarvis Taxpayers Association; with offices in Sacramento and Los Angeles.  Their official motto states that, “When illegal taxes are imposed by state or local governments, our legal organization goes to court to protect your taxpayer rights.”

During our brief interview, Mr. Coupal addressed several current, related issues – beginning with the so-called “2020 Proposition 13 Split-Roll Property Tax measure”; the latest public initiative being promoted throughout California by virulent critics of the original 1978 Proposition 13…

 

Property Tax Transfer: Mr. Coupal, thank you so much for taking some time out of your very busy schedule today to speak with us.

Jon Coupal: No problem.

Property Tax Transfer: Can you tell us what you think about the 2020 so-called Split-Roll property tax measure, by coincidence also named Proposition 13, pushed forward by opponents and critics of the original 1978 California Proposition 13 property tax shelter…

Jon Coupal: All of this is confusing, intentionally.  This new  2020 Proposition 13 is more or less tricking voters into thinking that the two   Proposition 13s are related. They’re not. The 2020 Proposition 13 with the Split-Roll Tax is strictly about removing all caps on commercial and industrial properties.

Property Tax Transfer: So how do folks stay on top of all this? How do they figure out what those folks are really up to?

Jon Coupal: This is all designed by opponents of the genuine 1978 Proposition 13 to be confusing and tricky. This is an ongoing educational process for Californians. The new Proposition 13 is not related to the original Proposition 13. What it is, is a $15 Billion bond measure to fund local schools, who must provide matching funds. Plain and simple, this is a tax increase that falls on property owners. Bottom line.

Property Tax Transfer: Yes we can see that. It is very tricky. Jon, what do you believe is our greatest threat?

Jon Coupal: Put simply, your greatest threat is realtors trying to end family property transfers. They would like to destroy inter-generational property transfers. Or they intend to at least limit transfers. The school bond affects the local debt caps… but it’s the realtors – they are the real threat to you.

Property Tax Transfer: A certain group of California realtors…

Jon Coupal: Yes. The media and the realtors will keep pounding away at this; and of course continue to use that one example they have of Lloyd Bridges and his sons renting out that property… to try to convince the public of all the things that are wrong with Prop 13 and property tax transfer. That is the one dramatic example they have to convince people of their point of view. That’s all they have. Nothing else.

Property Tax Transfer: The highly exaggerated, perhaps fictitious real estate crisis…

Jon Coupal: Yes. No matter how many times you ask that’s the only supposedly compelling evidence they have ever come up with to support their argument about their countless rich people  taking advantage of Proposition 13 tax shelter, supposedly renting our thousands of non-primary residences all over California, shrinking tax revenue to the government.  This, of course, is utter nonsense.

(Continued in Part Two…)

Polls Confirm CA Proposition 13 Continues to Provide Middle Class Homeowners in California of all Ages with Real Tax Relief

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Despite Media Claims that Prop 13 Favors   Older, Wealthier Long-Term Property Owners

In a powerful article entitled, “No It’s Not Just for Seniors — Prop. 13 Has Something for Everybody” (Click Here to Read Entire Article)… written by the talented writer Jon Coupal for the legendary Howard Jarvis Taxpayers Association, Mr. Coupal wields the truth about how  Proposition 13 continues to provide tax relief to regular middle class Californians, not just the rich; the way a knight in shining armor wields a glistening sword in battle.

Mr. Coupal points out the following benefits Proposition 13 continues to provide for mainly middle class homeowners in the state of California… despite unfounded claims from several sectors in California that insist, without convincing data to back it up, that wealthy homeowners have been the true recipients of real property tax break benefits from Prop 13, since 1978, Click here for more discussion on this false claim. Mr. Coupal tells us:

“…By lowering the tax rate from nearly 3% to 1% and restricting annual increases in assessed value to 2% – Proposition 13 has provided a stable system for all – including government agencies that depend on property taxes.  Still, the opposition continues to gin up discontent against the tax-limiting measure – using absurd and sometimes insidious arguments. Critics whine about fairness like children in a school yard shouting “Not fair! Not fair!” They point out that in some neighborhoods a recent home buyer is paying more in taxes than a neighbor who has owned their home for thirty twenty or even ten years.

