Re: "High-priced coastal homes have lower tax rates than inland Houses due to Prop 13, study finds," [News, Dec. 5]: The headline of your recent article on Proposition 13 seemed to have been written specifically to inflame readers on the "fairness" of Prop. 13. The article focused on a study done by the online real estate site Trulia, and concluded that Prop. 13 has caused coastal homeowners with higher home prices to have lower property tax rates than homeowners in lower-priced inland cities.
The problem is that's the wrong conclusion for the data. Prop. 13 guarantees that every homeowner is assessed at the same tax rate when purchasing their home - 1 percent of market value. The study looked at the "effective" tax rate, comparing the current market value to the tax liability. The study actually proves that Prop. 13 is doing exactly what it was meant to do - protect homeowners from volatile increases in their property tax bills.
The article stated that "most" homeowners benefit from Prop. 13. Not true. All homeowners in California, whether their home was purchased in 1978 or yesterday, are protected under Prop. 13. Every home purchased has its tax rate set at 1 percent of the initial market value, and homeowners have the stability of knowing that any annual increase will be capped at 2 percent. Imagine having to wonder every year how much property tax you owe based on a subjective evaluation of a county assessor. Of course, the longer someone stays in their home, the lower their "effective" tax rate will be in comparison to market value.
Prop. 13 has also created the most stable source of revenue for local government, stopping the volatility of market values from affecting the flow of property tax revenue to cities to fund vital local services. The report of the Commission on the 21st Century Economy states that Prop. 13 has helped create "the most stable of major state and local revenue sources." During the downturn of 2008, cities all over California watched as their sales tax revenue plummeted. Because of Prop. 13, property tax revenue was a stable source on which local governments could rely.
California taxpayers need to be watchful over the next few years. We are already some of the highest taxed individuals in the nation. Sacramento's appetite for more spending will require more of our hard-earned dollars. All homeowners need to stand together to protect Prop. 13.
This letter appeared was written by Carolyn Cavecche, President & CEO of the Orange County Taxpayers Association, and was originally published in The Orange County Register.