Monday, September 19, 2005

State-sanctioned scams

What am I talking about here? Generally, 'scam' brings to mind things like this; people taking advantage of something for personal enrichment while defrauding others. Now, some might agree with me in principle as I explain this, but we're not really talking apples to apples.

What you must understand is, it's not really a scam when the state says it's okay. Now that you're asking again, "What's your point?," I'll come right to it. I'm talking about property taxes in California.

Since the adoption of Proposition 13 in 1978, property tax increases in this state have been restricted by law. Now, for most of the 27 years since Prop 13 passed I've been oblivious to this issue: I was 12 years old when it passed, and only until now have I ever owned a home in the state. Hence my current interest in the subject.

As we moved through escrow I was amazed that my mortgage broker- though residing in Arizona licensed to do business in California-was very unclear as to how property taxes were being assessed on the new home.

In Arizona, it's a very straight-forward process, one that makes pretty clear sense: every year the home is assessed and the tax-rate applied to the assessed value of the home. Here in California, not so much (and this is where I get on my soap-box).

Advised by our escrow officer, I came to learn that our taxes were based on the sale price of the home. It represents a percentage (not a large one by any means; hardly bigger than what we paid in Glendale to my surprise) not of the appraised or assessed value of the land and structure, but simply a percentage of what it sells for. This is equitable?

I immediately think of my in-laws, who live in a newer and bigger home on a bigger lot, who pay 1/2 the tax amount we must simply because they were fortunate enough to buy it at a time when housing prices in the area were still reasonable. This is equitable?

I'm not being taxed on my desire to live in a large, new home on a large piece of property; I'm being taxed based on my bad-timing in that a smaller home, older than I am (nice and cute as it is), is all I can afford in the area as a result of a runaway real-estate market over the last few years.

Some may think I'm griping about paying my taxes. I assure you, I am not. What I am griping about is a perceived inequity. Why should my taxes be higher than someone else who owns a bigger and/or newer home on more land?

Seems to me any equitable tax system would see higher taxes paid on the newer and bigger structure. But maybe that's just me...

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