What’s Prop 13 in California?

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Proposition 13 limited California property taxes to one percent of a home’s appraised value and restricted property value increases to two percent annually. It also required a two-thirds majority to raise taxes, causing controversy and decreased property tax income. Attempts to reform or abolish Prop 13 have been unsuccessful due to concern for older homeowners.

Proposition 13, or “Prop 13” as it is often called, was a landmark proposal presented to California voters in 1978. Despite expectations that the proposal would fail at the polls, the measure passed, adding an amendment to the California Constitution. California which would prove to be a subject of controversy and heated discussion for decades afterward. In addition to being notable in the state of California, Prop 13 has also garnered national attention.

In essence, Prop 13 limited California property taxes to no more than one percent of a home’s appraised value. Furthermore, valuations of property values ​​could not increase by more than two percent annually, unless a property was sold, in which case it could be valued at a new value. The proposal also added a measure that would require a two-thirds majority to raise taxes in California, thus making it very difficult for the legislature to pass laws to raise the tax rate, even as the state has struggled to balance the budget.

Prop 13 was part of a larger tax revolt that took place in the United States in the 1970s and 1980s as property values ​​began to rise dramatically, thus causing a corresponding increase in the tax rate. Many homeowners rioted, furious at the fluctuating and ever-higher property taxes, especially in areas that were experiencing stratospheric increases in property values.

Proponents of Prop 13 have argued that property tax fluctuations hurt homeowners, especially older fixed-income homeowners, who may not be prepared to deal with a sudden increase 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 proposal was a dramatic decrease in property tax income and a corresponding fight for funding between schools, law enforcement agencies, and other organizations that rely on property taxes for part of their income. In response, some regions have begun putting package tax measures on their ballots to provide funding for local emergency services. Proposition 13 also impacted the housing market, as people became inclined to hold onto property longer to take advantage of low appraised values, rather than selling it and buying new properties that would receive a higher tax rate.

Several attempts have been made to reform or abolish Prop 13 in California since 1978, but these attempts have ultimately been unsuccessful, even when the evidence strongly suggests that the state is in dire need of more sources of income. One reason these efforts often fail has to do with concern for aging homeowners; most California politicians don’t want to attract negative attention potentially creating a situation where older homeowners could be faced with paying higher property taxes.




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