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By Jon Coupal
In most of America, one of the worst impacts of high inflation is a sharp rise in property taxes. But that’s not the case in California.
True, housing prices are some of the highest in the nation, due mostly to government policies restricting supply. But existing homeowners are protected by Proposition 13’s cap on annual increases in assessed value of 2%. According to the California Taxpayers Association, Californians would have seen their property taxes increase more than 7 percent this year without Prop. 13.
It is understandable why the political left – which wants all your money – has it in for Proposition 13, but we were surprised when the normally credible Tax Foundation, based in Washington, D.C., fell for some of the same falsehoods advanced by the “tax-and-spend” crowd. The Foundation is advising other states not to adopt Prop. 13-style reforms. We disagree and believe all states currently struggling with out-of-control property taxes should take a good, long look at California’s system based on acquisition value. It is vastly superior to one based on market value.
While the Tax Foundation admits that “Proposition 13 and other property tax assessment limits have done their job, keeping incumbent property owners’ taxes in check,” they assert that those systems result in “hidden costs.”
One clearly false claim is that assessment limits “discourage homeowners from renovating or adding onto their homes, for fear of incurring a dramatic tax increase.” In general, remodeling and repairs that are part of normal maintenance or cosmetic are not considered assessable. New additions that increase the square footage of a home or add new improvements that didn’t exist before are assessable—but that’s true everywhere. The difference is that in California, the reassessment is limited to the value added by the addition, with the rest of the assessment unchanged. So what you would pay under Prop. 13 is still less than what you would have paid in a market-based property tax system.
To read the entire column, please click here.
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