California Pols Add to Uncertainty for Retirees

Retirees and aging baby boomers hoping to join them are facing a reality check after Social Security trustees announced last week the fund will run dry in 2033 three years earlier than previously predicted.

As those planning for retirement know budgeting for life on a reduced or fixed income is a challenge. Those who prepared for the future by setting aside money and making investments are seeing their security threatened by a dismal economy declining home values and a roller coaster stock market. Now it appears that Social Security payments into old age are no longer guaranteed.

With Social Security on the ropes Congress and the president may feel compelled to rouse themselves from their lethargy and intervene but ironically another program on which many California retirees depend is being actively threatened by the political class.

Proposition 13 which benefits all homeowners by limiting property taxes and making them predictable can for those on a fixed income mean the difference between being able to keep a home or losing it to the tax collector. However this is a point that seems lost on much of the Sacramento political establishment who constantly grasp for additional revenue to support the maintenance and welfare of those who work in government not the citizens that government was designed to serve.

Those who would dismantle Proposition 13 take three basic approaches.

First are those who advocate jettisoning the entire measure and returning to a current value based tax system for all property. Few politicians outside the San Francisco Bay area have the courage to say so directly so they leave these attacks to tenured professors at taxpayer supported universities left-wing columnists in major newspapers and a few loopy economists promoting “tax efficiency” or “social justice.” These folks seem to feel that if someone commits 30 years of their life to buy a home and it appreciates they should be taxed on unrealized paper profits. Of course these critics — who often maintain they are smarter than the voters who passed and still strongly support Proposition 13 — show little concern that the first victims of such a tax system change would be retirees on fixed incomes.

The second form of attack on Proposition 13 uses the strategy of “divide and conquer.” While claiming they want to protect homeowners promoters of this approach want to force businesses to pay higher property tax rates. While homeowners might be spared initially they would ultimately pay through higher prices and the economy would be negatively impacted by a loss of jobs as has been confirmed by recent studies. Obviously older Californians seeking employment to make ends meet could be adversely affected.

The third and most common attack on Proposition 13 takes the stealth approach. The perpetrators many of them members of the Legislature pay lip-service to Proposition 13 protections while promoting legislation that would make it easier to raise taxes on homeowners by eliminating the two-thirds vote requirement. They hope to nibble away at Proposition 13 while being able to claim they never intended to jeopardize home ownership especially for older folks.

Highly regarded demographer Joel Kotkin has observed that California is devolving into two and a half classes. The very rich the poor and a shrunken middle class made up of public employees. The poor who receive some of the most generous benefits in the nation and the government employees who are the highest paid in all 50 states are unlikely to object to these efforts to squeeze more from property owners. And the rich? Well if they don’t like paying higher taxes they can afford to move to another state unlike the retired homeowners who are now under pressure on all fronts.

Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.