It makes owning property the only activity in the state that’s not taxed at a high rate. Specifically, its main part limits property taxes to 1 percent of assessed value, with maximum annual increases of 2 percent.
They make an old claim: That it is unfair for similar houses in the same neighborhood to be assessed at radically different rates, because Prop. 13 sharply limits tax increases on existing home ownership. But once a property changes ownership, it is reassessed anew at the latest, higher valuation.
They quote Justice John Paul Stevens’s dissent in Nordlinger, in which he wrote Prop. 13 created “a privilege of a medieval character: Two families with equal needs and equal resources are treated differently solely because of their different heritage.”
The two lawyers’ own main argument:
They don’t get it. There are two reasons for the differential evaluations. One is inflation, which first struck hard in the 1970s, artificially pushing up property prices and the taxes paid on them, even as incomes were being eroded. This began again as inflation has hit the last two years. Perhaps the authors would ask President Biden and Congress to stop spending and borrowing so much, so the inflation stops?
Why don’t our learned counselors call for the Supreme Court to find PLAs unconstitutional and discriminatory?
Elderly EvictionsThey also bring up the major problem that led to Prop. 13’s passage: Elderly homeowners being evicted from their longtime homes because they couldn’t pay the fast-rising tax rates. I remember this personally because, although I'm from Michigan, in 1978 the U.S. Army sent me to Monterey to learn Russian at the Defense Language Institute. The local folks who became my friends worried about losing their homes.
Sarkar and Rosenthal then then go into a non sequitur:
But how can an equivalence be made between California’s home values, which, despite occasional drops during recessions, rise ever upward—and Detroit’s long-depressed market? The Detroit case also is one of charging too much, not too little. Shouldn’t we want government to err, if it truly is erring, on the side of the people, not the bureaucrats with their tax thumbscrews?
And unlike in Detroit, Prop. 13 gives great certainty to the property taxes paid. A homeowner always knows, with high certainty, how much next year’s tax bill will be—and so on for the duration of ownership. At most, it will go up 2 percent each year.
"Mr. Kramer, the assessor in Contra Costa County, said homeowners started swamping his office with requests for new assessments in December. As many as 500 people would call in one day. His voice mail message now begins: 'If you’re calling to request an informal review of your property value due to the declining real estate market.'
"Contra Costa has now reduced the recorded value of more than a third of the 350,000 privately owned properties in the county.
"Lisa Driscoll, the county’s budget director, said property tax revenue had been growing about 8 to 9 percent a year but was now projected to decline 5 percent next year. The county has cut $50 million from its budget to offset the decline in real estate and other taxes."
Conclusion: Keep Prop. 13Sarkar and Rosenthal conclude: “Tax injustice shows up not only in the foreclosure of an elderly Black woman’s $40,000 Midwest condominium but also in the inability of diverse, immigrant families to purchase a $400,000 condominium in Mid-City.”
Then why don’t they call for the two reforms I mentioned above, of CEQA and PLAs, to reduce the cost of building new housing? Why don’t they call for cutting taxes and other regulations so businesses can give more raises to their employees, who then could afford homes? And how about improving the state’s low K-12 achievement scores so kids can get the knowledge they need to compete in the 21st century’s increasing global economy?
Finally, why do people like these two lawyers try to racialize everything, turning people against one another in our increasingly diverse society? If we don’t come together for real reforms, based on opportunity for all, we’re going to have a lot bigger problems than finding the right property tax rates.