A: Prior to Proposition 13, property taxes were out of control. The tax rate throughout California averaged almost 3% of market value, and there were no limits on increases either for the tax rate or property value assessments. Some properties were reassessed 50% to 100% higher in just one year, so their owners’ tax bills skyrocketed, often beyond the homeowners’ ability to pay their property taxes!
In one year in Los Angeles County alone, 400,000 people had not paid their property tax because they didn’t have the money, running the risk of being forced out of their homes.
Elderly people were among the hardest hit. Many had paid off their mortgages yet faced losing their homes because they couldn’t afford property taxes. Just as millions of Californians were at risk of being driven out of their homes, Howard Jarvis gathered more than 1.5 million signatures to qualify a statewide initiative that would finally end excessive taxation and protect the security of home ownership — Proposition 13.
An overwhelming majority of Californian voters — almost 66% — voted for Proposition 13 because they knew that the initiative would finally take power away from the tax collectors and give it back to the taxpayers. And once Howard Jarvis and his Tax Revolt passed Proposition 13, property tax rates finally became predictable, manageable, and fair.
A: After Proposition 13 was approved on June 6, 1978, Howard Jarvis knew that taxpayers’ gains would be temporary without a permanent citizens’ organization to protect Proposition 13. To make sure that Proposition 13 provided permanent protections, he founded the Howard Jarvis Taxpayers Association (originally called the California Tax Reduction Movement), starting with a handful of Tax Revolt grassroots activists.
Today, the Howard Jarvis Taxpayers Association (HJTA) has the support of more than 200,000 taxpayers. HJTA has kept Proposition 13 and the California Tax Revolt alive for more than 30 years now, and during that time, Proposition 13 has saved Californians billions of dollars — over $528 billion according to conservative estimates — almost $10,000 for every man, woman and child in the State of California!
Since 1978, HJTA has also added about $135 billion to Californians’ tax savings with court actions and more statewide initiatives.
Among ballot propositions sponsored or strongly backed by HJTA are:
1982 – Proposition 7, income tax indexing, which prevents state income taxes from being raised by inflation, prohibiting government from profiting from inflation at the expense of the taxpayer. Proposition 7’s estimated tax savings are well over $82 billion.
1982 – Proposition 6 repealed the state’s inheritance tax, making California one of the first to free its citizens of excessive “Death Taxes” and saving California taxpayers another $13 billion.
1986 – Proposition 62 strengthened the taxpayers’ right to vote on local tax increases. An appellate court nullified the initiative, tying up enforcement for nine years, until an HJTA legal action victory reinstated the initiative.
1986 – Proposition 60 saves many senior citizens thousands of dollars when they retire and move because it allows people age 55 and above to “trade down” — buy a new home for the same or lesser amount than the sales price of an old home — within the same county and transfer the Prop. 13-assessed valuation from the old home to the new property.
1996 – Proposition 218 — the Right to Vote on Taxes Act — plugged a long-standing loophole in Proposition 13 by requiring localities to get a popular vote, or in some cases, permission from property owners, for fees, assessments, and other levies that operated as taxes but weren’t technically called taxes. This initiative now saves California taxpayers about $100 million a year.
Above all, HJTA has fought a continuing battle in the California State Legislature, in local governments statewide, and in the courts — including the United States Supreme Court — to defend Proposition 13 and taxpayer rights.
2009 — HJTA led the effort to stop a massive $16 billion tax increase proposed by the Governor and the California Legislature…which would have been the largest tax increase in the history of California. The ballot initiative was defeated by a landslide.
A: Under the tax-cut measure, the property tax rate is set at a uniform 1% throughout the state, and property tax increases are limited to no more than 2% a year as long as the property is not sold.
Once sold, the property is reassessed at 1% of the new market value (usually the sales price) with the same 2% cap on annual tax increases. As a result, new buyers are always aware of what their taxes will be and know the maximum amount property taxes can increase each year for as long as they own the property.
Proposition 13 also requires that all state tax increases be approved by a two-thirds vote of the Legislature, and that new or increased local taxes be approved by a vote of the people.
