California Special Election & Propositions - May 19, 2009

[Ghoulish Delight]

Basically Prop 13 says that if you don't sell your property, the most that the value, for taxing purposes, of your property can raise in 1 year is by 2%. So if you bought your house for $100,000 in 1978, and it's now worth $700,000 on the market, your property tax is going to be 1% of ~$180,000 instead of $700,000.

There are two main arguments for why this is stupid. 1) It discourages sale of property. 2) My biggest gripe with Prop 13 is the fact that the largest properties, the ones that should be generating the most property tax revenue, are owned by large established corporations - least likely to sell. So while homeowners are fairly regularly resetting their tax basis by selling their home, companies that have giant tracts of land that they've owned since forever are still paying taxes based on 1970s property values. It's a massive deficit that means new homeowners are carrying the major burden of funding the state with property taxes.