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In California, what is Prop 13?

Mary McMahon
Mary McMahon
Mary McMahon
Mary McMahon

Proposition 13, or “Prop 13” as it is often called, was a landmark proposition placed before California voters in 1978. Despite expectations that the proposition would fail at the polls, the measure went through, adding an amendment to the California Constitution which would prove to be a topic of controversy and heated discussion for decades afterward. In addition to being remarkable within the state of California, Prop 13 also attracted national attention.

In essence, Prop 13 limited property taxes in California to no more than one percent of a home's assessed value. Furthermore, assessments of property values could not rise by more than two percent per year, unless a property was sold, in which case it could be assessed at a new value. The proposition also added a measure which would require a two thirds majority to increase any taxes in California, thereby making it very difficult for the legislature to pass laws to raise the tax rate, even when the state struggled to balance the budget.

Prop 13 was passed by California voters in 1978 limiting property taxes to no more than 1 percent of a home's value.
Prop 13 was passed by California voters in 1978 limiting property taxes to no more than 1 percent of a home's value.

Prop 13 was part of a larger tax revolt which took place across the United States in the 1970s and 1980s as property values began to rise dramatically, thereby causing a corresponding rise in the rate of taxation. Many home-owners revolted, furious at fluctuating and increasingly higher property taxes, especially in areas which were experiencing stratospheric increases in property values.

California Prop 13 imposed a limit on the amount of property taxes in the state.
California Prop 13 imposed a limit on the amount of property taxes in the state.

Advocates of Prop 13 argued that fluctuating property taxes hurt homeowners, especially elderly homeowners on fixed incomes, who might be ill-prepared to deal with a sudden rise in their tax rate. They also suggested that high tax rates in expensive areas essentially subsidized communities with lower tax rates.

One of the immediate effects of the proposition was a dramatic decrease in property tax income, and a corresponding struggle for funding among schools, law enforcement, and other organizations which rely on property taxes for part of their income. In response, some regions started putting parcel tax measures on their ballots to provide funding for local emergency services. Prop 13 also had an impact on the housing market, as people grew inclined to hold on to property longer to take advantage of low assessed values, rather than selling it and buying new property which would receive a higher tax rate.

Several attempts have been made to reform Prop 13 in California since 1978.
Several attempts have been made to reform Prop 13 in California since 1978.

Several attempts have been made to reform or abolish Prop 13 in California since 1978, but these attempts have ultimately been unsuccessful, even when evidence strongly suggests that the state desperately needs more sources of income. One reason these efforts often fail has to do with concern for elderly homeowners; most California politicians do not want to attract negative attention by potentially creating a situation in which elderly homeowners could be faced to pay higher property taxes.

Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a UnitedStatesNow researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Learn more...
Mary McMahon
Mary McMahon

Ever since she began contributing to the site several years ago, Mary has embraced the exciting challenge of being a UnitedStatesNow researcher and writer. Mary has a liberal arts degree from Goddard College and spends her free time reading, cooking, and exploring the great outdoors.

Learn more...

Discussion Comments

anon1002078

Our home is under Prop. 13, we are low income and our home is paid for. We would be forced to sell our home and live in an apartment if the politicians take away our Prop. 13 property tax. This is not what we worked hard for all our lives.

California politicians need to rein in their spending, stop spending our tax dollars on legal immigrants. They can get in line and pay their money just like every legal immigrants have done for many years.

anon989309

No one should have to pay property taxes on something they own. Any amount is government intrusion. You already pay taxes on your gas, over a quarter of your income, etc. Tax, tax tax!

Prop 13 was the best thing to happen to California. We have one of the highest tax rates in the country.

People want to complain that those "rich" people don't have to pay more property taxes. What, are you jealous? Pathetic.

You want younger people to get taxed to death? That is entirely unfair. If you have a good job, why should even more of your paycheck go to the government? If anything, less should go to it.

My foreign friends were shocked and horrified that we pay property taxes for property we own. Other countries do not do this.

anon274437

I'd be for an addendum to Prop 13 that phases in increases to current market value of properties owned by individuals making over certain dollar amounts.

If the person is elderly and on a low fixed income, they are not affected, however, those making $XX,XXX per year should be subject to their portion of property taxes at current values.

anon140359

Why should anyone be taxed on phantom wealth? Home prices go up and down. You can't trade your house to take advantage of value swings so the idea of charging a tax based on its value is utterly preposterous.

anon137128

Ad valorem is a stupid and medieval method of assessment.

It is antiquated and is completely unsuitable for our modern society. It arose from a medieval practice in which the income of estates or property, was taxed. It was a way of taxing the productivity of land and holdings. That's all. It was, in essence, an "income" tax, since people had no other real way to generate income except from real estate. You either farmed it, fished it, hunted it, or raised animals on it. And that is what ad valorem tax was applied to, the "value' of the estate, meaning what it produce in income, on an annual basis.

In England, when you spoke of the propertied class, a phrase of speech was "She's worth 300 pounds a year". Well what that means is that her estate, or portion of an estate, produced 300 pounds in income.

So, for us moderns, who do not derive any income from our homes (unless we are a landlord and rent them out, in which case the income is taxed by the income tax ), an ad valorem tax is wholly inappropriate.

Why? Because the price of the house has zero relationship to the costs that are imposed by it on the infrastructure of municipal services. The price is completely arbitrary. It doesn't tell you how many people live in the house, or anything about the services they consume. It is a meaningless number.

