The people who came up with Prop 13 had a stated mission of keeping grandma in her home. Which is fine, but that’s not really where we’re at today. While still keeping grandma in her home here are some straight forward ways to fix property taxes in California.
Repeal Proposition 58 and Proposition 193
Prop 58 allows a parent to pass their artificially low tax base to a child. Prop 193 extended that benefit to grand parents. A study by the Los Angeles Times found that 63% of homes inherited under these two propositions were used as second homes or rental properties. These propositions don’t meet the test of keeping grandma in her home. They allow children and grand children to use grandma’s home as a rental with an artificially low tax rate. Many of the homes benefiting from these transfers were purchased under redlining or other covenants that then allow the further perpetuation of institutional and government sponsored racism.
Apply Prop 13 only to primary residences
Once a Prop 13 base amount it set it doesn’t matter what the person does with that home and they can have as many as they can afford. Keeping grandma in one home is fine, she doesn’t also need to be kept in a vacation home or her own rental property.
Fix the homeowner exemption
Right now a home used as a primary residence of the homeowner receives a $7000 exemption which lowers the property taxes by a corresponding $70 per year. If a home benefits from Prop 13 (the assessed value is less than the market value) then there should be no homeowner exemption. For homes that do qualify for the exemption (owner occupied and not benefiting from Prop 13) it should be raised to let’s say, $25,000, then indexed to inflation.
Remove Prop 13 benefits for commercial and industrial properties
Commercial properties have played a game for years where they never having one entity own more than 49% of a property so when any one entity sells the property isn’t seen to have been sold and re-assessed. When property taxes go up to market rate on an apartment building that doesn’t make rents go up. Rents are already high and at market rate.
Institute a minimum property tax amount
The low amount of taxes that some people pay is awe inspiring. A house on my street pays $66.99 per month in property taxes. The people who live there are gainfully employed and are not the grandmother people envisioned. A minimum property tax of $100 per month is still shockingly low but it sets a floor. My neighbor who inherited his tax base and pays $74.61 per month is a big fan of complaining about where his taxes go and without missing a beat bemoans the poor quality of our schools.
Make it easier to see what people actually pay in taxes
Each county should have a map or feed data to a mapping service that puts property assessed valued (what they pay taxes on) onto each house like Zillow does with their value estimates. If people knew what the disparity in tax rates was they might be having a different conversation.
