The Corner

Buffetting Winds

So Warren Buffett thinks it is wrong that he pays $16,000 a year in property taxes on his $500,000 Omaha house, but only about $5000 a year on his $2 million California home. The obvious point here is that he is massively overtaxed in Nebraska.

More to the point, if he bought his California home today, he would pay $20,000 in property taxes, and because housing turnover is so rapid in California (property tax assessments are set on sales price in CA), not that many people are in Buffett’s position of having an old assessment (though I am one of them, with a home that has been in the family for over 40 years–under Prop. 13, you inherit your parent’s property tax basis when property passes between generations).

The favorite liberal solution for this is a “split roll” property tax, i.e., commercial and business property would be taxed at a higher rate than residential property. There is some element of fairness to this, because there is less turnover in commercial property than residential property. However, just as the corporate tax burden is borne by consumers and not corporations, commercial tennants (especially those with net leases) will bear the cost of any property tax increase–that is, businesses will pay the tax. Just what California business needs–more taxes.

One little wrinkle in this is that even Tom McClintock has said he might be open to a split roll tax. But he said this more for political than economic purposes; the business communiti in California, especially big business, has been notably feeble in recent election cycles, if not outright supporting Davis and the liberals. A number of conservatives have started to say, as I’ve heard Kate O’Bierne and others say through the years, “big business is not out friend,” and why should we keep defending their interests if they won’t?

So as bad as Buffett is, this may be a trial balloon that could play out in a number of interesting ways. (P.S.–A liberal-sponsored split roll property tax initiative failed on the ballot several years ago.)

Now back to the beach.

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