A:While Proposition 13 has become synonymous with property tax limits, it is a complete package designed to check arbitrary tax increases at the state and local level. Proposition 13 requires a two-thirds vote of the Legislature to increase state taxes, and, supplemented by Howard Jarvis Taxpayers Association-sponsored Proposition 218, the Right to Vote on Taxes Act, it requires voter approval of all new local taxes.
- Q: Is Proposition 13 to blame for a shortage of funds for schools and other important government functions?
A: No! Despite what many politicians say, total property tax revenues to local governments in California have increased at a rate exceeding inflation and virtually all other economic indicators, and, in fact, state and local governments have much more money today than before Proposition 13 passed, even considering inflation and population growth.
Proposition 13 is fair to local governments because it allows for periodic reassessment of property when it changes ownership. New construction and improvements to existing properties also are assessed at current value, which increases revenue to government. The property tax is a stable source of local government revenue — as predictable for the politicians as it is for property owners.
It’s true that Proposition 13 has forced local governments to manage their finances better — one reason the initiative had such overwhelming popular support.
Most cities and counties have been very successful under Proposition 13. If some have failed, the problem is not Prop. 13. It’s reckless spending.
- Q: Proposition 13 is part of the California Constitution, so are its protections guaranteed to all homeowners?
A: Yes and No.
As long as the politicians and courts respect Proposition 13, Article XIII-A of the California Constitution, it will continue to protect the security of home ownership, and property owners will continue to enjoy the $528 billion that this Tax Revolt initiative has saved them since 1978.
But government officials don’t have a very good record of respecting Proposition 13, particularly elected politicians, and most particularly those who are eager to spend — and just as eager to increase taxes to pay for their giveaways.
For over 30 years, the Howard Jarvis Taxpayers Association has been battling the tax and-spend politicians and their allies in special corporate interest groups, bureaucrats, and public-employee unions, among others who benefit from government spending.
This year, taxpayers are in unprecedented danger because the California State Legislature has in recent years built an “engine of overspending” that has made it impossible to balance the state budget, as required by law, and can only be fueled with more and more drastic tax increases.
Proposition 13 has saved California taxpayers $528 billion so far. By eliminating Proposition 13, politicians could easily increase property taxes on every homeowner by 300%, 400% or more. And by eliminating Proposition 13’s barriers to such things as sales tax increases, politicians could quickly add tens, even hundreds of billions of dollars in new tax revenue costing each California family thousands of dollars in higher taxes.
The two-thirds vote protection has already been weakened, and could be weakened even further in the coming months. Lifting the one-percent cap on the property tax rate is the next goal. After that, Proposition 13 and $528 billion could be stolen from California taxpayers forever.
These are all reasons that the Howard Jarvis Taxpayers Association is launching a Second Tax Revolt.
It took four million Californians to pass Proposition 13. HJTA hopes to mobilize as many to defend Proposition 13, because that’s what may be needed to keep $528 billion in our own wallets, and not turn it all over to the tax collectors.
This Second Tax Revolt
will take time, energy, and funding. Howard Jarvis never took a dime from corporate special interests. Neither will HJTA. So success is really up to the taxpayers themselves. If you are a California property owner, this means you.
Members of the Howard Jarvis Taxpayers Association are already supporting the rescue of Proposition 13. If you are not yet an HJTA member, we need your help to protect homeowners.
A: Proposition 13 protects homeowners — and all taxpayers — by requiring a two-thirds vote to pass certain tax increases, including the state sales and income tax. The intention of the supermajority requirement is to have a system whereby taxes cannot be raised too easily, or too often.
The two-thirds vote protection is particularly critical when it comes to property taxes. Since local taxes are approved by local voters, it’s obviously unfair if a tax can be passed by people who don’t have to pay that tax. Yet that intense unfairness is becoming possible as a pro tax coalition makes inroads into the two-thirds vote protection.
In 2000, Proposition 39 was narrowly approved after a massively expensive campaign put on largely by a handful of Silicon Valley billionaires who might well have been trying to get homeowners to pick up the slack for their own high-tech corporate tax breaks.
