Careful, Ahnold
So, Ahnold invited Warren Buffett to advise his campaign. Ok, good. Brings business acumen to the party along with wide ranging and deep-pocketed contacts. [...er] I'm a leetle concerned with this, though:[Buffet's] remarks in The Wall Street Journal about one of California's most sacred tenets, the 25-year-old tax revolt called Proposition 13.
Buffett suggested the landmark initiative has warped the state's tax system and may need changes that include higher property taxes. Buffett said he pays $14,401 in annual property taxes on his $500,000 home in Omaha, but only $2,264 on his $4 million home in Laguna Beach.
Damn Skippy, it's a sacred cow -- and for good reason. I do believe that, given the relative prices of real estate, Buffett's house in Omaha is probably 3 times the size of the little place in Laguna Beach. Hell, considering it's Laguna Beach, that place might be a condo! In our neck of the woods a 2 bedroom 1 bath, 1950's built tract on a tiny lot is $350,000. [$900 will rent a marginal 2/1 apartment; $1,200 rents a marginal 2/1 house in an iffy neighborhood] Property tax on that is a more than sufficient contribution to the tax base. Mortgage payments, alone, would figure in the $2,000 per month range. Add a large property tax to that and only people with *very* large incomes will qualify to buy a 2 bedroom 1 bath, 1950's built piece of tract-crap* in this area. But people with *very* large incomes don't usually want a 2/1 with no fpl, no yard, no pool, no spa, and no room in an ordinary little suburban tract development. Sensible people want a little more bang for their buck. So property taxes go up; people quit buying anything in the mid-range of the market; those property values fall and those owners lose the equity they have built up. The market further depresses, except at the upper end. The people who currently own these houses get the fire-sale panic and leave the community in droves moving to Reno, Oregon, or Iowa, where they can get one nice home for $300,000. There is no one left in town to do the middle-income range jobs and -- what? This doesn't sound like the way to fix the budget deficit to me. You? * yes, you caught me out: I am a house snob. I hate the 'burbs. If forced to decide, I'd choose to live in a tar-paper shack in Hell [or Reno - whichever is cooler] than live in the 'burbs. [come to think of it, the weather is cooler in Hell]
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