Dan Walters & Prop 13: A Confusing Duo

Dan Walters has an apology piece for Prop 13 this morning. Apology piece is being a bit generous, as it is more of a “LEAVE PROP 13 ALONE” kind of thing. He notes that its critics demand piece-meal reform because a complete repeal won’t pass.  Well, yes, Dan, we DFHs are pretty crazy that way, we aren’t into tilting at windmills and have a strange compulsion to go where victories are easiest. Shocking!

By the way, I don’t think you will find many liberals who would say that a complete repeal of Prop 13 would be a bad thing. I support a full repeal myself, anyway.

But once you get beyond tactics, Dan has fun with numbers, citing the large increase of property taxes since 1978. He notes that:

Since then, property taxes have risen 800 percent to more than $50 billion, according to data from the state Board of Equalization – far faster than other revenues, thanks to new construction and transfers.

Of course, he doesn’t note whether this is in inflation adjusted dollars or not, so I’ll assume it isn’t.  So, knock off a big chunk right there.  Further than that, this is a more meaningless statistic. Yes, property taxes have gone up a lot, because there is a lot more valuable property in California today than there was 30 years ago. THere are more homes, more office buildings, lots more strip malls, and even a few more gas stations. So, yes the property taxes have gone up substantially because there are many new properties.  In other words, this is a completely irrelevant statistic.

A more useful statistic would be the share of the income tax of state revenue. It’s way up (PDF). But instead of useful statistics, we get talking points from the California Taxpayers’ Association. The fact is that if we split the rolls for commercial properties and merely taxed them at their current assessment, the state would get an additional $7 Billion in revenue for the next fiscal year. Not raising the tax rate, nothing that new properties do not face, just taxing properties based upon what they are actually worth today. It is a move that would actually increase fairness and the business climate for new businesses.

But guess what, you know what has really risen in the past 30 years in California? Well, that would be people. People in California who need schools, who need police, who need firefighters, who need streets and who need all sorts of services the state provides. With many properties taxed like it’s 1978, they do not provide for their fair share of services.

While Mr. Walters really enjoys the status quo and pinning blame on the “Capitol political culture that’s utterly incapable of acting responsibly”, he ignores the facts that the system does not allow for anybody to behave responsibly. Let the majority govern, and see if the public supports it. Instead, the supermajority binds the hands of the legislators.

There are other columnists, though, who see Prop 13 for what it is. Like David Lazarus, who said we cannot afford Prop 13 Capitol political culture that’s utterly incapable of acting responsibly. Lazarus said back in 2008, referring to Lenny Goldberg:

What he means is that Proposition 13 allows the state to reach deep into the pockets of people and businesses that buy property at market value. But it does precious little to get a piece of the action from those with long-held properties that have soared in value over the years.

Prop 13 is not only a bad governing principle, it is a bad economic rule.  Whether or not Mr. Walters chooses to ignore reality, the fact is that Prop 13 needs to go.

20 thoughts on “Dan Walters & Prop 13: A Confusing Duo”

  1. Ask the homeowners in all the states that don’t have prop. 13 what it’s like to have THE STATE dipping into their pockets a little deeper every year. As someone on fixed income I thank god there is a limit on the amount the scoundrels in Sacramento can grab from my wallet. I’ve found that the folks genrally in favor of prop. 13’s repeal are usally people wh don’t own property.

  2. I nearly fell out of my chair after reading the repeal of prop 13 described as “fair.”

    Does increasing taxes on an elderly person on a fixed income strike you as “fair?”

    I have NO children, yet I’m expected to pay for public schools with my property taxes. Please explain how this is “fair?” Perhaps I should pay for the governor’s limousine service too since I don’t get to use that either.

    As a landlord, I will have to pass any tax increase on to my tenants or go bankrupt myself. Wow, I guess that’s only “fair” too. I’m sure they’ll all be grateful for the improved public services that feed them under their new home, sometimes known as “under the bridge.”

    Oh yes, by all means, repeal prop 13. Let the fairness trickle down to all. We’ve seen how well that works.

  3. the complete repeal of prop 13 would be a bad thing.

    there, I said it. Get a bigger circle of liberals, Brian.

    the split role is the way to do it. Homeowners have not gamed the system. Commercial and industrial owners have.

    that is the target.

  4. How do people really not understand that because our property tax system is the way it is, is the reason why we have an 8.25% sales tax, it is the reason we have a higher income tax rate?

    And as for homeowners being run out, there is a misunderstanding of simple economics there too…

    When someone qualifies for a loan to buy a home, property taxes are factored in. If there was the prospect of rising tax burden on the horizon then it would certainly reflect in your offer price for the home. If not, you would be a fool.

    And as for the fixed income folks, do we not think we are capable of devising a system to address that?

  5. The problems w/ prop 13 are numerous and need to be fixed but

    lets not think that pre 13 CA was paradise. My Grandparents bought their Wilshire Center(LA)house in the 30’s for less than $10K yet it was assessed @ 70K in 1978 and their tax bill was $5600 or about 8%. A lot of this money was used to build infastructure to fuel the building boom in LA County that started in the 50’s. Prior to Prop 13 the idea that Developers had to pay for improvements necessitated by their

    projects were dismissed out of hand. The public even paid for the streets inside subdivisions and the sewer hookups. The runaway Nixon inflation was increasing costs which were just passed on to property taxpayers. The runaway inflation also caused property values to rise with no gain in real value.

    WE need to reform prop 13 but not return to the bad old days. A sensible redefinition would limit the 1%/2% to owner occupants – who also claim CA as their tax home – and most rental housing. Commercial property rented to small businesses and AG land that can’t be developed should also be covered.  

  6. … is kind of like the “Apology” by Socrates.  It’s as much of an apology that doesn’t apologize for anything …

  7. love the Bay Area Council.  He and the BEE have run maybe 10 columns and articles in the past month saying we must have a rewrite of the state constitution with these people guiding the system.  The BEE never mentions that the Bay Area Council are multinational CEO’s who have a vested interest in keeping commercial property under the Prop. 13 system (like Howard Jarvis and his commercial property).  When people comment that while they favor looking at the state constitution, they want Proposition 13 included in the process, that goes against the Bay Area Council.  Dan probably wrote this column about Prop. 13 with info he got from the Bay Area Council.  Or put simply, they are trying to rig the system to favor the corporate world.  

Comments are closed.