Howard Jarvis Taxpayers Association - Proposition 13

Background on Proposition 13

Mon, 22 Oct 2007 10:21:06 -0700

On June 6th, 1978, nearly two-thirds of California's voters passed Proposition 13, reducing property taxes by about 57%.

Read Proposition 13 as it is enshrined in the California state constitution.

Read the text of the initiative circulated to voters.

Prior to Proposition 13, property taxes were out of control. People were losing their homes because they could not pay their property taxes, yet government did nothing to help them.

In the finest tradition of the Boston Tea Party, California taxpayers stood up and said "No more!" to excessive taxes.

On June 6th, 1978, nearly two-thirds of California's voters passed Proposition 13, reducing property taxes by about 57%.

Read Proposition 13 as it is enshrined in the California state constitution.

Read the text of the initiative circulated to voters.

Prior to Proposition 13, property taxes were out of control. People were losing their homes because they could not pay their property taxes, yet government did nothing to help them.

In the finest tradition of the Boston Tea Party, California taxpayers stood up and said "No more!" to excessive taxes.

Proposition 13 Savings Chart

Thu, 03 Jul 2008 12:34:09 -0700

Estimate your tax savings by finding the year you purchased your home.

The savings amounts shown are based on the median sales price for homes in California for each year. If you bought your home for more than the statewide average, your tax savings — thanks to Proposition 13 and HJTA — are even greater.

Purchase Year	Median Sales Price in Purchase Year[1]	Average Savings Per Year	Total Savings Since Year of Purchase[2]
1978[3]	$70,890	$4,892	$146,748
1979	$84,150	$4,859	$140,920
1980	$99,550	$4,805	$134,532
1981	$107,719	$4,844	$130,777
1982	$111,800	$4,948	$128,659
1983	$114,260	$5,059	$126,464
1984	$114,370	$5,243	$125,832
1985	$119,860	$5,326	$122,504
1986	$133,640	$5,347	$117,626
1987	$142,060	$5,413	$113,674
1988	$168,200	$4,909	$98,182
1989	$177,270	$5,149	$97,831
1990	$178,270	$5,326	$95,873
1991	$185,010	$5,420	$92,143
1992	$186,490	$5,650	$90,399
1993	$188,240	$5,958	$89,375
1994	$193,770	$6,245	$87,435
1995	$196,120	$6,617	$85,951
1996	$197,030	$6,973	$83,673
1997	$200,490	$7,374	$81,115
1998	$200,660	$7,598	$75,980
1999	$221,520	$7,903	$71,131
2000	$243,390	$8,276	$66,204
2001	$265,480	$8,687	$60,806
2002	$333,240	$8,795	$52,780
2003	$371,520	$9,208	$46,041
2004	$450,990	$9,167	$36,668
2005	$548,430	$8,915	$26,745
2006	$567,690	$9,000	$17,999
2007	$558,100	$8,929	$8,929

[1] SOURCE: California Association of REALTORS®
[2] Tax savings calculation compares the estimated tax paid under Proposition 13 with the tax that would have been paid if Prop. 13 had not been enacted. The tax rate in place when Proposition 13 passed was an average of 2.6%. (In some counties, the rate was much higher.)
[3] Tax savings listed assumes the home was purchased prior to the passage of Prop. 13. For homes purchased in 1978 after Prop. 13 took effect, the estimated total savings is $157,094 for a yearly average of $5,237.

Estimate your tax savings by finding the year you purchased your home.

Proposition 13: A Look Back

Wed, 17 May 2006 16:46:52 -0700

By Joel Fox

In the Beginning, there was Proposition 13.

On June 6th, 1978, nearly two-thirds of California's voters passed Proposition 13, reducing property tax rates on homes, businesses, and farms by about 57%. Now, according to the newly amended state constitution property tax rates could not exceed 1 percent of the property's market value and valuations couldn't grow by more than 2% per annum unless the property was sold.

Prior to Proposition 13, the tax rate throughout California averaged a little less than 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% in just one year and their owners' tax bills jumped correspondingly. Under the tax cut measure, property tax valuation was set at the 1976 assessed value. As stated above, property tax increases on any given property were limited to no more than 2% a year as long as the property was not sold. Once sold, the property was reassessed at 1% of the new market value with the 2% yearly cap placed on this new assessment. Thus, the new buyer is aware of what the taxes will be and knows the maximum amount property taxes can increase each year for as long as he or she owns the property.

In the Beginning, there was Proposition 13.

What Do You Tell a New Neighbor About Proposition 13?

Wed, 17 May 2006 16:48:37 -0700

By Kris Vosburgh, HJTA Executive Director

From time to time, HJTA members write and ask what to tell a new neighbor who just doesn't understand Proposition 13.

Those who have owned their homes for a while, easily see the value of Proposition 13. Many of us remember that before Proposition 13 the average property tax rate in California was three percent of assessed value and there was no limit on annual increases.

In those days, if a house on your block sold for much more than you paid for your house, you shuddered in fear when you received your next property tax bill. Chances are, your new taxes would be based on what your new neighbor was willing to pay for his home. Things got so bad in the late 1970s that people were actually losing their homes because of uncontrolled tax increases.

From time to time, HJTA members write and ask what to tell a new neighbor who just doesn't understand Proposition 13.

Here are some questions commonly heard from newcomers to the neighborhood and some answers you may find helpful.

Proposition 13 Has Made Everyone's Property Tax Reasonable

Wed, 17 May 2006 17:09:57 -0700

Proposition 13 has always had its critics. Lately, however, the criticism has been more widespread. Even some policy analysts who generally favor limited taxes and less spending have complained of an "inherent flaw" in Proposition 13.

