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Proposition 13: Difference between revisions
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In addition, during the early 1960s, there were several scandals in California involving county assessors. These assessors were found rewarding friends and allies with artificially low assessments, with tax bills to match. These scandals led to the passage of AB 80 in 1966, which imposed standards to hold assessments to market value, which caused a large number of California homeowners to experience an immediate and drastic rise in valuation, simultaneous with rising tax rates on that assessed value, only to be told that the taxed monies would be redistributed to distant communities. The ensuing anger started to form into a backlash against property taxes which coalesced around Howard Jarvis, a former newspaperman and appliance manufacturer, turned taxpayer activist in retirement.
== <br/> Consequences ==
==== Sales disincentives, less individual mobility, higher housing costs ====
Proposition 13 alters the balance of the housing market because it provides disincentives for selling property, in favor of remaining at the current property and modifying or transferring to family members to avoid a new, higher property tax assessment.
California has more rigidity and friction in both its housing market and in renting than other states; one study comparing California's market to that of other states found that between 1970 and 2000, tenure of owned homes increased by 10% and in renting by 19%, and attributed this change to Proposition 13.<span style="font-size: 10.8333px;"></span>Other studies have found that increased tenure in renting can be attributed in part to rent control<span style="font-size: 10.8333px;"> </span> D.R. Mullins states that “prospects of increased property tax liabilities triggered by residence or business location changes likely constrain mobility and filtering in the housing and property markets.”
Moreover, evidence shows that because homeowners would allegedly keep their homes for longer, young households often rent for longer before buying a house. Because Proposition 13 could be a disincentive to sell, there is less turnover among owners near the older downtown areas, resulting in an upward pressure on price appreciation in these areas.
Proposition 13 reduces property tax revenue for municipalities in California. They are forced to rely more on state funding and therefore may lose autonomy and control. The amount of taxes available to the municipality in any given year largely depends on the number of property transfers taking place. However, since existing property owners have an incentive to remain in their property and not sell, there are fewer property transfers under this type of property tax system.
California also has high rates of migrants from other countries and states,<span style="font-size: 10.8333px;"></span>which has contributed to more demand for housing, and it has low amounts of moderately priced housing due to the increased property tax liability after a sale.<span style="font-size: 10.8333px;"></span>In effect, because the different tax treatment makes real estate more valuable to the current owner than to any potential buyer, selling it makes no economic sense.
== Reform proposals ==
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