Proposition 39 changed the two-thirds vote for certain bonds to 55% — making it far too easy to pass these bonds, since they are paid back only through increased property taxes. And they impose a long-term debt, up to 30 years, that’s essentially the same as a second mortgage on a home.
Without the two-thirds vote requirement, one of these second-mortgage bonds can now be passed by people who won’t pay the tax and in fact are getting more from the government than they pay in taxes.
After Proposition 39 took away the two-thirds vote protection for these bonds, localities quickly passed almost $30 billion in such bonds — debt that homeowners will be burdened with long after they’ve paid off their homes.
Since then, the two-thirds vote has been repeatedly attacked by a pro-tax coalition that wants to eliminate this protection for more and more kinds of bonds and taxes.
Currently, several proposals are active in the State Legislature to change the state constitution to eliminate the two-thirds vote requirement for other kinds of bonds, and for certain sales and property taxes. If enacted, it will become far too easy to pass all kinds of tax hikes, so the Howard Jarvis Taxpayers Association is actively fighting this legislation.
A: The first benefit is that even the most recent homebuyers pay about 1/3 of the property taxes that they would have without Proposition 13. The initiative has simply kept the general level of property taxation lower and fairer. Without Proposition 13 many new buyers could not afford both their mortgage payments and their taxes.
Proposition 13 also gives new homeowners long-term security by providing predictability in taxes. It establishes a uniform statewide property tax rate of 1%, with a 2% cap on future annual property tax increases. New buyers know exactly what their taxes will be next year, in five years, and in 30 years — reassuring information for those who plan to live in their homes when they retire.
- Q: I recently purchased a house, and I'm paying much higher property taxes than my neighbor. How can that be fair?
A: This is a common criticism — and misunderstanding.
Because Proposition 13 uses acquisition value (usually what the owner paid for the home) rather than the current market value as a basis of taxation, it is possible for owners of identical side-by-side properties to have significantly different tax bills. Those who have owned their property longer, often see that the current market value is much greater than the taxable value, which is limited to a 2% annual increase under Proposition 13.
This cap on increases protects all owners from being taxed on “paper profits,” the higher market value of a home from which the owner receives no benefit. Many homeowners who bought their property just ten years ago could not afford to buy their own homes at today’s prices!
The difference between actual value and taxable value disappears when the property changes hands. New buyers are taxed based on what they voluntarily agree to pay for their property. The real fairness in Proposition 13 is in how it works once a home is purchased. It controls taxes on all property by restricting the maximum rate (1%) and by limiting annual increases in assessed valuation (2% annually).
Some politicians continue to argue that this acquisition-value system is unfair, that everyone should pay based on current market value. If the value of a home increases by 15% in one year, taxes should increase the same amount. These arguments come from those seeking higher taxes on all property owners, not those who want to provide tax relief to new buyers.
Those who focus on the difference in taxable values of properties ignore the fact that property tax assessments prior to Proposition 13 showed an even wider divergence than under the current Proposition 13 system.
This points to another great unfairness of the old assessment system, when homeowners were at the mercy of the tax collectors — assessors who could arbitrarily increase assessed value and, with that, increase taxes. By using acquisition value, Proposition 13 links the property tax to ability to pay, an important standard of fairness in taxation.
Alternatives to Proposition 13 are also bad for homeowners. A recent California Policy Seminar showed that more than 90% of elderly property owners would be negatively impacted by any proposed diversion from Proposition 13. Suggested alternatives would also result in widespread tax increases. For one example, almost half of all Los Angeles County homeowners would be hit with tax hikes of more than 160%.
Under Proposition 13, all homeowners on the block share key benefits — they pay far less in property taxes than without Proposition 13, they pay far less than property owners in other states that don’t have these kinds of protections, and they all have the absolute certainty as to what their tax bills will be in future years, without concern for skyrocketing property values or arbitrary assessors working for greedy local governments.
