FOR THE PROPOSITION 13 ILLITERATI:

An often neglected aspect of Proposition 13 needs to be pointed out – contrary to popular misconceptions Prop 13 leads to more stable tax revenue streams for state and local governments. Let me give you an example.

Without Prop. 13 the current tax assessments on a property would go up and down as the market changes. As the value goes up, the reassessments would drive up taxes. The state gets used to the new amount of taxes and buys 10 widgets with the money. When the market goes down, the building value goes down and the owner gets another reassessment. The taxes decrease and the government no longer has the tax money to pay for 10 widgets. It can only buy 5 widgets. A ‘shortage’ of 5 widgets is created.

On the other hand, with Prop 13, the current value of a building goes up by 2% annually as long as the owner does not change. The state buys 3 widgets with the money. (The amount gradually increases but is fairly constant.) When the market goes down, the building value goes down and the owner gets another reassessment. The taxes decrease and the government no longer has the tax money to pay for 3 widgets. It can only buy 2 widgets. A ‘shortage’ of 1 widget is created. This may be much more easily handled than a 5 widget ‘shortage’.

The difference is that in the first case the state government spent the higher amount and expected it. When the market downturn came around, there was a huge deficit. In the second case under Prop. 13, the government does not experience a severe shortage. This second way is the way to more stable government funding, not raising taxes through the roof by a split tax roll.

Actually, given the recent run-up in home prices in the mid-2000s, then the subsequent crash in property values of up to 80 percent, there’s no way the higher tax rates would have been sustained no matter what. Even people who were not “underwater” in their mortgage payments would have just walked away from their homes to avoid the high tax. If Prop. 13 and Prop. 8 would not have been in place, something else would have.

— John Seiler

Prop 8, on the other hand, gave county assessors and property owners (!) the power to temporarily lower property tax rates when values dropped, with the understanding that rates would go back to Prop 13-limited levels once the market & economy recovered.

Before we yet again beatify Howard Jarvis and Paul Gann, let’s try to have a factual argument on the merits/demerits of a split roll, etc. Of course, a factual argument is a rare thing on this website.

Let me bring you back to something mentioned earlier re: Blue state vs. Red state wealth.

Looking at a snapshot does not give a true account of the dynamics. Newgeography.com covered this is detail a while back, and the upshot showed that disparities have been closing for decades. (It’s easy to forget how truly backward much of the South was even just 50 years ago.)

And as to California’s ranking (12th)……I seem to recall not long ago (1980s and 90s) California was in the Top 5, and easily held the highest ranking among large states.

Take the nation’s basket case (Mississippi). California’s State Per Capita is less than 50% higher than Mississippi. 40 years ago the same measure showed California was TWICE that of Mississippi.

Interesting (or intentional ?) that you omitted that “their side” (meaning the employees contributions), even INCLUDING all the investment earnings throughout their careers, RARELY accumulates to a sum sufficient at retirement to buy more that 10-20% of the grossly excessive pensions that have been promised (with Taxpayers on the hook for the 80-90% balance).

I say “promised”, because I’m quite certain the day will come whereupon Taxpayers will rise up (likely with the politicians having switched sides to support THEM) and renege on a good portion of that excessive “promise”.

Slow growth is not “doomsday” nor is the word doomsday mentioned in the article.

Please stop reading something into the article that plainly is not there.

Thank you all for your comments.

“Desperate groups do desperate and sometimes even suicidal things. And California’s Government Class is in a full panic mode that its promised pensions and entitlements are not based in reality. There are few ways to reason with desperate people. They want to impose more taxes on everything to save their pensions. They believe that their new supermajority lets them wish reality away and that tax increases will cure everything.”