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There are some diaries alleging that Mitt Romney has done something wrong by asking for his property in San Diego county to be reassessed to way less than the sale price from a few months before. For all I know, there is some funny business there.

But on it's face, this isn't even close to being irregular. "You people" don't have Swiss bank accounts, offshore tax havens, and so on. But we do have homes, a lot of us. And we pay property tax based on what the homes are worth.

If you want to know why California is a perpetual budge basket case, its' precisely because people don't pay taxes based on the market price for the property, or even anything close to it.

Why? This is why:

CALIFORNIA CONSTITUTION
ARTICLE 13A  [TAX LIMITATION]

SECTION 1.  (a) The maximum amount of any ad valorem tax on real
property shall not exceed One percent (1%) of the full cash value of
such property. The one percent (1%) tax to be collected by the
counties and apportioned according to law to the districts within the
counties.

Here's what Warren Buffet pointed out about our flawed system in California (from the WSJ):
What I said in respect to property taxes was very specific. I gave him an example of three houses, two in Laguna Beach and one in Omaha. The first Laguna Beach house is a property that I bought in the early 1970s. It has a current market value of about $4 million and, because of the limitations embodied in Proposition 13, carried taxes of only $2,264 in 2003 vs. $2,241 in 2002. The second house, located just in back of the first, is one that I purchased in the mid-1990s. It has a market value of about $2 million and, simply because I bought it later than the first, carried taxes of $12,002 in 2003 vs. $11,877 in 2002. I pointed out to Joe that these figures mean that the tax rate on the second house -- same neighborhood, same owner, same ability to pay -- is roughly 10 times the rate on the first house.

I then referenced my house in Omaha, which I believe to be worth about $500,000 (though it's assessed at $690,000). Taxes on it were $14,401 in 2003 and $12,481 in 2002.

Buffet doesn't specify whether they are the magical "beach front" property that never loses value according to one rec'd diary, and this link is from 2003, but the same law remains in effect.

My grandparents paid $36,000 for their house that was worth nearly a million dollars pre-crash in Orange county. I wrote the bill once, it was a few hundred dollars. That same year, my property taxes were over $5,000 on a house I bought in 2005.

Maybe Romney should be paying more in taxes on his mansions. Hell, maybe there is some shenanigan with his reassessment. But the problem is that people who have tens and hundreds of thousands of dollars of wealth (still, post-crash) don't have to pay taxes on it. That is what is bankrupting our state, our schools, and our future.

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Comment Preferences

  •  Tip Jar (8+ / 0-)

    GOP: The Party of Acid rain, Abortion of the American Dream, and Amnesty for Wall Street.

    by Attorney at Arms on Tue Aug 07, 2012 at 04:18:26 PM PDT

  •  Prop 13 was the start of long, long legacy (2+ / 0-)
    Recommended by:
    a2nite, Quicklund

    of anti-tax lunacy. And it's run rampant in the western US. Up here in WA we now have "flat rate" tabs for vehicles. You've got a 1982 rusted out Yugo? You pay $50. You've got a 2012 Lamborghini? You pay $50. You've got a $2,000,000 luxury motor home? You pay $50. Yeah, guess what that's done to our road funds? Now we have to slap tolls on the bridges and have the highest gas taxes in the nation. But the 1%'ers are sure happy!

    Many people thought Bush was "the kind of guy you wanted to have a beer with". People are beginning to realize that Romney is "the kind of guy you want to pour a beer on".

    by ontheleftcoast on Tue Aug 07, 2012 at 04:31:17 PM PDT

    •  And 3/8th of the 99% cheer them on (2+ / 0-)

      The flat tax example you offer here is a perfect example. I wish every GOP voter was aware of what flat tax really is and what it really does. It puts the burden on "we people's"backs and the luxury motor home owner is paying what is for them, nothing. Less than 1/10th the cost of a fill-up.

      Maybe this example would get through to the ~20% of all Americans who think they are members of the 1%. And the ~20% more who assume they will be in the 1% before they retire.

      Isn't that cute? People who cash a paycheck think they have a chance to reach the 1%! That's precious.

      Anyway, take both groups together and you have 3/8th of the population all thinking they fit in the 1% sack.

      Well, thank you for an informed and non-hostile diary on the subject.

    •  Yeah but... (0+ / 0-)

      ... California property values were going up so crazily in the 70s that families like mine (I was a kid at the time) were about to be taxed out of our homes.  Without Prop.13, our property tax bill would have zoomed past $5000 -- this with my dad's salary being about $20K/year.  Just not possible.  

      The mistake of Prop.13 was to include commercial property in it, not just restrict it to private homes.  Commercial property that's owned by a successful ongoing business doesn't change hands, so keeps its low-low rate for ever and ever, amen.  Private homes get bought and sold a whole lot more often, so the tax rate can be readjusted with each sale, and the buyer knows what they're getting into before they sign.

      This .signature unintentionally left blank.

      by Avast Ye Swobbie on Wed Aug 08, 2012 at 12:03:36 AM PDT

      [ Parent ]

  •  Even a Dem member of the Chicago School (1+ / 0-)
    Recommended by:
    johnny wurster

    Board does the same thing. Penny Pritzker, who's personal wealth is estimated at $1.7 billion (which dwarfs Romney), and who serves on the Chicago School Board, has been in a battle for the last several years to lower the assessed value of her Chicago mansion so she can lower her property taxes. Priztker served as co-chair of the finance committee in the 2008 Obama campaign and is one of the President's top fund raisers for 2012.

    In a world of crashing real estate values everyone, rich and poor, who has an overvalued home is asking that it be revalued. This is a non-issue, there are lots of reasons not to vote for Mitt Romney, this isn't one of them.

    "let's talk about that"

    by VClib on Tue Aug 07, 2012 at 05:00:35 PM PDT

    •  But did she buy the property (0+ / 0-)

      a couple months before making the request for a reduced assessment? Like Mitt did?

      •  It's the San Diego county assessor (0+ / 0-)

        who ultimately determines the value, subject to a fact based appeals process. It would appear that in the end Romney and the assessor agreed that the value was about a third less than he paid. It would appear that the protocol used by lawyers who do this kind of work to throw in a low ball number to start the process. In the end something fair was negotiated.  What's the issue?

        "let's talk about that"

        by VClib on Tue Aug 07, 2012 at 05:12:14 PM PDT

        [ Parent ]

  •  But he asked for the change (0+ / 0-)

    just months after he bought the house! That would suggest that Mr Romney, Investor Extraordinaire, had bought a significant asset at an ultra-inflated price.

    I'm not buying it.

    •  Appraised price =/= market value (0+ / 0-)

      Just ask any of my neighbor's. This year we all got our new appraisals in my neighborhood. My neighbor's house was appraised at something like $96,000 at the same time it was listed for sale at $120,000.

  •  There are many more things more damaging to Mitt (0+ / 0-)

    than whatever kerfluffle may have surrounded his purchase/renovation on his San Diego property.

    1 - Bain Capital buying companies, bankrupting them, and absconding eith MILLIONS in fees and profit, while leaving UA taxpayers to bail out the pension funds

    and...

    2 - SHOW US YOUR TAX RETURNS!

    There should be NO secrets withheld by anyone running to be POTUS.

    For a better America, vote the GOP out of office whenever and wherever possible and as soon (and as often) as possible!

    by dagnome on Tue Aug 07, 2012 at 06:30:18 PM PDT

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