Study misses point of Prop. 13

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By Jon Coupal

A recent study published in Trulia, a website dedicated to housing issues, has raised eyebrows among those who follow Proposition 13. Indeed, the title of the study itself was marginally inflammatory: “The Taxpayer Revolt: Winners and Losers.”

The study was written by Trulia’s chief economist, Ralph McLaughlin, a person who clearly has bona fides as a housing expert. Indeed, the study sets forth detailed data that those of us who are tax and housing wonks will surely appreciate. The problem with the study, however, is not the data but rather the conclusions and thinly veiled innuendos about the “fairness” of Proposition 13.

First, a review: Proposition 13 limits property taxes by both limiting the maximum rate (1 percent) and, more importantly, by limiting increases in assessed valuation (2 percent annually). With the latter provision, it is easy to see how a property’s current market value can greatly exceed its taxable value over the span of just a few years. However, the difference between a property’s actual value and its taxable value disappears when the property changes hands because the property is reassessed to full market value. Thus, while recent purchasers enjoy the 1 percent cap on the tax rate, they may not derive any immediate benefit from the 2 percent cap on annual increases in taxable value.

Click here to read the full article in the Orange County Register.


HJTA-150x150Jon Coupal is president of the Howard Jarvis Taxpayers Association — California’s largest grass-roots taxpayer organization dedicated to the protection of Proposition 13 and the advancement of taxpayers’ rights.

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