The Pain is Just Beginning

By D.J. Blutarsky | October 29, 2017 |

Gov. Jerry Brown is feuding with House Republicans and threatened that there will be hell to pay going forward if they pass Trump's tax reform measures. One possible reform being mentioned is the elimination of the state and local tax deduction. Eliminating the local property tax and state tax deductions is going to hurt Elk Grove residents particularly hard, especially those who recently purchased, or will purchase homes in the future at 'bubble' prices.  

Once in your home, Prop 13 will slow the rate of property tax increase each year, but on the state end of things-it seems our Democratic-led Legislature never ceases to come up with a new tax proposal or "fee" to help cover their mis-management of the budget. The new taxes and fees are always justified on righteous grounds, but in the end, we are still paying. Our bank accounts don't make exceptions for good intentions!

Closer to home and adding to the pain, Elk Grove homeowners who purchased their homes in say the past 10 years or so, are being saddled with sizeable CFD (Mello Roos fees) supplemental tax assessments, some of which can, and have been, raised each year by a simple majority vote of the City Council. Those particular assessments are not subject to the Prop 13 limits, are technically not "taxes," and were never permitted to be written off as a tax deduction anyway. 

Long-time Elk Grove residents who watch homes sales/pricing would surely have to agree that our local real estate market is rapidly approaching a bubble now. Builders are not flooding the market with new inventory and the local wages certainly wouldn't support the current pricing. Throw in a new sales tax or two; keep boosting those CFD assessments each year; eliminate the local property tax deduction; and keep attracting low-wage retail jobs - and let's see what happens? 

House Representative Darrel Issa put the tax policies of California into perspective recently in a response letter to Brown, after the governor essentially threatened that Republicans who support the Trump tax plan would lose at the ballot box :

“I recognize the role of the state and local tax deduction to reduce the tax burden on many Californians, but let’s be clear: it has only become of such importance as a direct result of the tremendous weight that your misguided policies have put on California taxpayers.” In particular, Issa cited the state’s new gas tax law that Brown recently signed. “In terms of truly ‘horrible ideas’ on tax policy, I have to say, this one takes the cake.”