# Vancouver school tax?



## robfordlives (Sep 18, 2014)

Have seen very little discussion on this. There is a proposed 0.2% "school" tax on houses in I believe the Greater Vancouver area that exceed $3Million in value. This is nothing but a wealth tax on capital and a very dangerous precedent in my opinion. What are everyone's thoughts on this? All told it will be another $250Million to the government.


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## AltaRed (Jun 8, 2009)

Seems to have lots of media coverage and a town hall meeting cancelled over safety concerns. Don't think it gets any traction here since I suspect not too many CMF members are $3 million homeowners in Vancouver. Personally, I don't know why anyone would want to live in a $3 million home BWTFDIK.


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## nathan79 (Feb 21, 2011)

A few people are making a lot of noise, but I think it's pretty much a non-issue. Vancouver has some of the lowest property taxes in Canada and North America. It's one of the reasons why house prices have been able to soar to such heights (though obviously not the main reason).

Many of these owners with $3 mil+ homes have seen their equity quadruple over the last 15 years. If it's their primary residence, they're sitting on massive tax-free capital gains.

I believe this school tax can also be deferred... so rather than 6K a year, they'd just deduct a lump sum at the time of sale. If someone lives in their house for 25 years, that's $150,000... chump change for those sitting on multi-million dollar gains.

It will probably deter foreign buyers and speculators, as it's just another expense they have to pay that eats into their potential profits. Of course, the net effect of this tax may be to reduce the value of many of these homes to below $3 million, so in that case it'll be largely a moot point. People may be disappointed to see their home value decrease slightly, but it will only really hurt those who bought in the last few years and planned to flip.


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## Mukhang pera (Feb 26, 2016)

robfordlives said:


> Have seen very little discussion on this. There is a proposed 0.2% "school" tax on houses in I believe the Greater Vancouver area that exceed $3Million in value. This is nothing but a wealth tax on capital and a very dangerous precedent in my opinion. What are everyone's thoughts on this? All told it will be another $250Million to the government.


It's actually worse than you report. The additional tax rate is:

0.2% on the residential portion assessed between $3 million and $4 million
0.4% tax rate on the residential portion assessed over $4 million

Also, houses worth over about $1.6 million lose the home owner grant, which reduces taxes on houses below that ceiling. 

Seems to me that, to a large extent, property tax has always been a "wealth tax". I lived for years in Vancouver in a West Side house now worth over $3 million. When I owned it, then, as now, a house much the same on a lot of equal size, but in East Vancouver, cost about half as much. My property tax was about twice that of its twin 30 blocks east. Why? I do not think I consumed twice the municipal services of my east side counterpart. I did not send twice as many kids to school (none, in fact); I did not call the police or fire departments twice as often; put out twice as much trash for collection; use twice the amount of street lighting; make twice as much use of the roads; use the public library twice as much, etc. But I paid double as punishment for saving my pennies and buying a nice house. Probably I should have put the capital into the stock market and avoided a capital tax. But, I wanted the house and had to pay the freight. It won't change. Property is such an easy target.

On CTV news the other night, they interviewed a guy complaining that the property tax on his $6 million house was going to go up $11,000 a year. Not many people will hit the bricks to support his beef, I dare say.


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## AltaRed (Jun 8, 2009)

The thing is... it is purely voluntary for one to be in a $1 million home or $6 million home. If you don't like the heat at the high end, that is easily fixed. There is no empathy for that sort of thing.


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## ian (Jun 18, 2016)

Exactly. It simply comes down to choice.


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## nathan79 (Feb 21, 2011)

Mukhang pera said:


> It's actually worse than you report. The additional tax rate is:
> 
> 0.2% on the residential portion assessed between $3 million and $4 million
> 0.4% tax rate on the residential portion assessed over $4 million
> ...


I think those who do complain perhaps don't realize just how low property taxes are in Vancouver, even with this new tax... $11,000 per year is peanuts for a house worth $6 million. 

A $6 million dollar house in New Hampshire would cost $132,300 per year in property taxes, and the US national average on such a house would be $72,660. https://smartasset.com/taxes/new-hampshire-property-tax-calculator#yTKtKvq5Ra


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## Mukhang pera (Feb 26, 2016)

The OP was making to be what I see as something of a "thin edge of the wedge" argument. It has some force. So why not a broader wealth tax? Why just target homeowners? Why not levy a similar tax on those who, when it comes down to choice, instead of a house, choose to put their money in a stock market portfolio, a big bank account, a garage full of fancy cars, or whatever. If you choose to own those valuables, then pay something along the lines of the much-despised corporate capital tax levied in some provinces. 

Nathan, interesting about NH tax, to be sure, but we are in Canada. How cheap is Vancouver compared to the rest of Canada? 

I am not defending Vancouver. I got out because it has become a rather dismal place to live. So I say sock it to those whiners in their multi-million-dollar cracker boxes. They choose to live there, let 'em pay. Raise them to NH levels and see what happens! I now live in the sticks, off-grid, no services at all. Our BC assessment is in the range of $750,000 and our property tax is about $4,000/yr. For what we get (or don't get) it's a bit stiff, but our choice to live here, as we do, and not in a tent. So we pony up.


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## AltaRed (Jun 8, 2009)

I'd suggest BC property taxes in general are pretty low. I pay just a tiny bit more than my bro does with a house less than 50% of the value of mine in small town Alberta. A lot of places (and states in the USA) sock to property owners vs having state income taxes. Texas is another one like NH. We should stop whining.

