MY MODEST PROPOSAL TO MAKE PROPERTY TAX BREAKS LIVE FOREVER (Why Shouldn't We Take Our Subsidies to the Grave?)

Rich Old Homeowners Are California's Future, so Why Shouldn't We Take Our Subsidies to the Grave?

That’s the question raised by your glorious new idea: a ballot initiative to make our state’s famously generous Proposition 13 property tax savings even more generous—and portable.

Your “People’s Initiative to Protect Prop 13 Savings” is a proposal as perfectly Californian as the Golden Gate Bridge. It provides a concrete symbol of an undeniable reality: Limiting property taxes is the fundamental organizing principle of postmodern California.

Under our Prop 13 regime, the taxable value of every California home was frozen to its value as of March 1, 1975 (when Olivia Newton-John won the Record of the Year Grammy for “I Honestly Love You”)—or whatever subsequent date Californians first bought their houses. From that original base, the assessed value of a home cannot increase by more than two percent annually—no matter how much its actual value goes up.

In this way, Prop 13 provided homeowners an ever-escalating discount on property taxes as the value of their homes rose—in effect, it created a guaranteed subsidy for homeowners. And groups like yours have made this subsidy the most heavily protected part of our state’s finances. Californians will cut public school funding, or local government services, and they will raise the state income tax or sales tax, but property tax savings are untouchable. Over time, the imperative to protect those savings has shaped the state’s overall tax and budget systems—and how Californians think about state government itself.

But is Prop 13 sheltered enough? Something so fundamental to our state can always use more protection. So your new initiative shores up a fundamental weakness in the current regime: Homeowners don’t get to keep their low property taxes forever. Tragically, they lose the human right to that discounted tax assessment once they sell their property and move on to a new home.

What an outrage! If Californians want to move to a more expensive home (the American Dream!), or relocate for a job, or switch to a condo that allows for assisted living, they have to give up the tax savings they accumulated over many years and pay property taxes at—gasp—the market rate.

Your proposal would allow anyone over 55 to sell their California house and carry those same low property taxes to their next home, no matter the new home’s market value, or its location in the state, or the number of moves they make. Your tax savings follow you, and not just your house, as long as you live in California.

This historic change would represent, to borrow a line from the Great Emancipator, President Lincoln, a new birth of freedom. Prop 13 offered limited liberty; it only protected older homeowners from being forced out of their homes by rising property taxes. Your Son-of-Prop-13 also defends the very opposite freedom; it mercifully frees older homeowners who might feel trapped in their homes by their unwillingness to surrender those property tax savings.

If your initiative passes, longtime homeowners will finally be free—to sell their homes at the huge profit they’ve run up over the years, without losing their property tax discount in the process

Your own reasons for this policy are beyond noble. By allowing people to keep their property tax savings, you’d enable more elderly people to sell their homes at a steep profit and bring those few young people who can afford to buy into the market. Yes, this would also create more sales and commissions for realtors, but I’m sure that’s just a coincidence.

No Californian, in touch with the established values of our state, could oppose such a proposal. But—forgive me—I must admit to one concern: Your plan doesn’t go far enough

So here I propose—very modestly—an amendment: Please don’t limit these property tax protections just to those who are old and alive. To express the central importance of property tax discounts in our state, every California homeowner must receive a property tax savings that is immortal.

I propose that every California homeowner be entitled to property tax savings until the apocalypse. It would be up to you—and your estate—how to exercise it. You could transfer the property tax savings—as a whole, or divided up into pieces—to whomever you want, for as long as you want.

This historic change would represent, to borrow a line from the Great Emancipator, President Lincoln, a new birth of freedom. I, for one, think of the children—especially children of longtime homeowners burdened with all that housing equity. My proposal aligns with the new federal tax bill, which limits the estate tax, thus boosting the real lifeblood of this country—inherited wealth.

Now, I recognize that not everyone in California will see the genius of my plan, or yours. For one thing, your proposal would cost the schools $1 billion, and mine would starve the educational beats of billions more. For another, critics have argued that Prop 13 is generational theft. That, in providing tax rebates to older, wealthier homeowners, it shifting more of the costs of government onto younger taxpayers. That Prop 13’s property tax limits are one reason why the state’s taxes on income and sales are so punishing. That Prop 13 does little to encourage the building of new housing the state needs. That it effectively reserves for older homeowners moneys that would be better spent on improving education and building housing and infrastructure so that California—with some of the nation’s highest rates of poverty and inequality—could create a better future.