This they claim shows that the tax burden is being born by the young while older property owners reap the benefit. Of course this is nonsense. The longtime owner has been paying property taxes for years — property taxes that built the infrastructure the new buyer now enjoys — and they began paying based on what they could afford to pay for their home at the time of purchase. The new buyer is in the exact same position in that his or her taxes are based on what they can afford now and they too enjoy the benefit of knowing what their taxes will be in the future.

What Proposition 13 provides to both new and longtime homeowners alike whatever their age is certainty and security in taxation. And the critics of this system are not in the least bit concerned about “fairness”; they are looking for more money from the older owners.”

Opponents to Proposition 13 claiming that new home buyers moving into the same neighborhood as home owners that have been living there for 20 or 30 years are always young – is an absurd claim to begin with.  How can these critics possibly make an assumption that all these new home buyers are young ?

Secondly, how can they possibly make the jump from there that young home owners therefore carry the bulk of the property tax burden in California… when in fact Proposition 13 continues to provide tax relief to younger property owners, or, more realistically, new home buyers, with the same tax relief benefits as older home owners receive, or as long term home owners that have been living in the same home for decades, receive.  It’s an even playing field. To claim this is not so is simply out of step with reality.

As a matter of fact there is no factual data to back up either argument – long term dwellers or elderly home owners. Hence, this is yet another unfounded claim to back up a clearly biased argument to denigrate and tarnish Prop 13… built on a stack of cards. Not facts. As a matter of fact, we’d go so far as to suggest that this entire point of view, for some, is built on an obvious bias against older folks. It’s called “age-ism”, a bias we’re all familiar with.

For others, who make a living in the real estate game, and are presently grappling with a decrease in homes available for sale in certain areas in California – it wouldn’t be entirely unrealistic to suggest that this critical argument is merely an effort to get more properties on the market, to help realtors and brokers generate more revenue! And for newspapers who take this side of the argument, to generate more revenue from real estate ad sales. These issues go hand in hand.

Certainty and security are important matters to elderly Californians; so in fact (alluding to Mr. Coupal’s article title), the Proposition 13 tax break actually does benefit seniors in particular, not only due to the ability to avoid property tax reassessment – but due to the fact that many seniors see a slow-down in income in their mid to late 60s… Therefore a program that prevents their property taxes from going up and in fact sustains a very low rate, when you add it all up, at 1% to 2%, is going to be beneficial to, and popular with, elderly property owners who tend to live on more of a fixed income than many people do who are in their 30s, 40s and early 50s, for example.

So with all due respect to Mr. Coupal, it’s not a negative matter to point out that Proposition 13 does help to provide older property owners with a more predictable and affordable future. As a matter of fact, this applies to anyone living on a fixed middle class, or even upper middle class, income. We could look at veterans, retired police officers, post office and other municipal or govt. workers; as well as retired white collar folks living on retirement benefits from a former job, although, regrettably, that appears to be a fading prospect for most Americans these days. However… just the same.

The point is, Prop 13 contributes predictability for people who need a predictable future, economically. Certainly, some of these folks may have some stock here and there, but as we can see from recent events, Wall Street investment outcomes are not exactly something we can depend on these days – no matter how many analysts and financial advisors claim to have a financial crystal ball.

At any rate, let’s revisit some of these critics of Proposition 13, shedding crocodile tears and feigning interest in being “fair” to all homeowners… while at the same time really wanting more money from home sales, from buyers of all ages, in particular older buyers – as well as more cash from higher rentals. More expensive home values typically equal higher rentals. Which further feeds the bias against older home owners.

So if elderly home owners maintain the same primary property for decades, and possibly own additional properties as well, critics of Prop 13 insist that these homes inherited by adult beneficiaries, with current property value reassessment out of the picture thanks to Prop 13, all adds up to Proposition 13 being the sole cause of property owners keeping homes in the family… going to offspring rather than being available to as properties for sale.

