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Blowback: Debunking the Prop. 13 debunkers

Jarvis Jon Coupal, president of the Howard Jarvis Taxpayers Assn., responds to Steve Lopez’s June 1 column, "Debunking the myth of Prop. 13." If you would like to write a full-length response to a recent Times article, editorial or Op-Ed piece, here are our FAQs and submission policy

In his latest attack on Proposition 13, columnist Steve Lopez retreats to the ivory tower for moral support. When a USC demographics professor tells Lopez that support for Prop. 13 is based on myth, and that blocking tax increases is pathetic, dishonest and a long-term disaster, Lopez accepts the professor's words as gospel. 

The only "myths" to debunk about Proposition 13 are those promoted by the tax-and-spend lobby and public employees unions, which would like you to believe that the state's landmark 1978 initiative to limit property tax increases has "devastated" California's education system while at the same time not providing any real benefits to homeowners and renters today.

First and foremost, Proposition 13 did not dictate how our government would spend property tax revenues. It simply set a property tax rate of 1% and limited annual tax increases to no more than 2%. 

Proposition 13 is not responsible for shifting the responsibility of education funding from the local level to Sacramento. Years before Proposition 13 passed, the California Supreme Court ruled in Serrano vs. Priest, an equal-protection case, that school funding must be equalized for all California students. That meant education funding could not be based on property tax receipts, because wealthy neighborhoods with high property values could spend more per student than poor neighborhoods with lower property values. The funding of our education system based on varying property tax receipts was found unconstitutional, but you never hear the Proposition 13's opponents discuss this ruling or its implications.

You also never hear them talk about the fact that spending per pupil has actually increased 30%, adjusted for inflation, since Proposition 13 passed in 1978, according to research by the Howard Jarvis Taxpayers Assn.

Second, everyone benefits from Proposition 13. The moment California homeowners get the keys to their new home, they benefit from the law's protection -- and not just when the home value soars or if they've lived in their home for decades. Proposition 13 protects Californians from potential annual percentage increases in their tax bills in the double digits or more. For example, just a few months before Proposition 13 passed in 1978, then-Los Angeles County Assessor Alexander Pope announced that many parcels of property would see assessed valuations increase by as much as 100%.   

Proposition 13 saved many homeowners and businesses by simply setting the tax limit to provide stability. It allowed property owners to budget for their future and gave them protection from runaway taxes that would have forced many to sell their homes.

Government also benefits from Proposition 13, protecting it from severe yearly swings in revenue, including when the real estate market crashes and results in huge decreases in property value. The value reserve built into the system lets government predict revenues coming in, although, unfortunately, that doesn't prevent many politicians from spending above and well beyond that amount. 

And renters also reap benefits. Without Proposition 13, you can be sure that higher business property taxes on apartment buildings would be passed on, in the form of higher rents, to working families and seniors living on fixed incomes.

The truth is, the system works. Critics such as Lopez say commercial property owners receive more benefits from Proposition 13. But since the measure passed, the assessed value of homeowner property has grown at an average of 8.1% per year, and assessed value of non‐homeowner property subject to Proposition 13 has grown an average of 8.4% per year, according to data from the California State Board of Equalization.

Finally, California property taxes are not among the lowest in the nation. Even with Proposition 13, we still rank higher than 36 other states when it comes to per-capita property taxes, according to the Tax Foundation. Without Proposition 13's protections, California taxpayers would fare far worse and property taxes would be at or near the top, just as we are when it comes to sales, car, gas and personal income taxes.

There is one thing Lopez and I can agree on: California politicians are too busy bickering and tinkering rather than doing their jobs. But instead of blaming California's problems on Proposition 13, it's time to focus on the real issues, such as runaway pension costs and unaccountable politicians refusing to rein in spending, while beleaguered California working families are forced to cut back.

-- Jon Coupal

RELATED:

Editorial: To fix California's budget, we need taxes too

Tim Rutten: It's time to pass California tax hikes legislatively

Editorial: A broken budgeting process

Steve Lopez: It's time to tinker with "untouchable" Prop. 13

Photo: Howard Jarvis, chief sponsor of Proposition 13, signals victory as he casts his vote on June 6, 1978. Credit: Los Angeles Times

 

Comments () | Archives (23)

The comments to this entry are closed.

shale53

Proposition 13 is unfair, period. The way the original law was written, people who owned a home prior to its passage got enoumous benefit. Those who purchased a house afterward were left out in the cold. Worse (much worse) was that business properties were included. Properties owned by P.G.&E., Mobile, etc. are taxed today according to the formula rendered when the original law was passed, even though both of these entities (and thousands just like them) are making millions and millions of dollars in California every year. Indeed, businesses here have hidden the fact that the operation has actually been sold so the property tax does not increase through a series of legal shenaigans and slights of hand. What we have created, and I do mean we, the citizens of this state because we are those who voted this in, is a completly unfair and unbalances system of property taxation where neighbors living in identical houses are paying vastly different amounts. Prop 13 was a bad law when it was passed. It has not aged well and is worse now than when it was created.