And since your plan and mine would expand Prop 13’s tax protections, the critics say, you and I would just be making all the above problems worse.

Of course, such critics mean well, but they don’t recognize what our state has become. Don’t they know that old Californians are the future? The old represent the fastest growing demographic in our state (the proportion of Californians 65 and older should double by 2030)—while the population of children is declining. Why prioritize the education of the next generation, when so few of them will ever be able to afford to buy a home here?

Now, no plan rolls out perfectly, and mine might need a few brakes. For example, if new technologies allow Californians to live much longer, people could start hanging onto their subsidies past age 100, instead of dying and passing them on. But we could speed that transfer of property tax savings by amending the state’s aid-in-dying law to allow not only a doctor but a licensed realtor to oversee an assisted suicide. This would not damage the deceased homeowners, at least tax-wise, since under my plan their discounts would be immortal.

Sure, some people would call this extreme. Some people might even suggest that my whole plan prioritizes property tax savings over all other concerns, including life itself.

Which is to say: Some people just don’t understand what California is all about.

Before Prop 13 there was nothing preventing individual cities or counties from enacting their own local Prop 13's.

I don't know why this has to be a state thing. All it means is that the state gains more control because localities have less control over how they collect revenues.

Now of course the state imposes all sorts of mandates which would tend to force cities and counties to increase property taxes to fund them. However, they could also choose to pay for them via sales tax or some other fees.

In the end Prop 13 has already been undermined by the increases in income tax, sales tax, and the overall cost of doing business with all the regulations.

All we need to know is that now lots of people in California are retiring in other states. If Prop 13 was originally created to allow people to stay in their homes as they age, and yet they tend to sell their homes and move out of state, then that seems to say that Prop 13 has been undone.

And if the secret reason was to give businesses a tax holiday, well that hasn't turned out very well either because lots of businesses are leaving the state as well.

The only long term effects of Prop 13 I see are:

- People have to pay to remodel their homes soon after they buy it or risk having the property be reappraised later and increase their tax burden
- Some business properties are left vacant for years because the owners can afford to pay the low taxes
- The state can increase all sorts of costs related to workman's comp, ADA nonsense, etc. because at least the businesses are paying low property taxes
- The state is collecting locally generated money and vice-versa because of the Prop 13 caps, so our state and local financing is now a fustercluck
- Local Republicans can no longer promote themselves as low tax and low spending alternatives to Democrats because every city has to pretty much be run the same way. No more Pete Wilson's.

Ha! That article was in relation to an effort to extend prop 13 so seniors could sell their homes and keep their property tax cap (https://www.kqed.org/news/11703288/proposition-to-expand-property-tax-benefits-for-seniors-appears-headed-toward-defeat).

I’m 35 and bought a home a few years ago. I’m all in favor of repealing prop 13 - one of the reasons we have out of control spending is that that a bunch of old voters vote in more spending knowing they won’t have to pay for any of it. The fewer taxpayers you have in the voting public the worse they vote.

Boomers shut down all new housing construction, so there is woefully insufficient supply for all of the demand in SF and LA’s growing economies. So a single story ranch home in silicon valley can sell for 1-2 million. Their home is a lot of people’s primary retirement savings. So a lot of the selling is people cashing out and buying something 1/10th as cheap in a low COL Area.

I’d be interested in ideas you have for how we can reignite the tax protester movement of the 70s. It’s desperately needed. If we don’t rein in public pensions we will turn into Illinois.

Fortunately cities in California can declare bankruptcy and eliminate poor choices made regarding public employee pensions. I don't think this is the case in Illinois. I believe that somehow the pension plans are written into their constitution. So no matter how stupid our politicians are, the Illini have us beat in that department.

I don't really see any solutions. I would like to see more local control, however, localities don't play any role in the Constitution. So either the Feds or the State can dictate what cities do and promote a one-size fits all policy.

The State Equalization Board is a perfect example where cities that do generate more revenues have to give it over to the state to be redistributed to other less fortunate (or more poorly run) school districts.

Our only hope is that there are a few pro-business Democrats. Right now they are being stifled by the leftist majority, but if things get really bad then the lefties might allow the "rightwing" of the Democrat party to regain control to set things rights. Sort of like what happened when politicians like Bill Clinton rose in the Dem party on policies like welfare reform.

But the best we can hope for there is one step forward and two steps back rather than the current Great Leap Backward that we are currently taking.

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