Pros And Cons Of Proposition 13 In California

Proposition 13, which the voters of California approved in 1978, limited property taxes to one percent of cash value at the purchase price. Another clause stated that to pass a budget and tax increase, the legislature must agree with at least ⅔ voting to approve.

Some of the pros were the immediate relief it provided to homeowners upon ratification to the California state constitution. It provided a sense of predictability during the period of stagflation, and even during the housing booms and busts to subsequently follow, for residents who purchased property in years of low prices, they received the best bargain. In major areas like Los Angeles and especially San Francisco, longer term residents are paying way less than new homeowners, and that says a lot since California is the third most expensive real estate market, behind Hawaii and Washington D.C. Older residents especially are reaping the

Local governments were hurt mightily, since property taxes went to local governments to fund education (Christensen 115). Special Districts proliferated within the state, which could tax or charge autonomously from the state. Because of the lucrative real estate, the state is forfeiting a major source of revenue, so to counteract that, we have the highest personal income tax and one of the highest sales tax within the nation. The state uses this capital to fund more services typically reserved for local governments

Another flaw with Prop. 13 is best explained through the neighbor analogy. A couple has lived in a suburban home for several decades, and its assessed value is $100,000. In the present, another couple buys the house next door for 1,000,000, and pays ten times more taxes than the first couple. Enacted in 1978, the proposition never foresaw California having some of the most expensive real estate in the world, and is responsible for billions of lost revenue for the state’s general