john s wesson

Prob 13 is the best thing that could happen in California!! Period! It sets a fair standard that property tax payers SHOULD be paying! Because others have allowed the tax collectors to raise taxes way beyond what is fair is no reason to raise all taxes to match the outrageous taxes paid by some. LOWER the high tax rate paid by the unfortunate and un-informed to the fair rate paid by Prop 13 taxpayers.
Prop 13 is the STANDARD-----force the legislature to reduce the un-fair tax paid by those not covered by Prop 13 to the STANDARD!! Never raise taxes to match an un-fair and unreasonable rate.
Make us all equal in taxpaying . . . make all taxes match the lower rate!! Not the other way around!!!

jaded

Prop. 13 is the only thing that guarantees that homeowners aren't taxed out of their homes by the ever-greedy, rapacious and corrupt California legislature. And yes, homeowners forced out by runaway taxation most certainly DID happen before it was passed.

And it most certainly NOT true that Prop. 13 does not help those who purchased a home after it was passed. I bought my house in 1997, and it has protected me as it will protect someone who buys today.

Go get 'em, Mr. Coupal.

affableman

Just more from selfish people who don't wan to pay their fair share of taxes like the rest of us.

The Howard Jarvis Taxpayer Association has been responsible for the shifting of local responsibilities to the state and the costs as well.

Prop 13 created a two-tier system for property taxes and limited property taxes on commercial properties to way under what they should be. The result is a huge glut in the commerical property market.

Property taxes were a problem when Prop 13 was passed but it was like using a nuclear weapon when a well-tossed grenade would have fixed it.

Warren Buffet owns a 3 bedroom house in Omaha and a mansion in Newport Beach. He pays more in property taxes on his Omaha house than the Newport Mansion.

All Prop 13 did was screw the state up long-term to fix a short-term problem.

How rich is rich enough? How little in taxes are people willing to pay and still get the services, roads, etc... that they want?

California is 17th in overall taxation and headed downwards while we have a huge population, a very large state geographically and we need to move water great distances. We also have one of the finest university systems in the world and we have Silicon Valley and it's large companies that pay a lot in taxes to thank for it.

If these guys had their way, we'd be just like Texas. A third-world country with a tiny middle class, a few rich and lots and lots of poor.

P J Evans

I voted against Prop13 because it was obvious to some of us that it was a disaster in the making. I am surprised that *anyone* still thinks it was a good idea.

Rodney M. Stine

House turn over quite often in California, 90% of the houses on my street have sold over the past 5 years, and when they do they are assessed at the new market price. Therefore, most houses are assessed at much higher rates than were existing when Prop 13 was passed. True, I pay triple what my elderly neighbor pays in property tax, but she is on a fixed income and could not afford to pay current property tax rates if it wasn't for Prop 13. It's time for the politicians to get over it as it will never be repealed.

tjm

Basically, Prop 13 has been our only break. The family of a schoolteacher and an artisan cannot invest enough to get tax breaks and sustainable retirement earnings. Perhaps if we were city or state government workers we would be better off when we retire.

Anonymous

Just raise rolling stop sign or rolling right turn on red tickets to $4 million per infraction. That should raise enough revenue.

If it saves just one child's life, it will be worth it.

What_the

I paid for my house 10 years ago. Why does gov't get to change the value to tax it more when I did not get any benefit from the value increase? Go get the money from some place else.

baitboat

shale53 -
It is apparent that you did not read Mr. Coupal's comments that show Prop. 13 benefitted all residents. Additionally, property taxes are not paid by businesses, they are paid by the customers of those businesses...higher taxes for businesses =higher prices for their customers. In case you haven't figured it out, citizens/consumers eventually pay ALL taxes.

And what about the windfall of property tax revenue from higher home prices since 1995 through about 2007 when prices started to fall? The corrupt politicians in Sacramento blew through that money like it would never end. Same with the windfall from stock prices before the dot.com bubble burst.

State government has plenty of money but to corrupt politicians it is never enough. There is always one more hand out program that will buy a few more votes so they never turn them down.

So now, even with 2,000,000 unemployed in this state, the clowns in Sacramento keep piling on the regulatory burden that is causing productive people and their businesses to vote with their feet by going to the other states at the rate of 5 per week, taking their employees and their money with them. With the credit card maxed out, their only choice is raise taxes but the voters are saying NO, you have another choice…cut government!

In the end, the only way to limit government is to limit its money and thus force it to live within its means just like the rest of us have to! Until that happens, no on higher taxes including any changes to Prop 13.

Mike_S

Prop 13 also contributes hugely to preserving older homes and improving local neighborhoods. By anchoring assessed value at time of purchase, Prop 13 provides young couples a tangible financial incentive to buy a blighted house and fix it up. Old homes are renovated instead of scrapped for a new McMansion. Neighborhoods are improved and sweet equity is retained by those who earned it rather than siphoned off by tax collectors.

The problem is NOT Prop 13--it is Sacramento's addiction to borrowing and spending the future so they can get re-elected in the present. ...Howse that popularist approach working???

Mike S.

