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8 Reasons Why California’s Proposition 13 Still Matters Today

2 Guarantees: Death & Taxes With California’s passing of Proposition 13 in 1978, taxation became a heated issue amongst voters and a third-rail issue amongst politicians. Proposition 13 was voted in by way of a ballot initiative which gave voters a direct line of power to wield and they did so with staggering power. Prop. 13 set a cap on the level of property taxes on any given home to 1% of that home's 1978 assessed value. A home could only be reassessed if a change in ownership occurred, at which point the taxes could not exceed 1% of that value. The disparity could be seen in public services, neighborhood equity, and even the discontent of some new homeowners. Now, nearly 30 years later, we look at the impact it continues to have today in California and across the nation.

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1. California homeowners are STILL paying drastically lower rates for their property taxes, and public services suffer

With the passing of Prop 13, the property taxes in California were limited to 1% of a property’s assessed value. Therefore, a $500,000 home is paying no more than $5,000 in property taxes per year; this lowered amount in taxes was quite the incentive for new residents to seek out property in California, and that is exactly what they did. In no time, California saw an influx of new residents with a drastically limited monetary influx. California did not have the money to provide these new residents with public services.

2. A home in California can ONLY be reassessed for tax purposes when it is purchased or a change in ownership has occurred

Khalil Bendib / Via otherwords.org

Homeowners can only be reassessed for the property value when there is a CHANGE in ownership (ie. purchasing a house). Though this reassessed value can still only be taxed at 1%, this leaves long-time homeowners paying much lower property tax rates than their new neighbors.

3. Californians aren’t the only ones feeling the brunt of this epidemic, as many cities nationwide are facing steeper property taxes than had been foreseen in past years.

Tax Foundation / Via taxfoundation.org

With more and more families moving into suburban areas, cities are raising their property taxes to combat the impending fear of not being able to provide for its citizens. Police and fire departments, city parks, sanitation, and infrastructure all suffer with a lack of funds, but in a cruel twist, many families struggle to afford the property taxes they are required to pay.

4. People have tried to challenge the fairness of Proposition 13…and they lost.

In the landmark 1989 Supreme Court Case, Nordlinger vs. Hahn, Stephanie Nordlinger sued the LA County Tax Assessor on the grounds that she was being denied Equal Protection under the 4th Amendment and was subsequently forced the pay the increased property tax on her newly assessed home. The Supreme Court ruled in favor f the tax assessor, stating that Proposition 13 allowed such a situation to be valid, constitutionally.

5. The same conditions which led Californians to pass Prop. 13 in 1978 are brewing again, as discontent for our tax system grows.

View this video on YouTube

The Kinks / Via youtube.com

As The Kinks so eloquently put it, “The tax man's taken all my dough // And left me in this stately home”. The situation has not improved since the 1970s, but has simply manifested itself into a different form of discontent. Those same feelings of being taken advantage of by the government holds true to present day. We are currently seeing the tax plans of Donald Trump simplifying the tax code for the wealthy and the policies of “democratic socialists” gaining momentum amongst the millennial generation that has seen the current tax model wreak havoc on their parents’ livelihoods.

6. California’s Prop. 13 has evolved and developed our discontent with the tax system by pushing us to find solutions and rise above conformity.

Matt Wuerker / Via politico.com

This current election has brought about the staunchest opposition to corporate tax evasion, with the rise of Bernie Sanders and his anti-establishment views of corporations. Just as Californians in 1978 felt as though the government was not allocating funds properly, Americans today have expressed a similar discontent with paying their fair share while large corporations are not doing the same by evading those same taxes. The tagline “closing the loopholes” was used exhaustively during this cycle, suggesting that though some means may be legal, it would be just as simple to make those same means illegal.

7. Prop. 13 is proof that a tax revolt has happened, and that it most definitely can happen again, with caution.

Steve Greenberg / Via politicalcartoons.com

California’s Prop. 13 had many negative effects, but generally not to those who voted it in. Most Californians who supported tax reform were those who also did not move after the bill came into place. These citizens hardly moved, their tax rates stayed stable, and they paid pennies on the dollar for considerably expensive homes. New homeowners suffered, public services suffered, and families that were not given that ballot decision continue to suffer. For a tax revolt to be successful, in this day and age, it will take far more careful analysis and planning as to avoid the situation which California continues to live with.

8. The 2016 Election saw the rise of new forms of thinking in terms of taxation and deviation from the norm in a campaign platform.

Ted Rall / Via rall.com

Closing loopholes, distributing the tax burden, and ensuring the federal balance of payments; these are far from new ideals, but come with solutions that heed warnings. We cannot be hasty with reform, but if such reform should occur, it must be done with care and precision. Mistakes have been made and should be learned from, tax reform is necessary and inevitable.

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