Several places charge auto registration fees based on auto values. Virginia is such a place where I lived for a few years (suburb of Washington DC). Those who want to drive luxury vehicles should pay through the nose. Especially those diplomats who mostly lived on the VA side of the river. I chose to drive used, more modest, vehicles.


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## fatcat (Nov 11, 2009)

the NDP are lying through their teeth, this tax goes into the general fund and they are selling it under the banner of it being a school tax

lots of people have done nothing other than merely live in the same house for many years and watch it rise in value and often don’t have a commensurate rise in free cash flow to service their tax debt

it really is an opportunistic random tax and as mukhang pera says, they might as well start taxing our portfolios next ... it would be equally random and predatory 

farking socialists ...


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## Eclectic12 (Oct 20, 2010)

Mukhang pera said:


> ... Nathan, interesting about NH tax, to be sure, but we are in Canada. How cheap is Vancouver compared to the rest of Canada?


Google is your friend. According to this 2017 article, BC takes the first thirteen spots on the "low property taxes %" list.
North Vancouver is #8, Greater Vancouver is #12 and Vancouver is #15.

BC, Yukon, NorthWest Territories, Alberta, Saskatchewan and Ontario make up the list. 

The three Ontario ones are # 86, 87 and 98 while Saskachewan's only entry is # 97. 


http://www.moneysense.ca/save/taxes/best-places-to-live-lowest-taxes/


The cheapest Ontario entry is 2.16% as compared to 0.99% listed for Vancouver.


Cheers


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## rl1983 (Jun 17, 2015)

fatcat said:


> the NDP are lying through their teeth, this tax goes into the general fund and they are selling it under the banner of it being a school tax
> 
> lots of people have done nothing other than merely live in the same house for many years and watch it rise in value and often don’t have a commensurate rise in free cash flow to service their tax debt
> 
> ...


Totally agree with this. Their houses are worth what they are worth through no fault of their own, and chances are they are pensioners. I would like to see more fiscal responsibility from all levels of Government before asking for more from us. Enough is enough.


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## AltaRed (Jun 8, 2009)

Of course, we would all like to see more fiscal responsibility including balancing the budget, but it won't happen as long as voters keep asking for more services and/or benefit from graft. Why do Lower Mainlanders and Islanders keep voting for NDP, or worse, the Greens who would have us go back to horse and buggy and wood stoves?


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## fatcat (Nov 11, 2009)

Eclectic12 said:


> Google is your friend. According to this 2017 article, BC takes the first thirteen spots on the "low property taxes %" list.
> North Vancouver is #8, Greater Vancouver is #12 and Vancouver is #15.
> 
> BC, Yukon, NorthWest Territories, Alberta, Saskatchewan and Ontario make up the list.
> ...


it doesn't feel "low" to those of us who pay it ...


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## Mukhang pera (Feb 26, 2016)

rl1983 said:


> Totally agree with this. Their houses are worth what they are worth through no fault of their own, and chances are they are pensioners. I would like to see more fiscal responsibility from all levels of Government before asking for more from us. Enough is enough.


And I agree with fatcat and rl1983 about the impact on pensioners. 

My parents came from a northern European country which (at least when they lived there) had only a nominal property tax. My father always used to say that one never owns one's own home in Canada, since - unlike other assets - to retain it, one must pay tax on it. My mother did not work outside the home once married and my father faced mandatory retirement at age 65 with a non-indexed pension. With each passing year, their Toronto home (now worth in the millions) saw an increase in taxes that was not met by a corresponding increase in income. Folks like ian, nathan79 and AltaRed would say, well that's your choice, get over it. Or decide to get out. Or defer the tax and live with the knowledge that there is an ever-growing charge against your title. I am sure that my parents, who worked hard to pay off their home, would never be at peace with seeing it again encumbered.

I like the idea of living somewhere where one can save up, buy a house and keep it, even through lean times.


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## Eclectic12 (Oct 20, 2010)

fatcat said:


> it doesn't feel "low" to those of us who pay it ...


Then by all means ... buy a property in Ontario or a New Hampshire property.

Somehow, I have never associated "feeling low" or "feeling high" with property taxes. What I have associated with is value for services, which may be high/medium/low.


Cheers


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## Mukhang pera (Feb 26, 2016)

Eclectic12 said:


> Google is your friend. According to this 2017 article, BC takes the first thirteen spots on the "low property taxes %" list.
> North Vancouver is #8, Greater Vancouver is #12 and Vancouver is #15.
> 
> BC, Yukon, NorthWest Territories, Alberta, Saskatchewan and Ontario make up the list.
> ...


Google is no friend if what is cited purports to fairly list property tax rates. The list shows the cheapest as West Nipissing at 2.15% (not Hawkesbury at 2.16%). But it overlooks places like Toronto (which carries at least as much sample weight as does W. Nippissing), handily under Vancouver's .99%, coming in at a bargain 0.6355054%. See the Toronto City website:

https://www.toronto.ca/services-pay...ies/property-tax/property-tax-rates-and-fees/

Even at that, Toronto does not seem bent on collecting even that modest amount. Here's a house for sale in my old TO neighbourhood listed at $6,095,000 with taxes for 2018 of $12,823
https://www.rew.ca/properties/C4104826/233-st-leonards-avenue-toronto-on


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## Eclectic12 (Oct 20, 2010)

Mukhang pera said:


> ... My parents came from a northern European country which (at least when they lived there) had only a nominal property tax ... With each passing year, their Toronto home (now worth in the millions) saw an increase in taxes that was not met by a corresponding increase in income.
> 
> Folks like ian, nathan79 and AltaRed would say, well that's your choice, get over it. Or decide to get out. Or defer the tax and live with the knowledge that there is an ever-growing charge against your title.
> I am sure that my parents, who worked hard to pay off their home, would never be at peace with seeing it again encumbered. ...


