Is Prop 13 Demographically Unsustainable?
USC demographer Dowell Myers suggests yes -- that the crash in real estate prices has undermined it -- in his new report. That counters the view of Prop 13 supporters that the measure, by limiting property tax increases and reassessments in good times, takes some of the sting out of real estate declines since lagging taxes still have room to catch up.
A brief synopsis of Myers' argument:
"The recent 40% crash, far worse than the 15% decline in the bad recession of the 1990s, now calls into question the fiscal and political sustainability of Prop 13. New analysis shows that political support for Prop 13 is markedly weaker when house prices are flat or declining. In particular, the 2 million home owners in California (out of 7 million total) who bought since 2003 will likely receive no benefits from Prop 13.
"Extensive analysis also documents the wide generational disparities that have accrued since 1978, showing that longtime homeowners now pay taxes 21% BELOW the national average despite their far greater housing wealth. Meanwhile, the new generation of home buyers struggles with their high mortgages and falling home values, plus they are asked to pay extra high taxes to cover the steep discounts enjoyed by earlier buyers. Can this be sustained?"
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