Proposition 13, which was passed in California in 1978, is still working after all these years. This groundbreaking legislation has helped to protect homeowners from the sharp rise in property taxes that is common in most other states, and it continues to provide a stable, predictable, and growing source of tax revenue for local governments.
Despite the opposition from the political left and some misconceptions from organizations like the Tax Foundation, the benefits of Prop 13 are clear. The legislation caps annual increases in assessed property values at 2%, which means that Californians would have seen their property taxes increase by more than 7% this year if it were not in place.
One of the biggest benefits of Prop 13 is the protection it provides for existing homeowners. Older homeowners (age 55 and up) can move and take their Prop 13 base-year value with them to a new home, while younger homeowners will pay higher property taxes if they move to a larger and more expensive home. However, this is true in any state, and Prop 13 still provides a predictable 1% rate cap that helps new homeowners know what their tax bill will be for years to come.
The notion that Prop 13 discourages homeowners from renovating or adding onto their homes is simply not true. Remodeling and repairs that are part of normal maintenance or cosmetic upgrades are not considered assessable, while new additions that increase the square footage of a home or add new improvements will be assessed. But the reassessment is limited to the value added by the addition, which is still less than what would be paid under a market-based property tax system.
Prop 13 also provides a stable source of tax revenue for local governments. The legislation allows for increases in assessed value of 2% per year and requires reassessment of property when it changes hands, which has resulted in property tax revenue growing in California virtually every year since 1978.
Prop 13 is still working after all these years, providing a stable and predictable source of tax revenue for local governments, while also protecting homeowners from sharp increases in property taxes. Despite the opposition from the political left and some misconceptions from organizations like the Tax Foundation, the benefits of Prop 13 are clear, and other states currently struggling with out-of-control property taxes should consider adopting similar reforms.
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