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In 1978, when Jerry Brown was governor, soaring property taxes were literally driving people from their homes. Embattled Californians responded with the People’s Initiative to Limit Property Taxation. This measure capped property tax rates for residential and commercial properties at 1 percent of the assessed value and prevented assessed value from growing more than 2 percent a year. The initiative also required a two-thirds vote of the legislature to enact any change in state taxes designed to increase revenues.
Governor Brown called it a fraud and a rip-off, but the initiative duly appeared on the June 6, 1978, ballot as Proposition 13. A full 65 percent of California voters approved the measure, a landslide victory. Governor Brown then supported the measure, proclaiming himself a born-again tax cutter. Since then Brown has spearheaded a tax counterrevolution, and Proposition 13 has come under relentless attack from people such as Nathan Gardels of the Berggruen Institute, who said it was about older “white” people who represented the past. Actually, Proposition 13 applied to all Californians and was popular among young, first-time homebuyers.
In 2010, Joe Mathews and Mark Paul’s California Crack-Up blamed Proposition 13 for the state’s fiscal woes. Subtitled, How Reform Broke the Golden State and How We Can Fix It, the book charged that the measure “unhinged California” and offered mostly statist solutions in its place.
Enter Dan Walters of the Sacramento Bee, who has noticed that California boasts more than $5.5 trillion in taxable property, which even with Prop 13 limitations will produce $55 billion in revenue this year, more than $60 billion with taxes for bonds and other debts. That is more than 12 times the $4.9 billion collected the first year after Proposition 13 was passed in 1978, and also surpasses the nine-fold increase in state government revenue from income and sales taxes. This contrast, says Walters, “makes liars out of those who contend that Proposition 13 destroyed California’s public finances.”
Proposition 13 created no new state agencies and included no mandate for new state spending. Legislators would do better to leave Proposition 13 alone and target what Mr. Gardels describes as a “bloating state.”