Concerned Citizen

What this article doesn't mention is that commercial property can bypass reassessment by merging into another entity, thus keeping the 1975 base year value, while homeowners are assessed each and every time the home changes hands. This loophole is costing the state millions in property tax revenue. When this loophole is closed, then Prop 13 would be fair to all Californians.

Joe

You can't talk sense to the likes of Steve Lopez. He is a mouthpiece for illegal immigrants and the drug cartels.

WHATAJOKE1

shale53,

The tax rate BEFORE Prop 13: 2.67%
No cap on increases.

The rax rate AFTER Prop 13: 1.0%
2% cap on increases

You still want to abolish Prop 13?

Bob Malone

From the beginning to the end of this absurd screed, you speak in nothing but right-wing talking points. Tax and spend...blah blah blah. Public employee lobby...blah blah blah. Yes, it's those evil schoolteachers again, coming to take money away from those hardworking social-Darwinists in the top 1%. Spare us. You are greedy. The whole world is watching.

lexxie

Are you people still trying to beat this dead horse?

More boo hooing from people who are sucking on sour grapes.
I bought my home 18 years ago, in a nicer neighborhood. Oddly enough the vast MAJORITY of my neighborhood is made up of people who've lived here 15 to 20 years or more. Heck my next door neighbor and the neighbor across the street are people I went to jr. and High school with. Are we suppose to feel sorry for the new people who buy homes? Did I not pay taxes for 18 years that went towards the neighborhood schools, fire, police, tree trimming and other services? Yes, I did. Guess what, YOUR TURN.

You want to reap the benefits of 13, stay in your current home (if you weren't stupid enough to buy a McMansion you can't afford during the height of the housing market, or are you one of those people who moves every few years and have established zero equity?), you will reap the benefits just like us. And, when the new people buy homes next to yours and complain about your taxes, you can tell them how you paid your fair share and now it's their turn too.

Sorry, but I remember taxes before 13...The vast majority of the whiners are clueless about what they'd be paying now if it wasn't for 13. Not a clue...

Phil McKann

Politicians are dying to bust open the Proposition 13 pinata. Look, the government is addicted to spending money... our money... If Prop 13 gets subverted, it'll just be a quick fix for the junkies. They'll squander the cash and be back for more before you know it.

California spends more than half the general fund on education, and that doesn't include federal funds poured into our educational system. And in return we get a mediocre national education ranking and a 49 out of 50 ranking of states where the adult population has at least a High School education.

More money is not the solution.

Douglas Hunter

This article is clearly disingenous. Before Prop 13, commercial property tax income accounted for 75% of property tax revenue. After Prop 13, commercial real estate holders were able to form holding companies to own the property, sell the holding company and not the property, and thus escape property tax increases based on market value. Today property tax income is 75% residential, 25% commercial. This inequity must be corrected.

RBaird

And that is why Jon Coupal's generation is going down as the first in American history to sell-out their own children for the sake of not paying taxes. Thank you, Jon.

The Nation just devoted an entire issue to California's problems, with it's tax structure front-and-center, of course, so it's not like Steve Lopez is coming out of left field. And the unintended consequences are legion and obvious. Local governments think of nothing else but sales tax. This leads to an obsession with commercial development, and utter contempt for mid- and low-market housing construction. Jon Coupal could afford a 3-bedroom house with a mediocre job. Today's Jon Coupals can't afford a decent apartment.

And when a well run city of middle-class residents struggles, nevertheless, to keep it's parks and libraries running, this is not a healthy society we live in. And when cities are forced to "survive" rather than "thrive" (lusting for Costco when their residents want Old Town), you can't really begin to do thinks like sustainable urban development and smart growth and green building, etc. And this is why So Cal still appears like a suburban dystopian freakshow, even though public lifestyle preferences changed decades ago.

Max Plank

Affableman,

What ever tax break Warren Buffet gets on his Laguna Beach mansion is dwarfed by the income tax break he gets by paying income taxes in Nebraska rather than California.
California is 17th in taxes if you count only the state incomes and sales taxes. Throw in property and local taxes California jumps to #6.

Wayne Schotten

I moved to California well before Prop 13. The state was thriving. We were able to offer UC education to residents without tuition. Prop 13 threw the whole state into chaos. The schools were going belly up and the state had to step in to keep them afloat. Sad thing is, there was an alternate, Prop 8 if memory serves, that would have addressed the taxation imbalances and protected seniors. Prop 13 began the whole freeloader bandwagon.

Georgia in Washington State, formerly of California

Oh brother, I cannot believe there are still people defending Proposition 13. I lived in California the first 35 years of my life and was there when Prop. 13 was voted in. Anyone paying attention knew it would be disaster. I mourn for my beautiful home state. I'm in Washington state now, where they too are chopping off their own feet so the mega weathy can have their shoes, and I see no willingness to reverse the process. There is no civilization without a willingness to band together and pay for it. The free marketeers are taking us back to a new feudalism, and still we sleep.

Jesup11

Prop 13.

Gives to the old and steals from the young.

Nothing more.


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