How to get rid of Proposition 13

Yet, our state’s finances go wobbly at times because it relies so much on capital gains taxes from the super rich, cities got sucked into the fiscalization of land-use policy that favored commercial over residential development, school districts require parcel taxes and bonds because there just isn’t enough money to fund them with the money generated through property taxes and sales taxes bump against 10%. New homebuyers pay more than older ones, though the older ones paid more at one time and paid more over time since they started paying years prior. Two homes right next to each other could have very different tax rates depending on the purchase price. That spread flattens over the years and soon the one who pays more will pay less than someone else. Still, there can be envy and dismay, and sometimes even enmity from those so inclined. Newcomers believe old-timers aren’t paying their fair share. Old-timers say they’ve paid plenty over the years.

And here we are.

First of all, Proposition 13 will never be repealed straightaway. It’s beyond Sisyphus to try convincing regular folk to give up their property tax cap. If it were to be repealed, however, it would lower home prices because supply would open as many would move rather than pay rates on new assessments. That might lower the tax rates for new homebuyers or anyone seeking to buy a home. That may hold appeal for some but no one should want older folk to be forced to leave their homes so they themselves can benefit. That’s just gross.

However, older folk currently don’t want to move and pay more in taxes. That means they don’t downsize, which restricts the market. That issue was the subject of Proposition 60 in 1986, which allowed people to keep their tax rate if they stayed in their own county. And it was expanded by Proposition 90 two years later by allowing moves to certain other counties. In 2018, Proposition 5 would have allowed anyone over 55 to keep their tax rates and move anywhere, but it was defeated.

There could be a better way to repeal Proposition 13, slowly, as in over a generation or two. Everyone currently owning property could be allowed to stay under the current system until they die, with a small percentage of the property’s value if it’s sold going into a new state stabilization fund. Anyone who buys property now and into the future would have the value assessed annually, with local control as it was done prior to Proposition 13. Perhaps the taxable value could be lowered slightly during the first decade to ease those first few years. Any tax loss could be made up through the stabilization fund. The Proposition 13 system would expire over time. The stabilization fund could also be used to ease the tax burden for new seniors currently in the Millennial generation (I told you it was slow).

Repeal would open up new revenue. Yet, we’ve had decades of tax policy changes and amendments since 1978. The initial taxes lost by Proposition 13 have been made up naturally by 2003, and we’ve had higher sales taxes, gas taxes and property taxes through bonds and parcel taxes. Those won’t go away, taxes rarely do.

Some could argue that under the current system a 2% a year increase should be plenty for the state, especially considering our other new taxes. Others would want a new cap to ensure local officials don’t get too crazy with increases. And this large new revenue source would have to be earmarked toward something upon which we could all agree, like reducing the state’s debt, bulking up the rainy day fund, equitably funding K-12 education and dramatically lowering costs to attend our universities and colleges.

This plan may never work, but, so too is the case with many other plans. Proposition 13 is just too ingrained.

Jon Mays is the editor in chief of the Daily Journal. He can be reached at jon@smdailyjournal.com. Follow Jon on Twitter @jonmays.