I am currently handling the legal administration of the estate of a woman who lived in a mobile home park in the same city in San Diego County in which I reside. There are 192 spaces in this mobile home park, all of which are currently occupied. As a resident of the park for over 30 years, the decedent was paying one of the lowest rates of rent in the park on the plot of land occupied by her mobile home at the time of her death -- $463 a month exclusive of utilities, trash pick-up, etc.
The rent when decedent moved into the park in 1976 was $115 a month. The mobile home park is limited to residents who are at least 55 years of age.
The park, which is known as Terry's Mobile Home Park, is owned by a Mr. Terry. This park is one of five such parks that he owns. Mr. Terry's father acquired the land on which the park is situated back in the 1940s or earlier and opened a trailer park business, which morphed into the present mobile home park.
If we suppose that only $400 a month of the rent paid by each of the 192 mobile home owners constitutes land rent with the rest of the rent covering management costs, the cost of resurfacing the asphalt streets every 20 years or so (or as needed), liability insurance costs, electricity for the few street lights within the park, etc., then Mr. Terry is receiving $76,800 in land rent each month from this park alone.
A majority of the mobile homes in the park are occupied by just one senior citizen, but many have two occupants. If we suppose that there are around 250 persons in the park total who are paying land rent and there is one family who is benefiting from the receipt of the land rent (or even several families if Mr. Terry shares the income with siblings and their family members), we begin to get an idea of the political math which favors a switch to LVT in California as the primary source of public revenue.
It is true that collecting 75% of land rent in California in lieu of almost all other state taxes will hurt Mr. Terry and his family because their land rent income will drop to only $19,200 a month or $230,400 a year from their mobile home park. But they will probably still manage to get by on this 25% remainder of land rent -- after all, they will be able to supplement their income with the similar land rent proceeds from the other 4 mobile home parks they own.
Mr. Terry will be able to claim huge federal income tax deductions because every dollar of land rent they will be paying to the people of the state of California will be deductible on their federal income tax return. Under the tax reform initiative, Mr. Terry will also receive a nonrefundable tax credit for the land value taxes paid which will certainly wipe out his California state income tax liability.
However, all of the 250 residents of Terry's Mobile Home Park will almost certainly gain from this tax reform proposal because they will no longer be paying state income tax (or, if they receive more than $150,000 in annual income each, will pay state PIT only on the income in excess of $150K at a lower marginal tax rate than currently applies), will not be paying any sales taxes on their purchase of goods and services currently subject to that tax and will not be paying the personal property taxes currently levied on the value of their mobile home.
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