Proposition 13 – It’s Implications for California Homeowners
With so many different property tax systems affecting homeowners today, it is a good idea to take a look back to see exactly where the different types of regulation started. Proposition 13 implemented changes to the property tax structure in 1978.
Proposition 13 has been considered progressive with the property tax system being based on the property acquisition value.
That has been good news for home owners who have owned for many years and have not sold their homes. These home owners are paying taxes based on the original acquisition value, in some cases as low as a few hundred dollars.
The other side of the coin here is that the brunt of taxes are carried by newer homeowners with tax increases of up to 160 percent. Further, many long-time homeowners simply can not afford to sell their homes because they cannot afford anything comparable given the taxes they’d have to pay on such a property.
In a city like San Francisco, where home values have multiplied ten, twenty and even thirty-fold since the late 1970s, that is particularly true.
Nevertheless, Proposition 13 has many supporters even now. There are interests to protect on a number of levels. So is a revision of this proposition in sight?
Equalizing the property tax burden to residents is the most commonly called for update to the proposition, with a switch to a market valuation system instead of the acquisition valuation system. This would cause an increase in the taxes of the elderly who purchased their homes prior to 1975.
With a debate on whether or not to equalize up, equalize down, equalize up and reduce the rate, or to start a split-roll tax which would cause businesses to pay a higher tax rate, none of the recommendations have led to a successful restructuring of California’s property tax system.
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