Mr. Coupal really is 100% correct. These homes, going to adult children, without reassessment and a higher tax hit, would be inherited by these children of elderly homeowners regardless of Proposition 13 non-reassessment, or even California’s Proposition 58 property transfer tax break. People transfer property, or enable their children to inherit their property, regardless of whether they are benefiting from a tax relief program, or not. This is simply what people have been doing for their children for hundreds of years! Way before Proposition 13 ever appeared on the scene.

The below argument, and you can read the entire diatribe by clicking here, https://lao.ca.gov/Publications/Report/3706 is exactly the type of standard critique Mr. Coupal is talking about in his article at Taxpayer Association. These critics frequently take a wild leap to a conclusion that is merely a fear based outcome, not factual one – should you be a realtor or residential property sales executive, experiencing dwindling sales lately. They are taking some factual information, mixing it all up together and coming up with the following conclusion:

“Inheritance exclusions appear to be encouraging children to hold on to their parents’ homes to use as rentals or other purposes instead of putting them on the for sale market. A look at inherited homes in Los Angeles County during the last decade supports this finding. [Data] shows the share of homes that received the [Proposition 13] homeowner’s exemption—a tax reduction available only for primary residences—before and after inheritance. Before inheritance, about 70 percent of homes claimed the homeowner’s exemption, compared to about 40 percent after inheritance. This suggests that many of these homes are being converted from primary residences to other uses…”

In actual fact, this homeowners exemption from tax reassessment does apply to non-primary (i.e., additional) properties. So this part of their premise is in fact incorrect. Advancing this type of argument, that all these homes in California are not shifting to home sales, making money for realtors; and are robbing desperate Californians of the ability to purchase lovely homes in safe neighborhoods – and that this is strictly the fault of Prop 13 tax reduction, and is just plain “unfair”…

Actually, what this is all about is not “fairness”… it’s basically indicating that shrinking home sales throughout California is specifically due to older Californians taking advantage of tax relief from Proposition 13; and that the Prop 13 tax break is somehow the main reason elderly homeowners are allowing their beneficiaries to take over their aging properties, as opposed to their property or properties going to some real estate company to generate hundreds of millions of dollars in extra revenue. That is, frankly – absurd.

Adding all this up, somehow ending up where senior homeowners would not be providing beneficiaries with inherited property if they were somehow not benefiting from property tax relief is completely devoid of logic. As we have already said, parents transfer property, or make it possible for their children to inherit their property in every state in the union, whether they are benefiting from a tax reduction law called Proposition 13 or not! Somehow also making the jump to the theory that the overall California property tax burden is now being shouldered mainly by young homeowners, while older property owners who have been holding onto their old homes for decades, are somehow reaping the benefit of a general lack of home sales. Because they can save a few dollars in taxes, plus leave property to their children?

With all due respect, these arguments, proposed in newspapers and by certain local politicians, make no logical sense. Especially if you look at most of the homes that are being held onto and shifted over to beneficiaries. A lot of these homes are middle class homes, not super fancy upscale affluent homes, and, most importantly, they have depreciated over the years, not appreciated. So most of those properties need real work.

Proposition 13 continues to provide tax relief for all California  homeowners, with zero negative impact on the real estate market. To suggest that most of these older homes owned for decades by elderly people, would somehow be snapped up in a second in the real estate market, isn’t terribly realistic, is it. Yet critics of Proposition 13 and Proposition 58 continue to insist that wealthy homeowners are still benefiting more from these laws than middle class folks or anyone else in California, and that they somehow are continuing to shrink the real estate market, in areas like Santa Barbara, and San Francisco, Santa Cruz, and Los Angeles.

Proposition 13 continues to provide tax relief for regular everyday home-owning Californians, not matter how much the critics bray  about how all these benefits are going to the old and to the rich. It’s just not so.  You can continue to try to jam a square peg into a round space for some time… But after awhile it starts to become obvious that it just doesn’t make sense. Hopefully the media and certain critical politicians in California with special interests in the real estate business will also begin to see once and for all that these square peg arguments against Prop 13 just aren’t fitting into that round space called logic.