Proposition 13 California Law
Officially titled the "People's Initiative to Limit Property Taxation," California's Proposition 13 was a state ballot initiative passed in 1978 by 65 percent of voters. It changed the state's property tax valuation system from one based on yearly assessment of market value to one based on purchase price. Blamed for reducing school revenue, Proposition 13 is also lauded for stabilizing taxes.
Other People Are Reading
-
History
-
Since 1966, California state law required all property in the state to be taxed based on a set percentage of property value. During the 1970s property values in the state soared, resulting in substantial increases in property taxes. Taxpayers revolted, worried they would not be able to stay in their homes because of the uncertain and ever-increasing property tax liability. To stem the tide of rising property taxes, Republicans Howard Jarvis and Paul Gann wrote Proposition 13 and spearheaded the signature effort to get it on the ballot in June 1978.
Details
-
Upon passage, Proposition 13 rolled back tax assessment property values to what they had been in 1975. For properties remaining under the same ownership, future increases in the value could not increase more than 2 percent or the rate of inflation, whichever would be less. If the property changed hands, the selling price acted as the new basis for value. Certain transfers, such as between parents and children and spouses, are exempt from the higher valuation.
-
Court Challenges
-
The validity of the acquisition-based assessment was unsuccessfully challenged in both the state and U.S. Supreme Courts. Opponents contended it violated the constitutional equal protection clause because the law treated new property owners differently than existing owners. The tax liability for two identical, adjacent properties could be vastly different if one owner purchased one of the properties years after the other had purchased his property. The court noted the existing owner could not opt in or out of property tax whereas the new owner would understand what the tax liability was before purchasing and could base his choice to purchase accordingly. It pointed out the law would add stability to taxes and continuity and preservation of neighborhoods by allowing existing owners to remain in their homes.
Conflicting Views
-
Former California Governor Pat Brown and the state's superintendent of schools in 1978 decried Proposition 13, inferring that schools and the state government would not be able to run effectively. Yet, according to The New York Times, overall taxes in California are higher than the average of taxes outside of the state. In 2010, California's schools ranked among the worst in the country. Yet Texas and Florida, which spend less per pupil than California, ranked higher in school test scores.
Other Considerations
-
Proposals to amend Proposition 13 surface with some regularity, notably during times of economic downturns. One fact remains consistent, however. Voters remain supportive of the law, to the extent that Proposition 13 is referred to as "the third rail" of California government, which is to say it is a law that can't be touched.
-
References
- Photo Credit san francisco image by Tabitha Little from Fotolia.com
