THE REAL REASON GOVERNMENT WANTS TAX HIKES
Two-thirds of California voters consistently tell pollsters that they think Proposition 13 is a good thing, but even with more than 40 years of constant support, Proposition 13 is still attacked by people who are mad that it’s so effective at protecting taxpayers.
Every argument against Proposition 13 boils down to one thing: Control. They may mask it in buzzwords like “economic dynamism” and “equity,” but the reality is that they think they know how to spend your money and use your land better than you do.
California has the highest or near- highest tax rate in every category except property taxes, and even then the state is 14th in property tax collections per capita, according to the latest data from the Tax Foundation.
In fact, county assessors are reporting sizeable growth in the value of taxable property. In SoCal, Riverside County reported growth of 9.26%, reaching a net total of $369 billion in taxable property. San Bernardino County reported a historic high of $288 billion in value, representing a 9.3% increase from last year. Orange County reported a 6.37% increase, to $721.25 billion. In Los Angeles, the county assessment roll grew by a record $122 billion (a 6.95% increase that brings the roll to $1.89 trillion in total net value) during the past year.
Similar gains are happening statewide. Here is just a sampling: Contra Costa County, 7.79%; Sacramento County, 8%; San Mateo County, 8.34%; Santa Clara County, 7.46%; Ventura County, 7.3%; and Yolo County, 7.23%; Marin County, 6.55%; Amador County, 7.03%; Butte County, 6.81%; Humboldt County, 4.73%; Imperial County, 5.6%; Mendocino County, 2.41%; Modoc County, 4.6%; Napa County, 7.12%; Placer County, 9.2%; Santa Cruz County, 6.33%; Sierra County, 6.37%; and Stanislaus County, 6.82%.
While this is likely welcomed news in the county halls of administration, before Prop. 13 it would have been met with great anxiety among homeowners. That’s because before Prop. 13, property tax assessments were based on current market value, and property was regularly reassessed. Some property owners saw their assessments jump 50 to 100% in just one year and their tax bills jump correspondingly — even if the gains in value were only on paper. People were losing their homes to higher taxes.
In 1978, voters overwhelmingly approved Prop. 13 and limited increases in taxable value to no more than two points a year, cutting the property tax rate to 1% from a statewide average of 2.67%. Prop. 13 has been successful in its primary mission of limiting tax increases, but, for better or worse, it has hardly “starved the beast.” It raises plenty of money for bigger government.
All this compels a simple question: With California property tax revenue seeing consistent year-over-year growth, why would we even consider tax hikes? Well, there are the fake reasons and the real reason, and none of them are good reasons.
One fake reason is that the government “needs” the additional funds for critical programs. Given the inordinate amount of existing revenue coupled with waste in government, taxpayers would rather see elected officials prioritize the revenue we already give them.
Another fake reason is that housing isn’t turning over at a fast enough rate, and this exacerbates the housing crisis. That’s a nice way of saying the tax code isn’t sufficiently running you out of your home. But Prop. 13 isn’t the reason why California added 3.2 times more people than housing units over the last 10 years and averaged just over 108,000 new homes over the past five years. That’s a result of the state’s onerous regulatory regime that slows development to a crawl and dramatically drives up the cost of construction.
The real reason, as I stated earlier, is control. Government and its boosters think they can better use your money, and that the land your home rests on is being “underutilized,” so you must be taxed out of it and the property sold to someone who can build something these other people prefer.
Thanks, but no thanks.
The tax code should not be weaponized to run you out of your home. That was true when Californians struggled to hang on to their homes in 1978 when Prop. 13 passed, and it’s true for Californians buying homes today (who would be paying more than double today’s property taxes if Prop. 13 had never passed).
So, if someone calls or knocks on your door and asks if you would be willing to support “reforming” Prop. 13, remember what they are really asking: How much do you have, and how fast can we have it?