San Francisco receives over $3,000 per capita in property tax revenue alone. Dallas receives about $1,200 per capita. NYC is less than $1,000, though I gather NYC has their own property tax issues.
And California has an income tax, whereas Texas doesn't.
Prop 13 has it's problems, but I don't think they're as significant as the rhetoric claims. It makes for a great excuse, though. Politicians can blame Prop 13 for why they can't spend as much on services as people demand, and now it's become the common wisdom--but for Prop 13 California could afford to spend much more than it does, and the housing affordability crisis would end, too. It's just wishful thinking.
I remember when Prop 13 was on the ballot. The newspaper reported that if it passed, it would eviscerate the police and fire budgets. It passed, and nothing happened to the budgets.
I don’t think the housing affordability crisis ends and I don’t think that’s the right way to model it. SF has one of, if not the highest, $/sq ft in the US. And prop 13 is suppressing it - estimates indicate that property taxes revenues would double meaning that 2.5k/person would become 5k.
And remember that that 2.5k/person is only for residential properties. commercial properties still fall under prop 13 and that’s about 50-60 of the other tax. So a full repeal would make it closer to 10k/person instead of the current 5k.
I agree the story on rents and home prices would be unclear because ultimately the people might move and just rent out their homes with property taxes baling into the new rental price.
Also seems unlikely. It might depress housing prices and act as a natural counterbalance (but then rents and Col drops too). I think it’s really hard to model.
I don't think housing costs would drop that much, if at all. What matters is the monthly mortgage payment. Property prices drop when property taxes go up, but mortgage payments tends to stay similar.
In one sense that sounds like free money for the state. However, home equity constitutes the largest share of savings for people, and that's more true the lower down the income ladder you go. So you're taking money out of the working- and middle-class. In some circles home equity is considered a poor savings vehicle, but they don't seem to consider that it's the only secured loan most people can access for leveraged investment. It's the only investment available to most people that let's them leverage capital markets the way the very wealthy can.
And FWIW, residential rents also track monthly mortgage payments, so renters aren't likely to see any difference, either. On average renters pay roughly the same amount per month they'd pay as owners, just without building any equity. I suppose they might be slightly better off after accounting for transfer payments (i.e. public services, entitlements, etc), but they'd be even better off if they could become owners rather than renters.
"I don't think housing costs would drop that much, if at all."
That all depends on if people still want to live there, or can afford it. People tend to be sensitive to taxes, especially if they don't see it improving their lives. Businesses can be sensitive to this sort of thing too. And if they leave, people may leave too. California is already at a net negative when looking at joiners vs leavers. It's mostly been lower wage workers, but in recent years middle and high earners have also been leaving. The population is the same as it was 5 years ago.
"Property prices drop when property taxes go up, but mortgage payments tends to stay similar."
That might be roughly true for a person who just purchased and the federal property tax deduction is uncapped. A retiree who is getting a break on taxes is likely to see a big increase. Not to mention if the house is paid off, then there is no mortgage that could offset it.
And California has an income tax, whereas Texas doesn't.
Prop 13 has it's problems, but I don't think they're as significant as the rhetoric claims. It makes for a great excuse, though. Politicians can blame Prop 13 for why they can't spend as much on services as people demand, and now it's become the common wisdom--but for Prop 13 California could afford to spend much more than it does, and the housing affordability crisis would end, too. It's just wishful thinking.