What Buffett’s houses would cost in taxes here
Warren Buffett, the billionaire Democrat who is advising Republican Arnold Schwarzenegger’s campaign for California governor, raised more than a few eyebrows last week with his property tax analysis.
Buffett’s example was simple and direct. He used his own houses in Omaha, Neb., and Laguna Beach, Calif., to illustrate the difference in taxes.
On his $500,000 home in Omaha, Buffett said, he pays property taxes of $14,401.
On his $4 million home in Laguna Beach, he pays $2,264.
Buffett stopped short of recommending a property-tax increase for California. What he said was: “This property tax illustration, that tells you, you can draw certain conclusions from that.”
Yes, Mr. Buffett, we can.
It tells us that no matter how the public attempts to limit its own tax burden, legislators will find a way to raise enough money to cover what they want to spend.
In California, it’s Proposition 13, which limits property-tax increases to 2 percent a year regardless of how much the value of a property grows. Legislators there have found many ways to make up for that restriction, because taxes in the Golden State aren’t exactly low. But property taxes are extremely low.
For comparison’s sake, we calculated Warren Buffett’s property-tax bill if he owned homes in Carson City. His $500,000 home would get him a bill of about $4,600. His $4 million home would bring a tax bill of about $36,000.
(Neither calculation takes into account depreciation.)
The good news, we suppose, is that Nevada is very much in the middle of this property-tax equation. It isn’t as high as Nebraska, which does not have gaming or tourist industries to bolster the state coffers, and it’s well above California’s tightly restricted level, which doesn’t even keep pace with inflation.
The further conclusion we reach hearkens back to Nevada’s whole tax-and-budget debate. It reaffirms the wisdom of spreading the tax base as far and as evenly as possible. Too high here or too low there creates economic problems and, as Schwarzenegger is finding out, political ones as well.