LIFE BEFORE PROP 13
In the 1970s, families, seniors and others living on fixed incomes were being forced from their homes due to out-of-control property tax increases. In fact, some properties were reassessed 50 – 100% in just one year!
As a result, homeowners and business owners saw their property tax bills jump correspondingly. It was nearly impossible to predict the next property tax bill, leaving many families and small businesses unable to plan for the future.
This led to a bipartisan coalition to support property tax reform.
A VICTORY FOR CALIFORNIANS: PROP 13
On June 6, 1978, nearly two-thirds of California voters passed Prop 13 to cap property tax increases for residential and business properties and provide certainty so that they will be able to afford their property tax bills in the future.
Specifically, Prop 13:
- Calculates general property taxes for residential and business properties based on one percent of their purchase price
- Caps annual increases in property taxes at two percent per year, which prevents sharp increases in property taxes, especially when property values rise quickly
PROP 13 CREATES CERTAINTY & PREDICTABILITY
Prop 13 provides certainty to every taxpayer who buys real estate so they will know what their taxes will be in the future and gives them protection from runaway property taxes that could force many to sell their homes or lose their businesses.
Prop 13 also creates stability and predictability for local governments. In fact, according to a report by the nonpartisan Legislative Analyst, “Property tax revenues increased throughout the recession while other major revenue sources declined significantly.”
PROP 13 PROTECTS HOMEOWNERS & RENTERS
California’s cost-of-living is at a record high level. Without Prop 13’s protections, homeowners could once again see skyrocketing property taxes and landlords would be left with no choice but to raise rents.
On average, Prop 13’s rate limits, combined with current assessment practices, saved homeowners an estimated $13,700 and renters $4,400 in 2017. Prop 13 keeps property taxes affordable and prevents rents from raising even higher, making California’s housing crisis even worse.
PROP 13 PROTECTS SMALL BUSINESSES & CONSUMERS
Most small businesses rent the property on which they operate, and their lease agreements require they pay the property tax. Without Prop 13’s protections, property owners will simply pass on the higher taxes to tenants by raising their rent.
The split roll property tax measure’s higher taxes on businesses will ultimately get passed on to consumers in the form of increased prices on just about everything people buy and use, including groceries, fuel, utilities, day care and health care.