California tax trades

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Five taxes, one budget. Move a lever and watch who pays for it.

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What this shows

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Full methodology

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Your household
Assumptions

Off, today is one flat 0.73% rate on market value, which makes the taxes comparable like for like. On, today is what each owner reports paying under Prop 13, and the rest of the levy at one rate on everything else. Both raise the same $100B.

Tax collected on rented land and on business property is borne by whoever owns them, and the sales tax businesses pay is passed on to shoppers. With this on, both are imputed back onto households as a separate layer in every view. With it off, each household shows only the tax it is billed for.

59% of California's $13.69T of real estate is land, not buildings: $8.14T of lots under $5.55T of homes, shops and offices.

By default Prop 13 is assumed away: today's property tax is one flat rate on market value, split into a land half and a buildings half, which makes the five taxes comparable. Assumptions can switch today to Prop 13 as billed.

What this can and cannot claim

A static incidence model: real survey households, real state bases, calibrated to real collections, every assumption a lever. Six limits.

  1. No behavioural response. A lower gains rate would lift realisations, so its revenue loss is overstated. Work, moving and building responses are missing.
  2. The top is understated. The survey top-codes income, and gains are imputed by income class, not to real households.
  3. Where business taxes land is imputed. Tax on business property is put on its owners by income class, and sales tax on business purchases on shoppers by spending. Neither is measured.
  4. Prop 13 bills are self-reported. Owners' bills are what the census survey says they pay; the bill on a rented home or a shop is not reported anywhere, so one rate stands in for all of them.
  5. Gains are one weak year, 2022. Land shares come from single family homes, spending from income group averages.
  6. One price effect only. Land prices fall as the land tax rises, at the discount rate above. Buildings, construction and wider prices do not respond, and rent moves only through the elasticity.

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Sources

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