The Effects Of Tax Reform On California — страница 2

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assessed at the full market value and then the assessment will start to rise at the rate of 2% per year. Proposition 13 also placed restrictions on the ways local governments could initiate new taxes to pay for vital public services. Proposition 13 requires that local governments who wish to introduce a new tax to pay for special taxes for specific purposes. Local governments would now be required to put the tax to a vote of the people, and that the tax must receive a two-thirds vote of the people to pass. Local government taxes for general purposes could be approved by a majority of the governing body or a majority vote of the people. The state too was limited in the way it could increase or create new taxes. The state would need to pass any new tax by a majority vote of the

legislators, in addition to the signature of the governor. In the month of June 1978 the voters of California turned out and voted on Proposition 13. The results were 65% in favor of the proposition, and 35% against. Immediately following the passage of proposition 13 the effects were felt almost immediately. The effects of proposition were serious indeed, 6.1 billion dollars or 53% of local property tax revenues evaporated almost instantly. One of the most immediate effects of proposition 13 was against the states school age children. Prior to Prop 13, California schools enjoyed being ranked in the top five states for achievement for children grades kindergarten through twelfth. After the implementation of proposition 13 our children have dropped to the bottom ten of all fifty

states in achievement for the same grades. The reason for this is clear; the voters went against their own children, and grandchildren and removed the funding that enabled us to keep our children educated in the best way possible. No longer would school districts be able collect property tax, and then distribute it locally by the school district board. Now the school districts would need to depend on the state and federal governments for the majority of their funding. The problem with this scenario is that because of prop 13, the state was beginning to enter into a fiscal crisis of their own, and could not afford to give our children the level of education, that the people who voted for proposition 13 were afforded. It became apparent soon after prop 13 was passed that there were

huge differences in the property taxes paid my individual homeowners. Because property taxes were locked at 2% per year and the value of property increasing more than 2% per year created a unique phenomenon. The phenomenon was that the longer one held on to the same property the larger the gap between its market value, and the value that it was assessed at for property tax purposes. The only time that a home was assessed at its market value was either when it was sold, or when a home is newly built. Therefore, you could have one home with a market value of $300,000 and an assessed value of $100,000 in a ritzy upscale neighborhood, at the same time we could have a home that was newly sold, with a market value and assessed value at approximately $100,000. Both homeowners in this

example would pay approximately the same amount in property tax, because of the assessed value of the homes. This shows the true inequality of proposition 13 you could have next-door neighbors where the difference in property taxes differ at the ratio of ten to one. This difference places an unfair burden of property taxes on new homeowners. As stated earlier proposition 13 was designed to alleviate the tax burden shared by the owner-occupant property owner. The true effect of the proposition was quite the opposite, the tax inequality that existed prior to prop 13 only continued to worsen, and the burden of property tax shared by commercial properties continued to be less than that of commercial properties. The reason for this disparity is that the designers made the tax relief

available across the board. At the time proposition 13 was envisioned, commercial properties were not experiencing the tremendous growth in the market value of their properties, as the owner-occupant properties were. This indicates that businesses were not in the same dire need of immediate tax relief that the residential owners so desperately required. Because of this nearly two-thirds of proposition 13 s tax relief went directly to businesses and landlords, the ones who needed it the least. One of the other effects of proposition 13, was that local governments needed money to fund themselves, and would become creative to do so. After the passing of proposition 13, we began to see a proliferation of new fees, and assessments imposed by local governments to raise revenue. One of