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Paying More to Live Here

Here's the Scoop...

February 4, 2024

by Richard Newton

We Californians frequently read or hear about Proposition 13. The number has been recycled over the years, but when we hear those words it usually refers to THE PROPOSITION 13 - the one that was passed in 1978, affectionately referred to as simply “Prop 13”.


Sponsored by Paul Gann and Howard Jarvis, it was a tax reform measure passed by the popular vote of California voters. It gave relief to California homeowners from outrageous and escalating property tax bills.


Quoting The Howard Jarvis Taxpayers Association (“HJTA”):


“In the 1970’s, Prop. 13 was triggered by the use of current market value as the property tax base…an amount that increased 20%, 50% or more each year in a volatile real-estate market.  Prop. 13 made the current market-value standard unconstitutional, replacing it with purchase price…”


It did a few other things too, such as allowing for maximum increases in the assessed (taxable) value of real-estate to 2% annually, set the property tax rate at 1% of the assessed value, and required a 2/3rds approval of the voters for special bond assessments funded by property taxes.

What is Prop 13 ?

Why does this matter? Several reasons.


First, predictability and affordability. Never forget that for most people the biggest investment in their lives, and one that will have a huge impact on their future financial well-being, is their home. But real-estate is an illiquid investment. If the value of the property increases, homeowners do not see an increase in their cash flows; it is simply a gain on paper until the home is either sold, are additional loans are borrowed against it. Many homeowners struggle to make their monthly mortgage payments, and big part of that is property taxes. If property taxes are based on the volatile current market values assumed by a bureaucrat, homeowners will be faced with huge and uncertain tax bills they may not be able to afford. This can force the unwilling sale of their homes. Predictable expenses lead to informed affordable purchases. This knowledge allows people to purchase homes that are affordable and within their budgets. It helps provide for financial stability.


Second, homes provide an important social function- they provide shelter and keep people from being homeless. But only if the state doesn’t take their homes away.


Unexpected or excessive tax increases can force an individual to sell his or her home simply to meet the tax bill. And that’s if they are lucky. If they are unable to sell the home quickly, the home can be confiscated and sold at a tax auction, essentially stealing the homeowner’s life savings (and future pathway to acquire wealth), leaving unlucky homeowners homeless and destitute. I was too young, but remember my father talking 

about elderly homeowners being thrown out of their homes and left homeless due to excessive tax bills.


It simply isn’t good or fair policy to give money-hungry politicians control over our life savings.  


Politicians, of course, think otherwise. After all, they derive their political power from the biggest money-laundering scheme on the planet. They sit on billions or trillions of taxpayer dollars, and dole it out to their friends and supporters through government contracts. Of course, those recipients give ample support to those politicians at the next election, and so it continues on and on… and we wonder why our insatiable government spending continues out of control.

That’s why Sacramento politicians have passed two constitutional amendments to attack Prop. 13. Known as ACA-1, and ironically, ACA-13, these two amendments would strip Prop. 13 protections in an attempt to give the politicians more of your money. ACA-1 and 13 have been described in a separate article. It can get confusing. That’s why we printed the HJTA table showing how politicians voted on ACA-1 and 13. (Rejecting ACA-1 and 13 gets an “A”, and supporting both ACA-1 and 13 gets a “F”.)


Like most people we don’t like politics. We aren’t partisan, but factual. We know you’re busy and have better things to do than follow Sacramento legislators and legislation, so here is the “down and dirty”:


  1. If you want to pay more in property taxes, vote “Yes” on ACA-1 and ACA-13 in the November election.

  2. If you don’t want to pay more in property taxes, vote “No” on ACA-1 and ACA-13. (You may also want to consider supporting the Howard Jarvis Taxpayer’s Association.)

  3. Realize that Sacramento is dominated by Democrats, who hold the Governorship and super-majorities in the legislature, allowing them to control all legislation.

    • If you like what is coming out of Sacramento, vote for Democrats.

    • If you don’t like what is coming out of Sacramento, vote for Republicans.


It’s really that simple.

Prop 13 table.PNG
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