Not a complete list as there is also selling then renting or renting a place as well as the house. Since the nominal property tax is remembered fondly, there is also the option to campaign to switch to whatever way the old country funded what property taxes pay for.

Regardless - whether you've seen relatives have to deal with this (and expect to be in this situation yourself at some point) or get tied up in a knot for a current situation, any upset or angst is going to affect you/those close to you but not the system.




Mukhang pera said:


> ... I like the idea of living somewhere where one can save up, buy a house and keep it, even through lean times.


Then I guess you'd better get cracking at changing the system or investigating ways to influence how the rates are set or investigated locations where property taxes are nominal.

Like it, don't like, hate it, love it, be ambivalent, be livid or fondly remember the old country's situation ... makes no difference to the here and now.
I know it sounds harsh but no matter how you slice it - dem's da facts.


Cheers


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## Mukhang pera (Feb 26, 2016)

Eclectic12 said:


> Not a complete list as there is also selling then renting or renting a place as well as the house. Since the nominal property tax is remembered fondly, there is also the option to campaign to switch to whatever way the old country funded what property taxes pay for.
> 
> Regardless - whether you've seen relatives have to deal with this (and expect to be in this situation yourself at some point) or get tied up in a knot for a current situation, any upset or angst is going to affect you/those close to you but not the system.
> 
> ...


No need to speak down to me like I am a child. I have no wish to "get cracking at changing the system" or anything else of which you speak. Thanks to my parents, who lamented the property tax regime (not that it was a consuming topic, just something mentioned in passing a few times over a few decades), yet remained in their Toronto home until close to age 100, I, like they, have been equipped to provide myself with sufficient funds that I am pretty much impervious to the effect of property tax or any other rising costs. Thanks to their teachings and guidance, I am able to live well and I can stay in my home to age 100 (should I follow their lead) and not care a whit about any tax levy. Just as right now I could care less if gasoline costs $3/l. by July or if electricity costs $10 per kwh. Won't matter a bit. I'll drive my motor vehicles and boats just as much. I can afford it. But that does not mean I do not feel some empathy for those of lesser means who will feel some pain. Dem's da facts and they'll have to get used to it.


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## AltaRed (Jun 8, 2009)

Mukhang pera said:


> Google is no friend if what is cited purports to fairly list property tax rates. The list shows the cheapest as West Nipissing at 2.15% (not Hawkesbury at 2.16%). But it overlooks places like Toronto (which carries at least as much sample weight as does W. Nippissing), handily under Vancouver's .99%, coming in at a bargain 0.6355054%. See the Toronto City website:
> 
> https://www.toronto.ca/services-pay...ies/property-tax/property-tax-rates-and-fees/
> 
> ...


Percent tax rate is meaningless on its own. Average house price can be very high resulting in a very low tax (mill) rate. Absolute numbers tell me a lot more.

Added: People forget that property tax, except the school component in many cases which is pooled either at the provincial or school district level, pays for most of the municipal services we use. How else do we pay for fire and police services, transit, infrastructure, etc. Personally, I'd like our municipality to spend more on infrastructure and would be willing to pay a higher mill rate for it too.


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## Eclectic12 (Oct 20, 2010)

Mukhang pera said:


> Google is no friend if what is cited purports to fairly list property tax rates ... The list ... overlooks places like Toronto (which carries at least as much sample weight as does W. Nippissing), handily under Vancouver's .99%, coming in at a bargain 0.6355054%. See the Toronto City website ...


Interesting ... I wonder why the difference.

Of course if the article is wrong about the lowest Ontario property tax location as well as the rate then Vancouver's stated rate of 0.99% is also suspect.




Mukhang pera said:


> ... Even at that, Toronto does not seem bent on collecting even that modest amount. Here's a house for sale in my old TO neighbourhood listed at $6,095,000 with taxes for 2018 of $12,823 ...


And here's a Vancouver listing at $6,180,000 that lists taxes at $10,556 /yr or $2,267 less than your old TO neighbourhood listing.
https://www.zolo.ca/vancouver-real-estate/6978-laurel-street

While this other one for the same price lists $13,551 /yr or $728 more.
https://www.zolo.ca/vancouver-real-estate/2245-w-21st-avenue


There is clearly variation.


Cheers


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## Eclectic12 (Oct 20, 2010)

Mukhang pera said:


> No need to speak down to me like I am a child ...


My apologies - I did not intend for my points to come across as if I was speaking to a child or thought you were one.




Mukhang pera said:


> ... I have no wish to "get cracking at changing the system" or anything else of which you speak. Thanks to my parents ... I, like they, have been equipped to provide myself with sufficient funds that I am pretty much impervious to the effect of property tax or any other rising costs ... I'll drive my motor vehicles and boats just as much. I can afford it.
> 
> But that does not mean I do not feel some empathy for those of lesser means who will feel some pain. Dem's da facts and they'll have to get used to it.


