What the Heck Is Prop. 13?

It seems as though the contentious topic of Proposition 13 is broached during each election season in California. If you have lived in the state, you have undoubtedly heard mentions of the law before. But what exactly does Prop. 13 involve? And why do Californians continue to debate its merits?

Passed in 1978, Proposition 13 caps property taxes at a maximum of one percent of the market value of a home at the time of purchase. Property taxes usually increase when property is reassessed, a process that generally occurs every one to five years in other states, or when property is transferred between owners. However, this law limits “annual increases of assessed (taxable) value to the inflation rate or 2 percent, whichever [is] less” (“California Proposition 13”). This is a significant tax alleviation for homeowners, considering property values in California continue to rise. Notably, Prop. 13 also prohibits the legislature “from enacting new taxes on the value or sale of properties,” requires a ⅔ majority vote of the legislature “to increase non-property taxes,” and requires local governments to place special taxes on the ballot where they must receive a ⅔ majority vote of residents to pass (“California Proposition 13”).

The measure’s creation and enactment stemmed from “rapidly rising local property tax bills, a bulging state surplus, and legislative inaction” during the 1970s (“Proposition 13”). Many supported the proposition because it helped homeowners remain in their homes and communities in a state burdened by a high cost of living. Because property tax increases are capped at two percent, so long as “property values increase by more than 2 percent per year, homeowners gain from remaining in the same house because their taxes are lower than they would be on a different house of the same value” (Picker). Hence, there is an incentive for homeowners not to sell. This is evidenced by the fact that the average tenure of households has increased since the passage of the initiative (Picker).

However, critics claim the law is discriminatory, as individuals who purchased their homes in the 1970s have extremely low property taxes today, and these individuals are able to pass the asset along to their descendants. Meanwhile, new homeowners, who are more likely to be immigrants or minorities, must bear a greater “share of the costs of local services” (Pastor). Prop. 13 has also been blamed for inadequate local public school funding and lack of affordable housing across the state.

There have been many attempts to amend Prop. 13 over the years. One such attempt was Proposition 19, which successfully passed and required that “inherited homes that are not used as principal residences, such as second homes or rentals, be reassessed at market value when transferred” (“California Proposition 19”). Originally, Prop. 13 allowed for property to be passed from parent to child without reassessment. While Prop. 19 still technically permits this, it institutes stricter regulations.

In 1978, Prop. 13 passed 64.79% to 35.21%, thus, it was widely embraced as tax protection for low to moderate-income individuals. Although there is criticism of the law, a 2018 study conducted by the Public Policy Institute of California found that 65 percent of surveyed voters supported Prop. 13 and maintained it was a beneficial measure (Levin). Therefore, it seems most Californians continue to favor the initiative.

Whether you support or oppose Prop. 13, it is undeniably a significant law that has shaped the political, economic, and social landscape of California. 

Works Cited

“California Proposition 19, Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment (2020).” Ballotpedia.

“California Proposition 13, Tax Limitations Initiative (June 1978).” Ballotpedia.

Levin, Matt. “Californians Still Really Like Prop. 13 – except for the Big Parts They Don’t Like.” CalMatters, 5 Sep. 2018.

Pastor, Manuel. “After Tax Cuts Derailed the ‘California Dream,’ Can the State Get Back on Track?” KQED, 1 Nov. 2017.

Picker, Les. “The Lock-in Effect of California’s Proposition 13.” National Bureau of Economic Research, April 2005.

“Proposition 13: Its Impact on California and Implications.” California Budget Project, Apr. 1997.

• california
• Election Season
• Legislature
• Prop 13
• taxes