McClintock is an expert on matters of the State budget and fiscal
discipline. He is a Senator in the California State Legislature
and ran for Controller on the Republican ticket in 2002. His valuable
website is found at www.tommclintock.com
Defense of Proposition 13
by Senator Tom McClintock
Just for fun,
take the current value of your home and multiply it by 2.67 percent.
Look hard at that number, and then imagine paying it this year
as property tax. This isn’t a theoretical exercise –
if not for Proposition 13, that’s what you would now owe
to the county tax collector.
Prop. 13 made two critical changes in California property taxation.
It reduced the tax rate from the average 2.67 percent to one percent.
And instead of basing the tax on your home’s current value,
it based the tax on the price you paid for it.
The difference is staggering. Suppose you bought your home five
years ago at the median price of $186,490. Today that home is
worth $316,000. The Prop. 13 property tax paid on that home today
is roughly $1,900. Without Prop. 13, the property tax would be
$8,400. How long do you think you could keep up with those taxes?
This is an important question as the landmark taxpayer protection
law celebrates its 25th anniversary under a new round of attacks
by California’s insatiable spending lobby.
To hear them tell it, Prop. 13 decimated state and local finances
and it’s long overdue for some “adjustments.”
But the facts paint a completely different picture. Between 1977
(the year before Prop. 13) and 1999 (the latest year for which
complete data is available), inflation and population grew at
a combined rate of 235 percent. State revenues grew 448 percent,
California city revenues grew 333 percent and county revenues
grew 326 percent. If Prop. 13 was supposed to slow government
spending, it was a complete failure. Governments simply shifted
to other taxes.
Prop. 13 was actually supposed to keep a lot of California families
from losing their homes to galloping property taxes. And there,
When the facts don’t fit the appetite of the spending lobby,
an appeal is made to “fairness.” Since the tax is
established by the price of the home when it was purchased –
and not by the current market value -- identical homes purchased
at different times can end up with different tax bills. But consider
the alternative: a system where taxes that were affordable when
you bought your home make it impossible for you to keep it just
a few years later.
When a home is purchased, the buyer knows the cost of the mortgage
payments and the property taxes and can calculate his or her ability
to afford the home based on these predictable costs. Before Proposition
13, property taxes presented an unpredictable wildcard that was
as erratic as California’s peripatetic housing market.
It is true that the relative property tax burden has shifted from
commercial to residential property, since residential properties
sell more often.
But once again, consider the alternative. If commercial property
is removed from Prop. 13, skyrocketing business taxes will ultimately
fall on the same families in one of three ways: as consumers through
higher prices, as employees through lower wages, or as investors
through lower earnings. And most investments aren’t the
fortunes of wealthy fatcats; they’re Mom and Dad’s
You never see a proposal to tie an increase in commercial property
taxes to a decrease in residential property taxes. The reason
should be obvious: the objective isn’t fairness –
it’s more money.
And that’s what’s at the heart of the latest attacks
on Proposition 13. It’s something to think about as you
pay your property tax bill this month.