What is Proposition 13?
Proposition 13 was a measure passed on June 6th of 1978 that placed significant restrictions on local and state property taxes for both commercial and residential properties. It has greatly limited the amount of property taxes that have been raised state-wide ever since. The law states that the rate of property tax that a county can collect be no more 1% annually. Even more importantly, it limited the rate at which the assessed value of a property can increase to 2% annually. This meant that there has been a growing divergence between the assessed value of properties and their real value. Prior to Prop. 13, the average California state property tax was stable at around 3%, with no limitations on increases for the tax rate or on individual ad valorem charges; in simpler terms, local agencies used to independently tax businesses and properties based on property value, and could increase taxes through reassessment of property values with no limitations. This is no longer the case, and property tax revenues are much lower now than what they would’ve been had Prop. 13 not passed. Thus, Prop. 13 has proven to be highly beneficial for long time homeowners and business owners.
The Politics of Prop 13: Redlining
Racially discriminatory practices are an ingrained part of housing policy in California and the United States at large. From covenants that restricted the sale of properties to people of color, to racial zoning, steering, blockbusting, urban renewal, and redlining, numerous tactics have been employed by the real estate industry as well as federal and state government to severely limit homeownership opportunities to communities of color. The legacies of these policies include vastly differential rates of homeownership between whites and people of color. Proposition 13 has provided a massive tax advantage to primarily white, long-term homeowners, raising concerns about the racial wealth gap in California and how Prop. 13 has locked many out of homeownership. For this reason, this project will seek to examine correlations between redlining and discriminatory housing practices with the demographic profile of those who benefit from Prop. 13 today in order to examine the lasting legacy of these policies.
Modern Day Controversies of Prop 13
Despite clear inequalities within Proposition 13, a majority of Californians still support the measure, regardless of political affiliation or occupancy status (75% of Republicans and 70% of Homeowners view Prop. 13 as “Mostly a good thing”, with more than half of Democrats and Renters holding the same sentiment). Despite these favorable ratings, Prop. 13’s visible disinvestment from important government functions—from public school funding to recreational services and construction— highlights additional side effects of the proposition that do not shine a positive light on the measure holistically.
In addition to hidden reallocations of funds, the distribution of benefits generated from Prop. 13 poses significant inequalities based on household income, disadvantaging low income to low-middle class income citizens. In fact, two-thirds of the tax benefit goes to homeowners with a household income above $80,000, with the majority of that relief going to individuals making over $120,000, according to research conducted by California’s Legislative Analyst Office. The apparent income gaps, lack of transparency in public benefits, and the previous mention of redlining and its racialization, all contribute to the deeply controversial nature of Proposition 13.