If you have just purchased your home and are still uncertain about the value of Proposition 13 to you, just wait until after three or four years of double-digit inflation in the housing market. When you realize that you are saving hundreds, even thousands of dollars a year on your property taxes, you will join the ranks of enthusiastic supporters of Proposition 13.
A: Sometimes. If your property’s market value declines to less than its taxable value under Proposition 13, you can apply for a tax cut.
Homeowners who believe their property has declined significantly in value should contact the county assessor to request a reduction. Since property values nearly doubled between 2001 and 2006, those properties purchased before 2001 are unlikely to qualify for any reduction since any new lower market value will still probably be much higher than the assessor’s valuation for tax purposes. A good rule of thumb is if you believe your home would sell today for less than the value reflected on your tax bill, you should apply for a reduction.
Use the following link to identify and contact your county assessor and ask for an application for a Proposition 8 reduction in value. http://www.boe.ca.gov/proptaxes/assessors.htm
A property owner who receives a tax reduction should keep in mind that the reduction will last only so long as the market value of the property remains below the Proposition 13 trended value, which is the first year value increased by two percent annually. However, all property tax savings are permanent – a property owner does not have to make up the amount their taxes are lowered.
The following link provides helpful video instruction on preparing your application for a decline in value. http://www.boe.ca.gov/info/AssessmentVideo/AppealAssessmentIndex.html.
A: Probably, if you are over 55 years old and staying within the same county. Maybe, if you are moving across county lines.
Proposition 60, which was passed with HJTA leadership in 1986, allows seniors to transfer the base year value of their home when they sell that home and buy another in the same county, and meet other conditions specified in the law, including: (a) Both properties must be located in the same county and be eligible for the Homeowners’ Exemption; (b) You must be at least 55 years of age; (c) The replacement dwelling must be of equal or lesser value (sales price) than the original property; and (d) The replacement dwelling must have been acquired or newly constructed within two years of the sale of the original property.
Proposition 90, approved in 1988, also extends the transfer of assessed valuation to those moving into other counties within the state. However, participation by each county is voluntary and few counties adopted Proposition 90, so it is important to check with the Board of Supervisors and County Assessor’s office in the county to which you plan to relocate before selling your present home and buying a new one.
Note that Propositions 60 and 90 provide only a one-time exemption. The claimant and/or claimant’s spouse or any co-owner must not previously have been granted the property tax relief provided by Section 69.5 of the Revenue and Taxation Code. For more information on Propositions 60 and 90 relating to the transfer of one’s property tax base from one home to another, click here.
- Q: Can we leave our property to our children or our grandchildren without them having to pay higher taxes?
A: Yes! Proposition 58, adopted by California voters in November 1986, allows the transfer of certain property between parents and children without reassessment. However, your children must file for the Proposition 58 exemption at the time of transfer. You can get complete information about Proposition 58 and the necessary forms from your local office of the County Assessor.
Proposition 193, adopted in March 1996, allows the transfer of certain property between grandparents and grandchildren without reassessment. However, your grandchildren must file for the Prop. 193 exemption at the time of transfer. You can get complete information about Proposition 193 and the necessary forms from your local office of the County Assessor. For additional information on Propositions 58 and 193, leaving property so that family heirs are not burdened with a tax increase, click here.
- Q: I've been retired for many years. My only income is Social Security, but the tax on my home is still going up and it's harder each year for me to pay it. Is there anything I can do to lower my tax bill?
A: You may qualify for the State’s property tax postponement program for people who are blind, disabled, or 62 years of age or older.
If your total household income is $35,500 or less, you may have the option of having the State pay all or part of your property taxes. This deferred payment is a lien on the property that becomes due upon sale, change of residence or death. For more information on property tax postponement, call your county Tax Assessor for more details on the application process. Please click here for a list of phone numbers.
Please note: While enabling legislation, backed by HJTA, was signed by the governor in 2014, because it will take time to hire and train new staff to implement the program, it will not take effect until July 1, 2016.
A: An improvement such as adding a bedroom to an existing home will be assessed at its current value, which will add to your taxes. However, the entire property and existing improvements will not be reassessed.