Then if I understand correctly - the status quo is something to complain about with an example of a different system, empathy for those who face the same challenge that you have dealt with but not something to change.


Fair enough.


Cheers


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## fatcat (Nov 11, 2009)

Eclectic12 said:


> Then by all means ... buy a property in Ontario or a New Hampshire property.
> 
> Somehow, I have never associated "feeling low" or "feeling high" with property taxes. What I have associated with is value for services, which may be high/medium/low.
> 
> ...


i have to say that your post is a classic example of the kind of thinking that got donald trump elected and may well get doug ford elected as well ...


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## bgc_fan (Apr 5, 2009)

I wonder if there is some merit in changing the way property taxes are calculated. In California the property taxes are based on what you paid for the property. That would address the issue of long term home owners facing escalating property taxes because of an assessment that is really a guess on the value of the home.


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## AltaRed (Jun 8, 2009)

Solves one problem but creates another. It is the most convoluted scheme anyone invented just because of Proposition 13, 72, etc. http://www.lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx Talk about inequities. No, thank you. 

Someone has to pay for the annually increasing costs of providing services at the municipality level. Why should an 80 year old couple having lived in a property for 40 years get a free ride while a newcomer bear the full burden? That would really shut down building of new product and the collapse of RE prices and if like California create a whole new industry of 'financial engineering of property values'. 

We are now hitting our 70s. I see no reason why we should not pay our share of the municipal freight, albeit in BC, we do get both a 'resident homeowner grant' and a senior 'homeowner grant', the latter which offloads the education component to the province. Together they both knock off about $1000 from the annual property tax bill.

Added: It has become more common throughout North America to base fees on the market value of property. As I mentioned earlier, this has also been the case for vehicle registrations in a number of US states. It is as it should be in my opinion. No one is forced to own a McMansion or a fancy Beemer but if you do, well pay up... just like one does on income and income taxes.


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## fatcat (Nov 11, 2009)

AltaRed said:


> Solves one problem but creates another. It is the most convoluted scheme anyone invented just because of Proposition 13, 72, etc. http://www.lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx Talk about inequities. No, thank you.
> 
> Someone has to pay for the annually increasing costs of providing services at the municipality level. Why should an 80 year old couple having lived in a property for 40 years get a free ride while a newcomer bear the full burden? That would really shut down building of new product and the collapse of RE prices and if like California create a whole new industry of 'financial engineering of property values'.
> 
> ...


problem is that there are plenty of people living in very nice homes and communities that they were born into or found many years ago and these same people merely want to continue to live in the neighbourhoods and homes that they have established and often the value of the real estate bears no relation to the income stream that is there to support it and these are the people we see out in protest over in vancouver right now

we grant first nations all kinds of privileges but nothing apparently for longtime residents (many of whom see their home price value rise as a nuisance and an obstacle to their lives) in neighbourhoods that have been jacked through the roof by foreign speculators


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## AltaRed (Jun 8, 2009)

I don't have any sympathy for house rich and cash flow poor folk. Reverse mortgage the damn thing then. 

Houses should primarily be shelters for people to live in as in most Europeans and Asians have figured it out. North Americans need to re-think the purpose of housing. Get out of their houses most of the day and be part of the community rather than cocooning in isolation. I love places like central Amsterdam and Vienna where people are actually in the streets.


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## fatcat (Nov 11, 2009)

AltaRed said:


> I don't have any sympathy for house rich and cash flow poor folk. Reverse mortgage the damn thing then.
> 
> Houses should primarily be shelters for people to live in as in most Europeans and Asians have figured it out. North Americans need to re-think the purpose of housing. Get out of their houses most of the day and be part of the community rather than cocooning in isolation. I love places like central Amsterdam and Vienna where people are actually in the streets.


i agree on the get out in the street part and agree that we need to look at housing differently but we ought to give long time residents the same respect and privileges we give first nations

in singapore i believe that something like 80% of the housing is government owned so most singaporeans are renters


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## AltaRed (Jun 8, 2009)

fatcat said:


> ....but we ought to give long time residents the same respect and privileges we give first nations


Within certain parameters I agree (though I have some strong views about excessive political correctness with our indigenous groups). The world keeps moving on and some compromise is essential.


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## Eclectic12 (Oct 20, 2010)

fatcat said:


> i have to say that your post is a classic example of the kind of thinking that got donald trump elected and may well get doug ford elected as well ...


LoL ... does it make you feel that I am not making sense?


Cheers


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## Eclectic12 (Oct 20, 2010)

bgc_fan said:


> I wonder if there is some merit in changing the way property taxes are calculated. In California the property taxes are based on what you paid for the property. That would address the issue of long term home owners facing escalating property taxes because of an assessment that is really a guess on the value of the home.


They pay based on what they paid for the property?
I will have to let my relatives in LA know this! 

They keep telling me that cost of the *first* (and typically smallest) home is what is paid - as long as one takes possession of the larger home before or on the day the smaller home was sold (i.e. no break in home ownership). They keep saying that only outsiders or those who can't move to a bigger home are paying something remotely close to what the services provided cost. 

They clearly think that property taxes are one of the factors messing up LA's finances.


