By Jon Coupal, Howard Jarvis Taxpayers Association
During the holidays, most Californians are focused on their homes. This is the time when homeowners – and renters too – are decorating and extending hospitality to friends and neighbors. But heavy taxes and fees imposed on homes by the Grinches in government make it hard for Californians to hang on to their homes .
Homeowners, who work hard to pay for and maintain a house, pay property taxes that often do not fund property related services. These revenues go into local government coffers and can be spent for any purpose. To pay for services to property, like sewer, water and refuse collection, the homeowner pays extra through fees, assessments and other charges added to the property tax bill. Additionally, homeowners throughout California are also hit hard with bonds. Virtually all bonds for schools that must be repaid by property owners pass due to Proposition 39 that reduced the two-thirds voter approval requirement to 55 percent.
Even now, there are lawmaker Scrooges in Sacramento who want to make it even easier to load up your property tax bill even more. They argue that because of Proposition 13’s low property tax rate, they should be allowed to squeeze more from average homeowners by making it much easier to increase local taxes. They ignore the fact that while the property tax rate may be lower than in many states, because the median price of a California home now stands at about $450,000, while nationally it is at $208,000, what the homeowner actually pays is comparatively high. (California is in the top third of states in per capita property tax collections).
One of the few benefits to homeowners in California – besides Prop 13 – is the Homeowners Exemption. This exemption simply lowers the taxable value of a primary residence by $7,000, which translates into a paltry $70 reduction in a homeowner’s tax liability. Not only is the amount of tax savings negligible, the Homeowners Exemption hasn’t been adjusted since 1972. If the exemption had been allowed to keep up with inflation, today it would be way higher – at least $35,000 for a saving of $350. And if inflation were based on the increase in California housing costs, it would be even higher still.
The 1972 bill — SB 90 authored by Democratic Senator Ralph Dills and signed by Republican Governor Ronald Reagan — that established this homeowners exemption amount, also included a renters tax credit that allowed the renter to deduct from $25 to $45 from their income tax. Here, too, state government has been a piker. Today, the income tax credit sits at $60 for single renter or $120 for head of household or married couple filing jointly. While at least here there has been a modest increase, it does not come close to keeping up with inflation. Had it been indexed for the CPI, the $25 credit of 1972 would be $140 today.
It’s past time for our political elites to acknowledge the high cost of owning and maintaining a home as well as the sky high rents in many communities, by addressing these human concerns with an increase in the Homeowners Exemption and the Renters Tax Credit.
The tax-and-spend lobby in the Legislature and all those who receive a check from the taxpayers will say that they cannot afford any loss of revenue. They will confirm the old saying that taking a dollar from a bureaucrat is like taking a piece of raw meat from a hyena, a lot of shrieking ensues. But with the Sacramento politicians bragging about the increase in state revenues that is billions ahead of projections and has resulted in a surplus, they can afford to leave a few bucks in taxpayers’ and renters’ pockets, money that can improve the quality of life for average Californians, money that, when spent, will help to stimulate the economy.
It is long past time to provide some well-deserved relief to those who are struggling to keep a roof over their heads while trying to keep up with constant additions to their property tax bills, as well as to those straining to pay escalating rents.
Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights