Category Archives: Proposition 13 & 58 Property Tax Relief Still Popular with Californians

Part Six: Why California Proposition 13 and Proposition 58 Important to Californians with Different Incomes, Backgrounds and Property Values

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California Proposition 13 and Proposition 58

California Proposition 13 and Proposition 58

Everyone would like life to be forever smooth sailing… Especially in California, where the sun is typically shining most of the time, with most Californians looking to be positive and to have something to smile about every day.  However… life is not always smooth sailing, and even if the sun is shining – and California residents once again have something to worry about… sort of.  The latest political move against Proposition 13, the mega-popular tax shelter that makes avoiding property tax reassessment in CA legal for home owners and businesses,  and prevents taxation over 2% of property value – is called the “split-roll property tax initiative”, and will, if passed, remove this property tax relief from business properties.

Most likely, if the “split-roll tax” succeeds, Proposition 58 and Proposition 193 will also be under fire – i.e., threatening a popular initiative that insures home owners’ ability to keep parents property taxes upon property tax transfer, affecting parent to child transfer of a home and/or land; when inheriting property, and inheriting property taxes. It would also dilute or destroy home owners’ much cherished ability to get access to fast funds through loans to trusts, from a reliable trust lender.

This so-called “Split-Roll Measure” would, if it passes into law, destroy most Proposition 13’s tax shelter protections, such as avoiding property tax reassessment in CA, for commercial properties and industrial facilities across the state… and would raise theses business property taxes by billions annually.

Businesses would be more or less forced, by economic necessity, to pass on these increased costs to California residents. This business and industrial property tax hike would affect all of us in California. It would unfortunately increase prices incrementally on all the items we purchase day to day – i.e., gas, office supplies, groceries, alcohol,  monthly utilities, and healthcare costs.

Regrettably, these anti-Proposition 13 special interest groups are so razor-focused on eliminating Proposition 13, that they will even maintain a very badly written amateurish tax measure on the ballot as backup; in the event they fail to pass their new primary tax initiative. It’s pretty clear that all these tunnel-vision opponents to Prop 13 pushing this so-called split-roll tax measure aren’t one little bit worried about what will help regular Californians! They are apparently fixed on raising property taxes no matter what – beginning with commercial and industrial property taxes increases… flawed measures and all. And from that point, we can only make an educated guess at what their next moves will be… with respect to residential property tax hikes.

And so a new, this time different, anxiety has begun to emerge and grow… affecting large numbers of residential and business property owners, as well as renters, in the great state of California. Home owners, business property owners, industrial facilities, and even renters – are frightened, and not unreasonably so, that once this door has been opened, so to speak… to remove Proposition 13 tax relief protection from commercial and business properties – home owners are very likely next. And it wouldn’t be unreasonable or unrealistic to assume this would happen right away, if this measure passes.

Many movers and shakers in California believe this would be a likely scenario, if split-roll passes… with California property tax payers sliding down the proverbial “slippery slope” back to the bad old days before avoiding property tax reassessment in CA was possible, for a home owner or a business; before Proposition 13 property tax transfer tax relief allowed home owners to keep parents property taxes and actually transfer parents’ property taxes over to themselves, thereby avoiding property tax reassessment associated with inheriting property taxes.

Californians who are frightened of this slipper slope scenario are typically going on the assumption that once you open the door to a counter-effort, to weaken Proposition 13 protections for businesses… how are regular middle class California residents going to stop the new anti-Proposition 13 juggernaut from continuing on in the same direction, until the ability to avoid property tax reassessment has been watered down, and watered down… until you’re right back where you started.

Hence, the vocal and very motivated effort all across California to stop new measures like this, designed to destroy Proposition 13. And it looks like this type of battle will continue to be waged in this state until theses rabid, obsessive opponents to Proposition 13, and Proposition 58 and 193 either “see the light” on this issue – or are stamped out once and for all, with iron clad long-term statutes that lock down these property tax protections, and other protections for Californians as well within the Prop 13 initiative… that stretches 50 years out into the future. With no loopholes these opponents can grab onto, to water anything down.