Cheers


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## AltaRed (Jun 8, 2009)

Eclectic12 said:


> They keep telling me that cost of the *first* (and typically smallest) home is what is paid - as long as one takes possession of the larger home before or on the day the smaller home was sold (i.e. no break in home ownership). They keep saying that only outsiders or those who can't move to a bigger home are paying something remotely close to what the services provided cost.
> 
> They clearly think that property taxes are one of the factors messing up LA's finances.


I think I remember that being the case too. Cities will go bankrupt using that model for any length of time and it is hard to imagine voters being that economically clueless.


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## Eclectic12 (Oct 20, 2010)

It seems some aren't so clueless so much as ineffective. 

Propositions 42, 1A and 22 were supposed to make sure the sales tax on gas went to pay for transportation purposes. Multiple were required as after 42 was passed, legislators still siphoned off the money to the state budget. After 1A passed, bonds were paid for. After 22 was passed, debt couldn't be paid off so instead of the sales tax on gas being redirected, trucking weight fees to the tune of $1 Billion go to the state general fund. https://morrell.cssrc.us/content/op...d-largest-gas-tax-increase-california-history


Cheers


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## AltaRed (Jun 8, 2009)

The problem is property tax is the main revenue source for municipal services. I believe the propositions you mention are for state funding which is a different issue entirely. Overall, the state itself can't be that bad off. California just passed the UK for the world's fifth largest economy as measured by GDP.


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## fatcat (Nov 11, 2009)

i think what we are seeing with the protest in vancouver is a trend that will grow considerably over time and i refer to the notion of me-first-ism

people who have found beautiful houses and beautiful cities and beautiful countries are going to start to dig in against the idea that we are supposed to hand it over to the newcomers by virtue of absurd and unfair taxation, rezoning and a host of other regulations and laws

”first nations” recognizes their special status and they get privileges for it ... why not the rest of us ?


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## bgc_fan (Apr 5, 2009)

AltaRed said:


> Solves one problem but creates another. It is the most convoluted scheme anyone invented just because of Proposition 13, 72, etc. http://www.lao.ca.gov/reports/2012/tax/property-tax-primer-112912.aspx Talk about inequities. No, thank you.
> 
> Someone has to pay for the annually increasing costs of providing services at the municipality level. Why should an 80 year old couple having lived in a property for 40 years get a free ride while a newcomer bear the full burden? That would really shut down building of new product and the collapse of RE prices and if like California create a whole new industry of 'financial engineering of property values'.
> 
> ...


It isn't overly complicated. What it boils down to is you pay 1% property tax based on your purchase price and that escalates 2% annually. Not too complicated for the vast majority of the situations.

As for someone getting a free ride for living in the same property for 40 years I disagree. If the idea is that their property taxes are to provide utility infrastructure and surrounding amenities, then I would argue that they would have paid plenty throughout the 40 years. After all, after 10 years, pretty much all the surrounding area is developed and it should be the building permits that collect the funds to subsidize the initial infrastructure for new development. The tax rates should be sufficient to pay for the maintenance and services of the neighborhood, not to subsidize new developments 30 km away in some suburb. 

I am surprised you support this, as it really is a wealth tax. Should we do something similar for equities? If you buy speculative stocks, or if the share price is over $150, should you pay a special tax?

Because that is essentially what this boils down to, a "luxury tax" for these class of products (homes, cars) that reach a certain threshold.

I personally find it a bit perverse that they should resort to reverse mortgage schemes to stay in their house that they spent years paying off, but now have to go back into debt to stay in their house because their neighbors were able to sell their houses at a greatly increased price.


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## bgc_fan (Apr 5, 2009)

Eclectic12 said:


> They pay based on what they paid for the property?
> I will have to let my relatives in LA know this!
> 
> They keep telling me that cost of the *first* (and typically smallest) home is what is paid - as long as one takes possession of the larger home before or on the day the smaller home was sold (i.e. no break in home ownership). They keep saying that only outsiders or those who can't move to a bigger home are paying something remotely close to what the services provided cost.
> ...


Tell, me. Are your relatives older than 55? Because that is referring to prop 60 and 90 which allows them to "carry over" the assessment of their original house. From what I gather, it is a one time thing, not something you can continually do. So, if they bought a house for $400k, and it rises to $600k, they can purchase a house up to $600k and keep their original tax assessment plus 2% annual increase. But the minute they buy something $1 above their current assessed home value, i.e. if the new house costs more than their old house, they are on the hook as any new home owner.

As for taxes in California, IIRC, to raise taxes, it has to be put on a ballot and you need 66% of the electorate vote to raise them. Not surprising, it never happens, so you end up with "fees" instead.


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## AltaRed (Jun 8, 2009)

bgc_fan said:


> As for someone getting a free ride for living in the same property for 40 years I disagree. If the idea is that their property taxes are to provide utility infrastructure and surrounding amenities, then I would argue that they would have paid plenty throughout the 40 years. After all, after 10 years, pretty much all the surrounding area is developed and it should be the building permits that collect the funds to subsidize the initial infrastructure for new development. The tax rates should be sufficient to pay for the maintenance and services of the neighborhood, not to subsidize new developments 30 km away in some suburb.
> 
> I am surprised you support this, as it really is a wealth tax. Should we do something similar for equities? If you buy speculative stocks, or if the share price is over $150, should you pay a special tax?


