Quote:
Originally Posted by jyl
The fear that old folks will be taxed out of their long-time homes, as house values rise, is easily handled.
Simply allow the property tax payments to be deferred until the home's owner (and spouse) pass away, then the tax is paid from the sale of the house. Easy.
I don't think one group of homeowners should subsidize the other group.
Prop 13 did huge damage to California's finances, by reducing a stable source of revenue (property taxes) and forcing the state to rely more on volatile sources (as explained above). This makes the state more vulnerable in recessions.
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Damn right - nor should "non-homeowners" be subsidizing the ones that are underwater because of contracts THEY voluntarily entered into. Problem is the precedent has been set with bailing out stuff that's deemed "too big to fail" (GM, Chrysler, AIG, Citi, etc.) Now "underwater homeowners" are trying to apply the same strategy saying if they're all allowed to go under it'll tank the economy, but I digress. The whole thing is sickening. Nobody likes to hear of anyone facing foreclosure or losing their home but the reality is this is RISK. If you don't like it, don't buy. It's that simple.
The problem with this is it's SO murky and case-by-case as to who bought speculatively and who bought honestly - expecting to live there for a while. It's a difficult if not impossible thing to determine. If ANYONE gets aid, it should only be those who bought in good faith, not looking to do a "quick flip", but how do you determine that? I'd say you could probably exclude all the ARM loans (these were taken typically by speculators hoping to dump the property before the reset) but it's possible that some bought "in good faith" looking to live in the place with an ARM hoping to refi, which now they can't do because the banks won't lend. It would unfairly penalize them I suppose, but maybe it's still better than doing nothing if this segment of the economy really is "too big to fail".
Also, much of CA's problems are systemic and unfixable by any governor or single entity. There's SO much budgetary obligation that's build directly into the state constitution that the state really has very little room to maneuver. Add to that deliberately gerrymandered districts (which effectively force a "Mexican standoff" over every issue constantly - especially the budget which requires a 2/3 majority to pass), ASSembly members who are beholden to special interests (minorities, etc.) CA is going into bankruptcy guys - face it. There's nothing that can fix its problems short of a miracle or a total failure followed by a Constitutional Convention and re-writing of the entire state Constitution. It's not a question of "if", it's a question of "when", and what I'm reading is that the "when" is several months from now at most.
It probably won't be the only one either.