California Proposition 13
Proposition 13 has had some unintended consequences, such as affecting land use decisions by forcing communities to look for businesses that will generate sales taxes, and increasing state control over local functions (schools).
Proposition 13 was intended to keep poor seniors from losing their homes because of rising tax rates. But because it cut rates for all existing owners (the ultimate grandfather provision) its side effects cause a lot of unfairness:
- New buyers pay much more than existing buyers (who are typically older and richer).
- slower-appreciating sites (inland, poorly located) are carrying a larger share of the tax burden than they should because of the taxes don't keep up with the higher appreciating property.
- corporate and industrial property pays less taxes because there is less turnover generating reassessments. It discourages new businesses which have to pay higher property taxes than existing businesses. "For example, IBM Silicon Valley Laboratory is paying $0.004 per square foot of land in property taxes compared to many other companies in the area which are paying roughly $0.60 a square foot - a disparity of 150 times." (California Tax Reform Association paper, p. 10).
"Failure to tax land appropriately is a major contributor to speculation and sprawl, just as an under-performing property tax is the major reason local governments over-rely on the sales tax in their land use decisions." (California Tax Reform Association paper, p. 10)
Mercury news opinion - eliminate application to corporate and industrial property. Also see San Francisco Chronicle opinion.
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