WHAT IS PROP 13?

What is Prop 13?

LIFE BEFORE PROP 13

In the 1970s, families, seniors, farmers and businessowners were being forced from their homes, farms, and properties because they couldn’t afford to pay 50-100% increases in their property taxes every year. Property tax bills skyrocketed, often beyond the owners’ ability to pay.

It was nearly impossible to predict the next property tax bill, leaving many families and small businesses unable to plan for the future. In some cases, small businesses were left with no choice but to lay off employees or raise prices on their customers.

This led to bipartisan support for property tax reform.

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A VICTORY FOR CALIFORNIANS: PROP 13

On June 6, 1978, nearly two-thirds of California voters passed Prop 13 to cap property tax increases for residential and business properties and provide certainty so that they will be able to afford their property tax bills in the future.

Specifically, Prop 13:

  1. Calculates general property taxes for residential and business properties based on one percent of their purchase price
  2. Caps annual increases in property taxes at two percent per year, which prevents sharp increases in property taxes, especially when property values rise quickly

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PROP 13 CREATES CERTAINTY & PREDICTABILITY

Prop 13 provides certainty to every taxpayer who buys real estate so they will know what their taxes will be in the future—protecting them from runaway property taxes that could force many to sell their homes or lose their businesses.

Prop 13 also creates stability and predictability for local governments helping them plan for the future.

In fact, according to the nonpartisan Legislative Analyst, “Property tax revenues increased throughout the recession while other major revenue sources declined significantly.”

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PROP 13 PROTECTS HOMEOWNERS & RENTERS

California’s cost of living is among the highest in the nation. Without Prop 13’s protections, homeowners could once again see skyrocketing property taxes which could mean higher rents for tenants.

On average, Prop 13’s rate limits, combined with current assessment practices, saved homeowners an estimated $13,700 and renters $4,400 in 2017. Prop 13 keeps property taxes affordable and prevents rents from raising even higher which would make California’s housing crisis even worse.

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PROP 13 PROTECTS SMALL BUSINESSES & CONSUMERS

Most small businesses rent the property on which they operate, and their lease agreements require they pay the property tax. Without Prop 13’s protections, small businesses will face soaring rents at a time when federal and state government is trying to provide small businesses with relief to keep their doors open.

This November, a $11.5-billion property tax hike on businesses will be on the ballot. Unless defeated by voters, Prop 15’s higher property taxes will ultimately get passed on to consumers with higher costs on just about everything we buy and use, like groceries, fuel, utilities, day care and health care.

Want to join the fight against higher property taxes?

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