> It forced a reduction in the out-of-control government spending

No, it didn't. California just kept adding taxes everywhere else to make up the difference and still had an annual deficit most of the 13 years I lived there.

> It saved seniors from losing their houses

Why are seniors magically allowed to be immune to basic market forces when no one else is?

> Why are seniors magically allowed to be immune to basic market forces when no one else is?

Because they have fixed incomes (generally). This income is immune to market forces. That's why.

While many elderly invested wisely (and at the right time) to become wealthy, especially when leveraging dips (like during the 80s), it doesn't change the average case. Living month to month on a fixed income is the norm after retirement.

I do not think elderly invested wisely. Cities grew. They got lucky. It's as simply as that. The remote working is taking pressure off the cities. And you can see many crying about return to office, who have multi year leaseholds or own the buildings.

I specifically called out that this is a minority situation, so the characterization you put forward seems like a wild overstatement.

Some seniors bought post ww2 bonds at phenomenal rates. There were many ppl who made wise investments, regardless. Patience turned thousands into hundreds of thousands outside of the housing prices.

Except, while it was always rhetorically useful to talk about seniors with limited and fixed incomes being able to stay in their homes, Prop 13 also benefits people with multiple homes, landlords with rental properties, kids inheriting their parents house and running it as an AirBnb, etc. It benefits _corporations_ and non-residential property. Corporations can also skirt around it by not triggering a reassessment by not transferring ownership all at once.

Meanwhile, why are only senior home owners worthy of that stability? Why do seniors who rent not get rent stabilization as a matter of law?

If this were really motivated out of altruistic concern for vulnerable retirees, the law would look very different.

> kids inheriting their parents house and running it as an AirBnb

This doesn't exist anymore as of Prop 19. If an inherited home is not primary residence, it is taxed at full market value.

Oh, right I'm sorry, since the beginning of 2021 if you inherit a home in CA you should move into it and run your _prior_ home as an AirBnb. My understanding is you need to make it your 'primary residence' within 1 year, but it doesn't say how long it must remain your primary residence?

With the "portability" affordances for people over 55, and with the special treatment of farms, I think there's still plenty of room for heirs to receive properties with ridiculously low assessments. A savvy person trying to give the greatest tax advantage to their heirs would sell their property with the lowest assessment, and buy the most expensive property they can, make it their permanent residence, and leave it to a child or grandchild.

In combination with the special treatment for farms, I think there's plenty of room left for people to inherit property which they don't actually need, with ridiculously low assessments.

That doesn't mean they should be excused from paying their fair share, especially since the elderly make greater use of public services. Float the tax rates to the market level and allow fixed income elderly to accrue a lien against the property that can be paid out of the estate when they die.

The question was why, and fixed income is the rationale. How effective it is or what you or I or the voters think is fair, is incidental.

How is it incidental? Its a bad answer for why because there is a way to solve the problem you described without letting the elderly freeload off the backs of the young.

Fixed incomes while complaining that their land is going up in value which lead to high property taxes? That kind of thing?

This was an argument for prop 13. The GP seemed to be puzzled about the reasoning, when it was sold to voters on this simple premise.

> California just kept adding taxes everywhere else to make up the difference and still had an annual deficit most of the 13 years I lived there.

The state taxes were added to partially backfill the lost local taxes. Prop 13 was a major contribution to moving control from local governments (which it kneecapped fiscally) to the State (which it also kneecapped, because of the supermajority requirement to raisd any tax, but not as badly.)

I lived in California for most of my life and I remember the effects of Prop 13. Before Prop 13 the parks had recreation coaches, the libraries were open seven days a week, and schools had more than enough teachers. As is typical with any forced budget reduction, the changes were targeted for maximum effect on public perception.

The federal government went through a similar activity a few years later when Reagan slashed budgets. Everyone survived.

The state/federal budgets today are astronomically higher, even after accounting for inflation.

Below is a newspaper article I saved from over 30 years ago:

--

See Dick and Jane-and Simple Simon-Solve the School Budget

By ALICE J. GLASSER

Once upon a time, a very long time ago, there was a schoolhouse with a few children and a teacher. The children went to school to learn and the teacher went to teach. It was all very simple.

Then a few more kids came, so they hired another teacher. Now, with two teachers, they needed someone to supervise. So they hired a principal. (Meanwhile, a lot more kids came, but just one more teacher.)