Because it is not as you suggest. In any municipality I have been involved with, developers pay for all (almost all) the new infrastructure already when they re-zone and get their subdivision approvals and building permits. It is called DCC (Development Cost Charges). Basic property taxes cover mostly operations and maintenance and the new assets (buildings) contribute to that O&M base too as they are given occupancy permits. It all works quite well (and fair) almost all of the time. Portions of the DCC are set aside for future expansions of water treatment and waste management plants, and arterial road infrastructure too. Whether it is perfect I do not know unless I was to get right into the books, but in the places where I have been involved in some form in municipal Planning & Development, I am satisfied there is fairness.

FWIW, municipal budgets typically don't add more than 2-4% to individual property taxes annually and that suggests the system works as planned. I am quite prepared to pay that level of increase annually, the largest segments of which pay for fire and police protection to begin with. Study the budgets of your own municipality to satisfy yourself.

I support it because it is not a wealth tax at all.


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## OhGreatGuru (May 24, 2009)

Property tax has always been a regressive tax. The incredible real estate prices in Vancouver are just making it more obvious; and this latest move by Vancouver to try to charge a surtax appears to be bringing matters to a head. I think in most of the country municipalities would not have the legal authority to charge such a surtax. Either Vancouver has special powers or there is some collusion going on with the provincial government.


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## AltaRed (Jun 8, 2009)

Setting aside the surtax issue which is a concern, I don't see property taxes themselves as regressive. A municipality has to operate and all municipal residents need to contribute. It just so happens it is based on real estate prices rather than headcount. Would you rather it be done on headcount? Exclude businesses and industry from paying part of the freight? A 10 member family should pay 10 times that of a single person? How would you do it?

Don't get hung up on RE prices as the culpirt. It is the sum of the Market Assessments that sets the mill rate such that if one's property is exactly dead on the average MA, they are indifferent to changes in MA. It is only if your property goes up more than the overall MA that your property will bear a slightly disproportionate share of the municipal tax burden. People know from the day they buy a property that they will have to bear a property tax burden commensurate with their 'status' relative to everyone else.


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## bgc_fan (Apr 5, 2009)

AltaRed said:


> FWIW, municipal budgets typically don't add more than 2-4% to individual property taxes annually and that suggests the system works as planned. I am quite prepared to pay that level of increase annually, the largest segments of which pay for fire and police protection to begin with. Study the budgets of your own municipality to satisfy yourself.
> 
> I support it because it is not a wealth tax at all.


Given that the California property tax regime does increase 2% annually, does that not meet your requirement then? The issue is the large jumps in certain areas of overheated housing markets. Let's put it this way, because your neighbor sold their house for double the original value, does that mean you are getting twice the services now your assessment has doubled?

How would it not be considered a wealth tax? Your house does make up part of your net worth. And this particular application only applies to houses greater than $3M.

I don't think anyone is concerned about the people who buy the house now and realizes the property tax they will pay. What people are concerned about is what will the taxes be 30 years down the road when they may be retired with relatively little financial room to manoeuvre. I get that you are well off, but when you were budgeting for retirement, were you considering (for example) a three fold increase in property tax because you were expecting housing prices to continually rise?


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## AltaRed (Jun 8, 2009)

First of all, we are not California so their weird processes of shooting themselves in the foot have no effect in Canada. Everyone's market assessment goes up pretty much proportionately. I'd say people should expect their property taxes to at least double in 30 years, just from O&M cost increases of 2.5% annually..... rule of 72. What is difficult to understand about that? Inflation is inflation.

Why do I have to keep repeating that rising house prices across a municipality have nothing to do with property tax increases? Housing prices can go up 400% across a municipality. They have no effect on property taxes because mill rate comes down by a factor of 4. The way it is going, my house is likely to double in value within 10 years. Don't care since it won't cost any more to operate than if it didn't gain price at all.

P.S. Okay, the 3% surtax is indeed a wealth tax. Happy? I actually have friends who through no fault of their own, now live in $3+million houses in GVR. At some point, they could cash in and could buy their own private island in the Bahamas for that price. It's a nice problem to have.


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## latebuyer (Nov 15, 2015)

I think the fact people won't sell their 3 million dollar homes shows just how skewed peoples relationship with their homes are. I would also guess these people are comfortabley well off or they would sell. If you are poor you would take that amount of money in a heartbeat. Also if they are anything like my sister they complain about their property taxes but they want the money when they sell and are disappointed if their property value goes down.


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## Mukhang pera (Feb 26, 2016)

Eclectic12 said:


> They pay based on what they paid for the property?
> I will have to let my relatives in LA know this!
> 
> They keep telling me that cost of the *first* (and typically smallest) home is what is paid - as long as one takes possession of the larger home before or on the day the smaller home was sold (i.e. no break in home ownership). They keep saying that only outsiders or those who can't move to a bigger home are paying something remotely close to what the services provided cost.
> ...


I think your relatives are having you on. I have lived with Proposition 13 et seq. for over 20 years. The link that AltaRed provided upthread describes how the various props work quite well. It does not support what you are being told.

When I bought my SoCal house in the mid-90s, I started paying property tax at the annual rate of 1% of the price I paid for the house. It (and the taxed assessed value), have gone up 2% per year since then. I do not believe that I can take my present tax assessed value of $796,962, sell that house, and buy a new house for $2 million and port that tax assessed value of $796,962 to the new house. I am sure my new house taxes would commence at 1% of $2 million, i.e., $20,000/yr.

One online article about Prop 13 that supports my view is here:


https://blog.sfgate.com/ontheblock/2011/11/07/do-you-really-understand-prop-13/

It reads, in part:

_I even know of friends that now don’t want to move, though they could afford and would like to move into a nicer, bigger house from their house they bought 10 years ago, because their property tax would literally triple – and needless to say are lower than mine – though the market value and size of their home is twice ours, and we live in the same community.
_

THAT is how I understand it. That is quite different from saying you can upgrade to ever-pricier homes and keep your slum tax assessment throughout.

Here's more:

http://www.dansuich.com/files/TransferringYourProp13TaxBase.pdf

_Below is some information regarding transferring your proposition 13 tax assessment when you buy a new home and sell your old one. The requirements are that you need to be over 55, make the purchase within 2 years before or after the sale, neither you nor your spouse must have taken the transfer before, you must transfer (if across county lines) into a county that accepts the assessment, and you must purchase a home of equal or lesser value (with an exception).
_ Emphasis added by MP.


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> The problem is property tax is the main revenue source for municipal services ...


It does not seem to work that way in California. 

For the 2012 budget, San Jose lists the General Fund that is described as the primary funding source for many of the core city services. At $906 million, it is reported to be 26% funded by property taxes. Unless I have messed up the math - this means property taxes are slightly over $235 million. 

Police services taken from the General Fund are $298 million while the fire department is $158 million to roughly total $456 million for only two services.
Keep in mind that the General Fund at $908 million is a bit under a third of the total San Jose city budget of $2.8 billion.

San Jose seems to be saying that property taxes account for all of 8.3% of the city budget, which is hardly major.


I am not sure I am reading San Francisco's numbers correctly but it appears that property taxes provides 28% of their General Fund (as opposed to San Jose's 26%). When compared to expenses, it comes out to 28% but for some reason, when compared to all revenue to all funds, it works out to 14%.





AltaRed said:


> ... I believe the propositions you mention are for state funding which is a different issue entirely ...


It is different than property taxes but it does demonstrate that the California voters are trying somewhat successfully to keep the politicians and bureaucrats from diverting money from the official purpose.




AltaRed said:


> ... Overall, the state itself can't be that bad off. California just passed the UK for the world's fifth largest economy as measured by GDP.


My relatives disagree.

Over and above the mismatch between house size/services versus cheap property taxes - they don't particularly like firefighters with the Los Angeles Fire Department, public safety workers with the California Highway Patrol, the California Department of Forestry and Fire, as well as those with the cities of Riverside, Long Beach, Anaheim, Santa Ana, Huntington Beach, Irvine and others being able to boost overtime pay by counting vacation hours as time worked.

Then there's cities like Stockton that declared bankruptcy. It had three police chiefs who worked before the pension was changed. Two of three collect more pension that their base salary while working (the only one with figures is 30% more than base salary where early retirement without penalty means he has already collected roughly $2 million). Those coming after earned the pension at 3% with retirement at 50 plus the perk of being able to turn unused sick/vacation days into cash or pension credits that permanently boost the pension.

One of Stockton's police chiefs from the era of "brief chiefs" was their chief for eight months. He retired and then joined the DA's office to collect a salary, in addition to his pension which again was larger than annual salary and over $200K.


The redirection of gas tax money that should have been fixing interstates etc. was covered in the part about the propositions.

There are also financial gymnastics required when the California constitution is reported to limit debt to $300K for a GDP of almost three trillion where depending on what source one looks at, California debt is written up as being as low as $150 billion or $426 billion.

I don't remember the rest of what they were concerned about.


Cheers

*PS*
I forget what California city tops the list for average salary where the city has residents of something like 209 while the employees number about 270.

There's also the mess of top paid public employees being university coaches. The top end salreay of $3.5 million is said by the tax payers agency to be obscene but as it is coming out of "other sources" instead of taxes, it is okay. What bothers the tax payers agency is the part time lecturer being paid $1.2 million (which I assume is not coming from whatever the "other sources" are).


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## Eclectic12 (Oct 20, 2010)

Mukhang pera said:


> I think your relatives are having you on. I have lived with Proposition 13 et seq. for over 20 years ...
> 
> When I bought my SoCal house in the mid-90s, I started paying property tax at the annual rate of 1% of the price I paid for the house. It (and the taxed assessed value), have gone 2% per year since then. I do not believe that I can take my present tax assessed value of $796,962, sell that house, and buy a new house for $2 million and port that tax assessed value of $796,962 to the new house. I am sure my new house taxes would commence at 1% of $2 million, i.e., $20,000/yr ...


Interesting ... I will have to ask about it.


Cheers


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## Eclectic12 (Oct 20, 2010)

bgc_fan said:


> Tell, me. Are your relatives older than 55?
> 
> Because that is referring to prop 60 and 90 which allows them to "carry over" the assessment of their original house. From what I gather, it is a one time thing, not something you can continually do ...


That would explain the disconnect as the ones talking about property taxes are over fifty five.

The ones under were more interested in complaining about why after five or six years of the Winnipeg relative bringing his tools down to help renovate the fixer upper house, a US border official told him he was fine but the tools meant illegal work so leave them behind if he wanted to visit.