A: Click here to download a primer on Understanding California’s Property Taxes.
- Q: I just got my property tax bill and I think the Assessor has increased it more than the 2% allowed by Proposition 13. What can I do about this?
A: Your property tax bill consists of three separate categories of levies: General Tax Levy, Voter Approved Indebtedness, and Direct Assessments. Compare your current bill to last year’s bill and determine where the change is. It may be that a new bond or assessment appears on the bill this year that was not on the bill last year. (NOTE: Each county’s bill format is different; so yours may not show separate categories.)
That portion of the bill labeled “General Tax Levy” is the only amount controlled by Proposition 13, and this tax is limited to a maximum of 1% of the assessed value of your property (the “land” and “improvements”), and can be no more than 2% greater than the previous year’s tax bill.
The portion labeled “Voter Approved Indebtedness” is a levy to repay bonds approved by the voters. This amount varies greatly from county to county depending upon the number of local bond issues approved. Under current law, local general obligation bonds require a two-thirds majority vote to pass, except those for schools, which require only 55% voter approval.
The portion of the bill labeled “Direct Assessments” is now controlled by the HJTA sponsored Proposition 218. Assessments now require a majority “YES” vote of the property owners, with each owner voting the dollar amount of their assessment. Fees charged for the property-related services of sewer, water, and refuse collection can be imposed without a vote, but may not be greater than the cost of providing the service.
If you believe the Assessor’s valuation is incorrect, you should first call your local office of the County Assessor and discuss your valuation with an appraiser. If you cannot reach an agreement there, you should file an appeal with the Assessment Appeals Board in your county. Please note that there is a limited window of opportunity to file an appeal and be sure you meet the deadlines. For contact information for your County Assessor click here.
- Q: I have just bought a new home and it looks like the Assessor has given it a value that is higher than Proposition 13 allows. What should I do?
A: Proposition 13 states that property is to go on the Assessor’s rolls at the full cash value – market value – at the time of purchase. This usually means the sales price resulting from a normal market transaction. Sometimes there are unusual circumstances, like the sale of a home on the market because of a foreclosure, that result in a sales price that the Assessor believes is less than the true market value. In this case the assessor’s valuation may prevail.
If you believe the Assessor’s valuation is incorrect, you should strongly consider an appeal because all future taxes will be based on the first-year value of your home. Call your local office of the County Assessor and discuss your valuation with an appraiser. If you cannot reach an agreement there, you should file an appeal with the Assessment Appeals Board in your county. Please note that there is a limited window of opportunity to file an appeal, and be sure you meet the deadlines. For contact information for your County Assessor, click here.
A: What you most likely received was a notice of intent to form an assessment district.
Thanks to Proposition 218, California property owners are better protected against assessments, fees, and other tricks used to raise taxes by calling them something else.
Prop. 218 requires that an agency seeking to establish an assessment district notify the owners of all property within the proposed district by mail. The notice of the proposed assessment must include a ballot, which the property owner completes and returns to the agency or its designated agent. Each property owner is voting the dollar amount of his/her assessment. Only the ballots that are actually returned can be counted, and a majority must be in favor for the assessment to be imposed.
Prop. 218 also gives you the ability to use the initiative process to reduce or repeal any tax, assessment, fee or charge. By collecting the signatures of 5% of the number of people in the local district who voted in the last election for governor, you can put any locally imposed levy to a vote.
- Q: I recently bought my home and just got a supplemental assessment notice. What is this and why do I have to pay it?
A: Proposition 13 requires that real property be reappraised whenever a change in ownership occurs. When a transfer occurs, the assessor receives a copy of the deed and an appraisal is made to determine the new market value of the property. The property owner is then notified of the new assessment, and has the right to appeal the value if he does not agree with it.
The amount of the supplemental assessment is the difference between the prior assessed value and the new assessment on the property. This value is prorated, based on the number of months remaining in the fiscal year. Thereafter, the new owner pays the full tax based on the new assessed value. The previous owner is liable for the tax due up to the date of sale; the new owner is responsible for the tax after the date of sale.