A new report from the Opportunity Institute and Pivot Learning titled “Unjust Legacy” wrongly asserts that California’s popular and longstanding taxpayer protection, Proposition 13, has contributed to inequities in schools and communities.
Contrary to the authors’ contention that Proposition 13 is “racist,” it has been recognized by the nation’s highest court that it protects low-income neighborhoods. In Nordlinger v. Hahn, the United States Supreme Court expressly stated that California can “legitimately . . . decide to structure its tax system to discourage rapid turnover in ownership of homes and businesses, for example, in order to inhibit displacement of lower income families by the forces of gentrification.” Proposition 13 is, in fact, anti-racist by being one of the most powerful forces preserving minority neighborhoods.
The so-called “Unjust Legacy” report concludes that scholars and others “should collectively determine what it will take to overcome political and taxpayer resistance to changing Proposition 13.” This is a thoughtless assault on California property owners, who do not pay property tax bills “collectively.” They pay property taxes for the property they own, based on the price they paid, with an annual inflation adjustment that cannot exceed 2%. Without Proposition 13, many low- and middle-income California homeowners would be taxed out of their property, forced to sell because they cannot afford to pay an annual tax bill based on the skyrocketing, inflation-driven value of real estate. That meets no one’s definition of equity or justice.
For example, a recently listed single-family home in the community of South Inglewood—1,235 square feet, 3 bedrooms, built in 1953—last sold in 2006 for $525,000. The current property tax bill under Proposition 13 is based on 1% of $525,000, and the assessed value has risen no more than 2% per year. Without Prop. 13, the homeowner would be required to pay property taxes based on the market value as a condition of continuing to own that property. The current market value, per Redfin, is $855,964.
How much would the current homeowner be paying without Proposition 13? Prior to Prop. 13’s adoption in June 1978, the statewide average tax rate on property was 2.67%. On an assessed value of $855,964, the annual tax bill for that home without Prop. 13 could today be $22,900.
Another fallacy in the report is the assertion that Proposition 13 “reduced revenues for schools.” The National Center for Education Statistics annually reports the current expenditure per pupil in fall enrollment in public elementary and secondary schools by state. In inflation-adjusted constant 2020-21 dollars, per-pupil spending in California rose from $5,805 in 1969-70 to $7,547 in 1979-80, to $9,331 in 1989-90, to $14,173 in 2018-19, the most recent year for which statistics are available.
All property owners benefit from Proposition 13, which is why, year after year, roughly two-thirds of Californians continue to support it. Out-of-touch researchers are wasting their time and yours by issuing yet another report on how much more money the government could collect if only it was allowed to take it all.