So the principal hired an assistant. But still more kids came, so they built another school and hired another principal. And now, with two principals, they needed someone to supervise. So they hired a superintendent, an assistant superintendent, a supervisor of Here and a supervisor of There. And since they needed a place for all these people, they built their own building and called themselves Unified. And they were happy until someone pointed out that there wasn't enough for them to do. So they hired a director of This and a director of That to develop pages and pages of things for them to do.

But there still was a problem. Unified had no one to implement these pages and pages of plans. So they hired coordinators of This and coordinators of That to decide which of the pages and pages of plans they should implement. (Meanwhile, a lot more kids came but just a few more teachers.)

Now Unified needed a bigger building for all their people. So they bought a really big place. So big that they hired a few more Heres and Theres and Thises and Thats to fill up the space. And they were happy until they realized that they had run out of money. Their budget didn't balance. (Meanwhile, a lot more kids came and an occasional teacher.)

So they hired a financial expert of This and a resource planner of That, and Unified came up with a Plan to balance the budget. They would break down all the walls between all the classrooms and once again have just one schoolroom. Only this time there would be 500 kids and one teacher. Of course, the teacher couldn't really teach and the kids couldn't really learn, but Unified was happy. Their budget was balanced. It was all very simple.

----

As chairperson of the Mar Vista School Site Council in West Los Angeles, Alice J. Glasser has been wrestling with Los Angeles Unified School District budgeting problems. By profession, she is a physician.

Update: I found it online here: https://www.latimes.com/archives/la-xpm-1992-07-08-me-1359-s...

Doesn't Prop 13 also apply to commercial property? And second/third/30th houses? I think they smuggled a bear in as a rabbit with this one.

The intent of the law was malicious. That's why it applies everywhere.

Angry voters wanted a "tax revolt". Jerry Brown's Prop 8, on the same ballot, would have given homeowners a specific break but they wanted blood.

It does, but commercial property tends to change ownership and undergo construction more often. Therefore property taxes on commercial property tends to be higher.

As a result, cities have an incentive to build commercial property over residential homes. The result is that the people working in those offices are competing for limited residential space (leading to high prices) and often have to settle for long commutes (leading to gridlock).

Prop. 13 means that a commercial renter can rent out the land to one tenant after another virtually forever without the taxes going up very much at all (way below inflation). At some point it gets to a point where it is never economically advantageous for either renter or landlord to ever have the landlord sell... the situation is only disadvantageous for the city/community (which is getting far less in taxes than other places).

Remember that companies never die of old age.

You should never sell land because ground rent doesn't disappear, land is a monopoly.

Even if commercial property is changing hands, there are well-known loopholes to structure that as multiple transactions, none of which transfer more than a 50% stake, and which therefore do not trigger a Prop 13 Reassessment.

https://journal.firsttuesday.us/change-the-law-close-prop-13...

When was the last time Disneyland changed hands?

> commercial property tends to change ownership and undergo construction more often

Definitely going to need to see a reference on that one.

Grandma is a millionaire. She can take out a reverse mortgage to pay her taxes and she'll still be a millionaire. Or she can agree to a lien that pays her taxes upon her death or move. We don't need to worry about grandma losing her house.

You do have to worry about working families losing their houses in gentrifying areas though. The UK gets "property" tax right in the form of council tax. It's low, paid for by the person living in the property, and often is punitively high for the owners of empty properties.

When people say that the US is a "low tax economy" they seem to forget property taxes, which make the effective rate in almost _all_ US states higher than the UK (and much of the rest of Europe) if you own a home. It's just a "poor value for money" economy instead.

> Grandma is a millionaire.

You must come from a privileged family.

In California, being a millionaire at "grandma" age is no more privileged than average.

> In California, being a millionaire at "grandma" age is no more privileged than average.

[citation needed]

The only reason to say grandma can’t pay her property tax is because grandma’s house has appreciated substantially and now grandma is wealthy.

Wealthy people should pay their taxes.

It created a landed gentry in California and has caused out of control housing prices. The world changes, trying to insulate one particular group from change is deeply unfair.

Inexpensive senior housing comes from the same place inexpesive housing for everyone else does: building more housing.

Unlike first-time buyers, though, for whom asset inflation is itself strictly a tax (paid by them, to seniors, but far more so, banks and investors), price inflation of an asset you already hold is free money.

It's highly distortionary.