Californian Property Taxes Are Too Low, Says Buffet

by Leroy Baker, Tax-News.com, New York

18 August 2003

In an interview with the Wall Street Journal last week, high profile investment guru Warren Buffet, who is advising Arnold Schwarzenegger in his campaign to become the next governor of California, suggested that the state's property taxes should be higher.

California's famous (or infamous) Proposition 13, which dates back to 1978, limits property tax increases in the state to no more than 2% per year. As a result, Buffet has observed a large difference in the property taxes he pays on his homes in California and Nebraska.

For his $500,000 home in Omaha, Nebraska, Buffet revealed that his yearly tax bill is $14,401. On his $4 million California home however, the annual property taxes are a fraction of this at $2,264. Mr Buffet also points out that the taxes on his Omaha property rose $1,920 this year, whereas the tax increase on his California property was a mere $23.

Whilst Buffet's words have inevitably led to speculation that he is in favour of repealing Proposition 13, he has stopped short of making a statement to this effect. Besides, such a proposal would be unlikely to sit well with the conservative voters that Schwarzenegger is currently trying to court.

However, the Berkshire Hathaway chairman did concede that "certain conclusions" can be drawn from the comparison he made between Nebraska and California, observing that "in effect, it makes no sense."

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