As a proposition-rich election bears down on Californians (especially Angelenos), the New York Times's Retro Report is taking a look back at one of the most important ones ever passed in the state, Proposition 13. The measure slashed property taxes for land owners, and amounted to "an assault on the property-tax structure in California," the Times writes. (One way Prop. 13 keeps taxes low is by only reassessing commercial and residential property values when that property is sold, so long-time property owners pay taxes on old, not current, property values.)
In a short video filled with footage and photos from the late 1970s, the Retro Report documents the political climate that allowed the measure to pass. California residents who felt they were being gouged on their property taxes were galvanized by the angry everyman leader, Howard Jarvis. (Jarvis was a lobbyist for the Los Angeles Apartment Owners Association—a group that stood to benefit hugely from decreased property taxes.)
Opponents noted that the proposition would benefit the wealthy and those who owned large portfolios of property, and warned that its passage would potentially decimate services that property tax revenue paid for, especially education. But their warnings didn’t strike a chord with voters, and Proposition 13 passed in 1978 in a landslide. The summer after it passed, there was no summer school in California for the first time since the Great Depression, a news report in the Times video points out.
Owners of real estate quickly saw their property tax bills slashed. But they, and millions of others, also found themselves burdened with assorted new fees and levies to compensate for lost state and local government revenues.
The long terms effects have been harder to quantify, in part, says the Los Angeles Times, "because the state hasn’t compiled statistics needed for the discussion." The Times looked at a report released in September by the state’s Legislative Analyst’s Office. That report notes that while there’s still much that we don’t know about the effects of the proposition, it does seem that Prop. 13 has helped the wealthy more than anyone. The Times says that the authors of the LAO report:
calculate that two-thirds of [Prop.13's] tax benefits go to those with incomes above $80,000, and most of that to homeowners earning more than $120,000. The benefits to renters, by comparison, are speculative. While landlords may pass some of their tax savings on to tenants, the extent to which that happens is unclear, they say.