Because Proposition 13 uses acquisition value (usually the purchase price) as a basis of taxation, it is possible for owners of identical side-by-side properties to have significantly different tax bills. In short, the system generally favors those who have owned their property longer.

To understand why Proposition 13 is fair, one must understand how it works. Proposition 13 curbs property taxes by restricting the maximum rate (1%) and, more important, by limiting increases in assessed valuation (2% annually). With the latter provision, it is easy to see how a home's current value can greatly exceed it's taxable value over a span of just a few years.

Proposition 13: Love It or Hate It, Its Roots Go Deep

Tue, 30 May 2006 01:28:53 -0700

Cal-Tax Research

November 1993

Introduction

California continues to face one of the most serious crises in the state's public finance history, and proposals are likely to surface in the Legislature or via the initiative process that would overhaul the way taxes are imposed on individuals, businesses and property owners, both residential and commercial. This research bulletin, the first in an occasional Cal-Tax series on public finance issues, examines California's property tax system. It highlights the strengths of acquisition-value assessments and projects the ramifications of possible changes to the system established by Proposition 13.

NORDLINGER v. HAHN, 505 U.S. 1 (1992)

Thu, 11 May 2006 13:17:07 -0700

U.S. Supreme Court

Argued February 25, 1992 Decided June 18, 1992

U.S. Supreme Court

NORDLINGER v. HAHN, 505 U.S. 1 (1992)

505 U.S. 1

STEPHANIE NORDLINGER, PETITIONER v. KENNETH HAHN, IN HIS CAPACITY AS TAX ASSESSOR FOR LOS ANGELES COUNTY, ET AL. CERTIORARI TO THE COURT OF APPEAL OF CALIFORNIA, SECOND APPELLATE DISTRICT

No. 90-1912

Argued February 25, 1992 Decided June 18, 1992

In response to rapidly rising real property taxes, California voters approved a statewide ballot initiative, Proposition 13, which added Article XIIIA to the State Constitution. Among other things, Article XIIIA embodies an "acquisition value" system of taxation, whereby property is reassessed up to current appraised value upon new construction or a change in ownership. Exemptions from this reassessment provision exist for two types of transfers: exchanges of principal residences by persons over the age of 55 and transfers between parents and children. Over time, the acquisition-value system has created dramatic disparities in the taxes paid by persons owning similar pieces of property. Longer term owners pay lower taxes reflecting historic property values, while newer owners pay higher taxes reflecting more recent values. Faced with such a disparity, petitioner, a former Los Angeles apartment renter who had recently purchased a house in Los Angeles County, filed suit against respondents, the county and its tax assessor, claiming that Article XIIIA's reassessment scheme violates the Equal Protection Clause of the Fourteenth Amendment. The County Superior Court dismissed the complaint without leave to amend, and the State Court of Appeal affirmed.

505 U.S. 1

The Original Proposition 13

Mon, 15 May 2006 12:16:55 -0700

Text of Proposition 13 as originally presented to the voters (June 1978)

Read Proposition 13 as it is enshrined in the California state constitution.

PROPOSITION 13

THE AMENDMENT.

That Article XIII A is added to the Constitution to read:

Section 1.

(a) The maximum amount of any ad valorem tax on real property shall not exceed one percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.

Text of Proposition 13 as originally presented to the voters (June 1978)

An Analysis of Government Revenues in California Since the Enactment of Proposition 13

Tue, 23 May 2006 23:20:52 -0700

Executive Summary

Revenues for every category of government in California increased when adjusted for inflation and population growth between FY 1977-78 and FY 2002-03.
Total state government revenues adjusted for inflation and population growth grew well over 25% from FY 1977-78 to FY 2002-03 (see page 13). Personal income tax revenues adjusted for inflation and population growth have increased 57 percent over this period (see page 19).
County government revenues in California, adjusted for inflation and population growth, grew 8.43 percent from FY 1977-78 to FY 2002-03 (see page 69). During this time, counties became more dependent upon state transfers for revenue, while experiencing a significant drop in property and sales tax revenue (see page 71).
City government revenues in California, adjusted for inflation and population growth, grew over 20 percent from FY 1977-78 to FY 2002-03 (see page 127). Per capita revenues from current service charges, adjusted for inflation, increased over 41 percent over this period, while revenues from general property taxes decreased over 49 percent. This loss in property tax revenue was more than offset by other non-property taxes and other revenues (see page 131).
K-12 school districts revenues per student, adjusted for inflation, increased over 30 percent between FY 1977-78 and FY 2002-03 (see pages 188-189). Particularly notable increases in school district revenue came from federal aid, which increased sharply since FY 1997-98. Large increases in state aid to education were also recorded during this period (see pages 190-193).
Special district revenues in California, adjusted for inflation, grew over 160 percent. Per capita revenues increased over 64 percent (see page 207). Special district enterprise revenue, adjusted for inflation and population growth, grew over 31 percent, while special district non-enterprise revenue grew over 74 percent (see pages 209-211).
State expenditures for K-12 education, adjusted for inflation and population growth, grew almost 99 percent between FY 1977-78 and FY 2002-03, while health and welfare expenditures grew over 48 percent (see page 49).
County expenditures for health and sanitation, adjusted for inflation and population growth, increased over 38 percent, while public protection expenditures increased over 61 percent (see page 107).
City expenditures for police protection, adjusted for inflation and population growth, increased almost 59 percent between FY 1977-78 and 2002-03, while expenditures for sewerage and sanitation increased over 301 percent (see page 173).

Read or download the entire report in PDF format (.5MB).

A new study shows that governments at all levels have seen a net increase in revenue since the passage of Proposition 13 in 1978. Read the executive summary or download the complete report (PDF) right now.