If this new split-roll measure is defeated, Proposition 13 will need to be re-established as rock solid and rock steady, for the next 50 years, before these rabid critics will simple throw up their hands and “give up the ghost”.

Part Five: Why is Proposition 13 so Important to so Many Californians with Different Incomes & Property Values?

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California Proposition 13

California Proposition 13

It was a decisive majority that voted in California Proposition 13 on June 6, 1978. The joy and relief sweeping through the state, they say, was palpable. You could cut it with a knife. The anxiety over property tax instability and arbitrarily increasing financial demands on property owners had reached a genuine tipping point by that time, and voters knew that a change was needed, and on the horizon. Instability and anxiety was about to be replaced with the ability to avoid property tax reassessment in California… and a host of other tax relief benefits.

With Howard Jarvis and his mega-motivated colleagues leading the charge, this modern day tax revolt was one of the very few in American history that wasn’t a thinly disguised “tax cut” for top conglomerates and the wealthiest Americans, falsely entitled “tax reform”. It was a genuinely revolutionary “tax reform” initiative, passed by nearly 66% of the voting public in California. Beneficiaries and heirs inheriting land and homes, and naturally inheriting property taxes, were now able to keep parents’ property taxes and avoid property tax reassessment in California.  Parent to child transfer of a house and/or land had become legal parent to child exclusion from present day property value assessment, or property tax reassessment. And the numbers added up for home owners all across California.

Both businesses and residents were pleased with the money they would be saving every year. Naturally, the wealthier the property owner the larger the savings by having the ability to avoid property tax reassessment every year, year in, year out. And most likely the stark difference between the savings experienced by families in the six-figure range, for example, and families with homes in the seven-figure range, started the ball rolling on the conspiracy theory that Proposition 13 was all about savings for the rich, and no one else.

Naturally this was, and is, a misrepresentation of the benefits all Californians enjoy from Proposition 13, and Proposition 58, tax relief.  Certainly, the wealthy were saving more, in aggregate numbers, however 2% maximum tax rate forced property taxes become predictable, and manageable, for all Californians who owned their own home. The numbers affected by property tax transfer are simply relative. The rich pay more and save more, while the middle class pays less and therefore saves a little less.

Bringing us all the way up into the present, there in now a new threat to Proposition 13, egged on by the same critics that have been spouting false conspiracy theories and rumor campaigns since Prop 13 passed in 1978, and other special interest groups. It is called a “split-roll” property tax initiative, backed by some of the most powerful public employee unions in California, including Service Employees International Union, the California Teachers Assn. and the California Federation of Teachers. And it is now threatening to limit, and destroy, various tax relief benefits for a variety of business owners.

This 2020 ballot initiative has a misleading name, which supporters and critics of Prop 13 call “The California Schools and Local Communities Funding Act of 2020” Better known as the “split-roll tax initiative”, this plan would reassess and wage a tax hike war on all commercial and industrial properties – including retail stores, manufacturing plants, and popular malls all over the state. This so-called split-roll property tax measure would also remove Proposition 13 benefits protecting farmers, and return to the hated, dreaded yearly present-day tax reassessments measured by present-day market value – targeting all agriculture-related facilities.

Supporters of Proposition 13, Proposition 58, involving parent to child property transfer; and Proposition 193, supporting grandparent to grandchild property transfer… are afraid that this new “split-roll” ballot measure is likely to open the door to unwanted special interest backed tax hikes… and create a rather negative slippery slope affect. In other words, people are frightened that once you open the bottle, you can‘t put the genie back in again!  And that all the folks who want property taxes to return to the bad old days will have a foothold again. This is what nearly ¾ of the state does not want.

Most people are hoping the majority of the state will remember the bad old days before the 1978 ballot initiative to cap property tax increases for both residential and business properties began providing the public with a sense of security and consistency, insuring that property owners would not be literally taxed out of their homes and businesses ever again.  Proposition 13 has consistently provided middle class home owners in California, of all ages, with real tax relief. However, it is true  that before this initiative was passed, many elderly and senior Californians that were living on a fixed income were actually pushed out of their homes due to out of control property tax rate hikes. And most people in California are voicing their opinions telling their representatives that they never want to see this type of tragedy ever occurring again in their state.