California Proposition 13
California Proposition 13
Name:
Institution:
California Proposition 13
What is proposition 13?
Property taxes in California have been a controversial issue for very many years. In mid 1978, approximately ⅔ of voters in California passed proposition 13. Before it had been passed, property taxes increased almost annually according to the assessed value of the property. In the 1970s, there was a remarkable growth in the real estate market and the value of homes rapidly went up. Property values were escalating substantially since assessors had to keep assessed values current. On the other hand, increments in the evaluated value were not made annually. Therefore, this led to a huge tax shock for homeowners after every few years.
After Proposition 13 was passed, there are several things that have taken place. The cap of property tax rates was set at 1 percent. This implies that one is supposed to pay property taxes of only up to one percent of the evaluated value of their home. The evaluated value of homes cannot surpass the evaluate value between 1975 and 1976. Also, it can increase in excess of two percent annually according to the Consumer Price Index (CPI). If the ownership of a home changes or modification is made, another evaluation is done according to the current market value. The new value should increase annually at a maximum of two percent every year. Various local agencies have been forced to look for alternative sources of funding due to the reduction in property taxes as a gross percentage of the evaluated value of houses. The aim of Proposition 13 was to safeguard taxpayers from unexpected rises in property taxes, to make it a requirement for voters to approve any increases in taxes, and to allow efficient tax relief.
How Does Proposition 13 Affect California’s Economy?
In 1994, Money Magazine published an article that portrayed the way through which Proposition 13 ruined the economy of California. The article claimed that the snowballing
Name:
Institution:
California Proposition 13
What is proposition 13?
Property taxes in California have been a controversial issue for very many years. In mid 1978, approximately ⅔ of voters in California passed proposition 13. Before it had been passed, property taxes increased almost annually according to the assessed value of the property. In the 1970s, there was a remarkable growth in the real estate market and the value of homes rapidly went up. Property values were escalating substantially since assessors had to keep assessed values current. On the other hand, increments in the evaluated value were not made annually. Therefore, this led to a huge tax shock for homeowners after every few years.
After Proposition 13 was passed, there are several things that have taken place. The cap of property tax rates was set at 1 percent. This implies that one is supposed to pay property taxes of only up to one percent of the evaluated value of their home. The evaluated value of homes cannot surpass the evaluate value between 1975 and 1976. Also, it can increase in excess of two percent annually according to the Consumer Price Index (CPI). If the ownership of a home changes or modification is made, another evaluation is done according to the current market value. The new value should increase annually at a maximum of two percent every year. Various local agencies have been forced to look for alternative sources of funding due to the reduction in property taxes as a gross percentage of the evaluated value of houses. The aim of Proposition 13 was to safeguard taxpayers from unexpected rises in property taxes, to make it a requirement for voters to approve any increases in taxes, and to allow efficient tax relief.
How Does Proposition 13 Affect California’s Economy?
In 1994, Money Magazine published an article that portrayed the way through which Proposition 13 ruined the economy of California. The article claimed that the snowballing
References: Buffett, W. E. (2003). Warren Buffett Criticizes Journal Reporting. Wall Street Journal, 3, 15. Campbell, B. C. (1998). Tax revolts and political change. Journal of Policy History, 10 (1), 153– 178 Cashill, J. (2007). What 's the Matter With California?: Cultural Rumbles from the Golden State and Why the Rest of Us Should Be Shaking. New York: Simon and Schuster. Reeves, R. (1994). THE TAX REVOLT THAT WRECKED CALIFORNIA Schools, services and criminal justice are failing for lack of funds. It is a warning for America. Money. Retrieved August 28, 2012 from http://money.cnn.com/magazines/moneymag/moneymag_archive/1994/01/01/88570/inde x.htm> Smith, D. A. (1998). Tax Crusaders and the Politics of Direct Democracy. New York: Routledge.