California looking to correct its biggest mistake: Prop 13
Prop 13 capped property taxes and made it nearly impossible to ever raise taxes in California. This is why the state has largely fallen apart since 1978. Why our schools are crumbling. Why public colleges used to be free and now have annual 15% cost increases.
The funny thing about Prop 13 is: the legislature capped *commercial* property taxes in 1978 too without realizing that because commercial property very, very rarely changes hands they were effectively capping taxes on corporate property forever at the 1978 rates.
When you sold your home, it was transferred to someone else. The home was reassessed, and the taxes for the buyer were increased accordingly.
What we did not realize was that corporations don't actually transfer property - they transfer the stock in the company that owns the property.
And Prop. 13 didn't apply to stock.
The result is that corporate property that existed in 1978 is still being taxed based on 1978 assessments - even property that has changed hands time and again.
That means a disproportionate burden of California's property taxes is falling on homeowners.
The remedy, as suggested by Assemblyman Tom Ammiano, D-San Francisco, would be to change the definition of a transfer. With Democrats now controlling two-thirds of both the Assembly and state Senate, they could do that without having to worry about no-tax Republicans.