Cheers


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## AltaRed (Jun 8, 2009)

I do remember sometime back in the '90s I think where municipalities in many US states bid against each other on salaries and benefits for police, fire, etc. It got pretty obscene. The reasons I believe for places like Detroit and NYC to basically hit the wall, and I do remember Stockton as an example in California. Some of your anecdotes now show how the pain has come home to roost. Short sighted politicians for sure.

However, I don't see where any of that has direct application in Canada and the discussion on the 'wealth' surtax. The NDP will obviously look for ways to take more blood though, especially from the golden gooses. The sooner Horgan is gone the better for all.


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## Eclectic12 (Oct 20, 2010)

Oppss ... I see that when commenting on how much of the California city budget is from property taxes, I missed including the Canadian city property tax info.

Toronto property taxes provides 33% of their budget ... down from 40% from 2000. Note that today Toronto receives 3.8% from land transfer tax where in 2000, it received nothing.
Ottawa receives 55% percent of their budget from property taxes.
Montreal has 68.4% coming from taxation but my french is not up to confirming if this is more than property taxes as I suspect.
Calgary is at 42% but interestingly, the property tax breakdown page says that province gets 31% of what is collected.
Vancouver is 56%.


Cheers


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## AltaRed (Jun 8, 2009)

I won't dig into the numbers, but in the case of Calgary, I am pretty certain they are including the education component in what they collect...and that goes to the province for equitable province wide distribution (prevents some school boards from being a lot more rich than a rural based school board). 

And of course, there is plenty of other fee revenue as well. I don't think any of us would say that 100% of a municipality's revenue comes from property taxes. Kelowna for example https://www.kelowna.ca/city-hall/budget-taxes/where-money-comes and just across the bridge, West Kelowna (3rd panel) http://www.westkelownacity.ca/DocumentCenter/View/8042/Talk-Budget-With-Council---2018-Presentation

Not sure what this is supposed to tell anyone other than when the noise is stripped out, a municipality's residents generally fund the O&M of their own municipality.


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> I do remember sometime back in the '90s I think where municipalities in many US states bid against each other on salaries and benefits for police, fire, etc. It got pretty obscene. The reasons I believe for places like Detroit and NYC to basically hit the wall, and I do remember Stockton as an example in California. Some of your anecdotes now show how the pain has come home to roost. Short sighted politicians for sure ...


Not only Stockton ... Desert Hot Springs, Mammoth Lakes, San Bernadino, Vallejo and Orange County. 
Vallejo is said to be trending towards a second bankruptcy with it's pension obligations projected to hit 60% of budget in a few years.

The pain hasn't gone away as reports as recent as a couple of years ago have some cities with half their police/firefighters makes $300 to $400K a year when overtime is included. That's without things like the city manager who decried how generous the pensions were for his bankrupt city but he is reported to have made a part of his hiring as city manager doubling his salary where the full salary had to count as pensionable.

El Monte is an example where the median household income is $32K where since the '80's, the 7 to 9% the employee would contribute has been covered by the city. The retired city manager is pulling in over $216k in retirement plus cost-of-living increases and fully paid health insurance. I mentioned property taxes for San Jose contributed 26% of the city budget - in El Monte's case, the retirement costs are 28% of the budget and climbing.




AltaRed said:


> ... However, I don't see where any of that has direct application in Canada and the discussion on the 'wealth' surtax. The NDP will obviously look for ways to take more blood though, especially from the golden gooses. The sooner Horgan is gone the better for all.


True ... maybe it's time to start a "How Healthy is California Threat".

In any case - a key point that is going to apply to all property tax discussion is what it funds and probably the area that is harder to tackle but would be more beneficial, how can $$ be used more effectively so that property taxes or wealth taxes are lower or no needed.


Cheers


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## kcowan (Jul 1, 2010)

Eclectic12 said:


> The ones under were more interested in complaining about why after five or six years of the Winnipeg relative bringing his tools down to help renovate the fixer upper house, a US border official told him he was fine but the tools meant illegal work so leave them behind if he wanted to visit.


Yes in the 70s, a buddy was taking new cabinets to his Mount Baker ski chalet. He said he would have to go to Seattle to get them in the US. The border nazi asked who was doing the work and his quick thinking saved him. He said it was a US neighbour. He could have been banned from entering the US for 10 years for doing work without a visa on his own chalet.


Eclectic12 said:


> Vancouver is 56%.


ISTR some discussion a few years back that Vancouver is unique in lacking the business tax base of major Canadian cities. West Vancouver is even more dependent on residential taxes. For example, there is no hotel in the town.


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## Eclectic12 (Oct 20, 2010)

AltaRed said:


> ... Not sure what this is supposed to tell anyone other than when the noise is stripped out, a municipality's residents generally fund the O&M of their own municipality.


My intent was to underline that Canada, in general, has cities depending on property taxes as a bigger component of their budget. Those who would like property taxes to stay flat or be reduced to a nominal level need to understand what that means for their particular city's funding/programs.

Where one can get rid of waste or silly decisions by the city - all the better.


Cheers


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## AltaRed (Jun 8, 2009)

Okay. I agree on getting rid of waste and silly decisions, but I also support needed* infrastructure and find myself at odds with some friends and neighbours with willing to pay more to get it done. IOW, either pay up to have something done, or quite bitching.

* Prime example about 5km away. A T intersection with a Stop on only the leg of the T backs up traffic forever trying to get on to the through road and causes all sorts of ill feelings among residents. A $200k roundabout (or a 3 way stop) would solve it.....get with the program!


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