Real Estate Industry Wants to Expand Prop. 13 Property Tax Breaks
The idea behind a proposed ballot initiative in the state of California would be to provide a property tax incentive to get longtime homeowners to move from their homes. Currently, the property tax cap offers a strong incentive for staying put as the value of homes around California skyrocket.
As reported by Katy Murphy, a ballot initiative circulated for signatures by the California Association of Realtors would "expand Proposition 13, the landmark constitutional amendment passed by voters in 1978 that has kept homeowners’ property taxes artificially low over the years, even as their home values have doubled or even quadrupled. Under the initiative, homeowners who are over 55 or severely disabled would be able to keep those lower tax obligations for life, regardless of how many times they move, as long as they stay in California."
Proposition 13 is already widely blamed for struggles to deliver services at every level of government in the state of California, as well as the state's worsening economic segregation (here's a link to a thorough explanation of Prop 13 and its effects, if you're not already familiar). This statewide ballot initiative is not designed to solve those problems, and more debate will surely follow about whether the initiative will improve or exacerbate those challenges, though a report from the California Legislative Analyst’s Office "estimates the annual losses in tax revenue from giving older owners a break would grow to $1 billion or more for schools and at least $1 billion for cities and counties," reports Murphy. Yes, "that’s even after taking into account the higher taxes paid by those buyers who would presumably purchase some of the new inventory."
This ballot initiative is designed to get older homeowners to decamp from their homes and create more real estate transactions. Alex Creel, a lobbyist for the California Association of Realtors, is quoted directly in the article explaining the state of the market: "A lot of older people — and I’m one of those older people, by the way — are feeling locked into their properties....They’re holding onto their property not because they like their house, but because they like their taxes."
The initiative would need 585,000 voter signatures by late March to place the measure on the November 2018 ballot.