So real tax reform needs to eliminate this medieval practice of ad valorem taxation, and instead focus of providing a fair and equitable way to assess taxes - one way would be to establish some baseline level of services to which every similar parcel (iea SFR is similar to all other SFRs, a MFR is similar to other MFRs), is "entitled". Thus all parcels are taxed the same way. This is how, for example, the sewer connection fees are assessed. They don't care if you have chronic diarrhea or if you make all your bowel movements at the gym and never flush the toilet at your house.

In any case, the fair way is to say "Look, society has a vested interest in providing "free" public school education to citizens, but there has to be some kind of limit on what is reasonable. Is it really reasonable to ask society to pay for schooling 10 kids if you can't keep your reproductive organs under control?"

In this kind of a scenario, you'd have a baseline. A good baseline for children is two, because two is a socially and globally responsible number of children - it is the "replacement" value - so it helps keep the population steady or better yet to shrink it slowly.

So you'd get "free" education for two kids, but additional ones are at your own expense. That kind of thing. Why should society subsidize your children beyond a socially responsible number?

That makes no sense and is certainly not "fair" to childless people or people with one or two kids. Even childless people benefit from a reasonable level of procreation, because those replacement people ensure that services can continue to be delivered as those replacement humans grow up and enter the workforce.

Sure, maybe you're childless, but if nobody produced new humans, all the people who service you would die or retire. That clearly is not sustainable.

Sorry for the long post. I really meant to simply illustrate how obviously unfit and unfair "ad valorem" taxation is, and how there are other ways of looking at taxation in a much more equitable and reasonable fashion.

anon135695

To the Canadian who suggested that old people should sell their homes because of property taxes: do you hear yourself? Why in the hell would you think that old people should move out of their home just because the property value went up? And where are they going to move?

If the property value is up in their area it's up in the whole region, so they should move to a different state and leave their families because they can't pay taxes on their home? Go back to Canada if you like taxes so much.

anon130160

As a Canadian who has recently purchased a property in California, I'd like to add my two cents on Prop 13.

1) Love it or hate it, beneficiary or benefactor, this is an unbalanced and unfair piece of legislation. I can understand how it passed in late 70's and I understand why many would protect it today, but understanding something does make it right, and there is much room to improve upon what Howard Jarvis started years ago.

2) The argument of protecting seniors: "I'll be kicked out of my house if my property taxes accurately reflect the assessed value of my home (rather than original purchase price with inflation)." This argument brings a smile to my face, because it tries (and fails) to arouse empathy, particularly among today's young families. Granny and Grampa, without Prop 13 you can't afford the property taxes on your 900k bungalow you paid 30k for in 1974? Congratulations, you're rich! Sell, reap the rewards, and move to a neighbourhood/house more fitting to your economic demographic. Property taxes ensure that property is used in the most efficient way possible, and prop 13 overlooks this point completely.

anon115181

I moved to La county and bought a house in 2005. My co-worker had been here for more 15 years. We earned about same amount of salary, live in a similar house. He pays much, much less property tax than I do. Is this fair?

anon67030

prop 13 is only good for the state/city for increase in property tax at 2 percent per year. My property tax has gone up, when the value of the property value plummets.

Why should property owners have to pay taxes to raise money to pay for law enforcement? Have you seen johnny law lately hiding on the side of the road, behind bushes, to protect you? No, the sting is on.

I inherited my grandma's house with a grandparent to grandchild transfer in which she paid annually 450.00 in property tax. One of howard Jarvis's buddies created prop 58/193 that Jarvis endorsed. If the the parent of the grandchild is still alive the property will not be free and clear of a tax increase. The family idea of passing property on with out reassessment was stopped. How discriminatory is that?

So now the city of san diego gets $4500 annually for the same property. So Meg, how does a homeowner/grandchild deal with this one?

If you want to talk about taxes, let's talk about all the money that goes south of the border untaxed and out of the states circulation. Billions every year, while california has lost its business to mexico and other countries that pay less for labor, california is broke.

You want to bring back california? Stop growing produce in other countries and stop the untaxed dollars leaving the state.

anon55122

My house is covered under prop 13. If I sell, I know I can take it with me to another property as long as the county I move to accepts prop 13.

Do I have to purchase another home immediately to apply prop 13 to or do I have a year or two? I can't seem to find this answer.

anon35138

Can people still file for prop 13 protection in california

mcl26022

My father will leave me his home when he dies under a Parent - child tranfer. This home is protected under Prop 13. I have a home that is also protected by Prop 13. Can one owner own 2 pieces of property under Prop 13?

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    • Prop 13 was passed by California voters in 1978 limiting property taxes to no more than 1 percent of a home's value.
      By: elnavegante
      Prop 13 was passed by California voters in 1978 limiting property taxes to no more than 1 percent of a home's value.
    • California Prop 13 imposed a limit on the amount of property taxes in the state.
      By: emiliezhang
      California Prop 13 imposed a limit on the amount of property taxes in the state.
    • Several attempts have been made to reform Prop 13 in California since 1978.
      By: juan35mm
      Several attempts have been made to reform Prop 13 in California since 1978.
    • Supporters of Prop 13 argued that fluctuating property taxes hurt elderly homeowners who may be on a fixed income.
      By: Mitarart
      Supporters of Prop 13 argued that fluctuating property taxes hurt elderly homeowners who may be on a fixed income.