NO: IT LIMITS FAMILIES’ ABILITY TO GROW WEALTH
Many state lawmakers see the 1978 ballot measure Proposition 13 as a “sacred cow” and are reluctant to tamper with its property tax limitations. However, it has plenty of faults, and many also feel the measure’s requirement that properties be taxed at no more than 1 percent of their full cash value shown on 1975-1976 assessments, with subsequent yearly increases limited to 2 percent, made a mess of public finance in California. (Fun fact: the San Diego County Taxpayers Association initially opposed this measure over 40 years ago.)
This fall, voters will get to decide on Proposition 19, a statewide initiative on “property tax portability” that will impact the rules and protections Proposition 13 put in place.
So what does that actually mean for people who pay those taxes here in San Diego?
The San Diego County Taxpayers Association opposes Proposition 19 because it plays fast and loose with the benefits originally offered by Proposition 13 at the expense of too many homeowners and their families — and the tax revenue it raises will not be directed in a way that serves Californians in an uncertain time.
Under current California law, homeowners who are over the age of 55, have severe disabilities or have been affected by disaster can buy a new home and keep the lower property tax bill from their old home. This means that right now, a senior citizen on a fixed income, living in a home purchased 50 years ago, wouldn’t have to move to Nevada or Arizona to afford a new home. Proposition 19, though, would get rid of this protection, leaving those homeowners with no choice but to leave our state.
Current law also empowers homeowners to transfer property to their kids or grandkids without triggering a reassessment and subsequent increase in their property tax bills. Think of it this way: You’ve worked really hard for your children, and like a few neighbors of mine in La Mesa, you want to pass down the family home and keep it affordable for them. You don’t want them to pay any more taxes than they have to — it’s already expensive enough to live in California. Well, Proposition 19 will eliminate the parent-to-child or grand-parent-to-grand-child property tax exemption if the kid or grandkid does not use the property as their primary residence.
Some may argue that these inheritance changes only affect the wealthy, but in fact they put middle- and lower-income San Diegans at a huge disadvantage. A home has many more uses beyond a primary residence — for example, it can be rented out to generate needed income or fund a child’s college education. The current law under Proposition 13 allows families to grow generational wealth without incurring a crippling tax bill. Most Californians can barely afford one home; the lucky few who inherit property should be allowed to use that property in any way they need to bolster their family’s financial security.
Even though California has some of the highest taxes in the nation, we have a protracted housing crisis and have failed miserably to address economic inequality. If Proposition 19 passes, millions of Californians will need to leave the state to survive financially, and many more will be denied an opportunity for upward mobility enjoyed by their parents and grandparents. As the Taxpayers Association has said many times in the past, we need to look at wholesale tax reform, not quick, patchy fixes. Proposition 19 is simply yet another Band-aid that just picks winners and losers — and the losers include far too many middle-income Californians, who are being pushed closer and closer to poverty.
If passed, Proposition 19 would create and direct new tax revenue to the California Fire Response Fund, which in theory is a very good thing, given the fires currently devastating our state. However, if we are going to make changes to property taxes, those funds should go to all key services — education, ending homelessness, affordable housing and every local fire agency in the state, for that matter — to support Californians through the coronavirus pandemic and beyond.
Proposition 19 only adds to the complexities of Proposition 13, strips property owners of protections and “lockboxes” tax revenue, making it harder to flexibly address Californians’ needs in these tough times. No matter your views on the current property tax situation under Proposition 13, all who value meaningful solutions to our state’s problems should vote no on Proposition 19 this November. Proposition 19 will only add layers of complication to an already-messy financial situation in a fragile environment, and deny millions the opportunity for a better life in our state. Is this what we really want for San Diegans of any income level?
Most Californians can barely afford one home; the lucky few who inherit property should be allowed to use that property in any way they need to bolster their family’s financial security.