Death and Taxes: a modest proposal Hey California, why limit Prop 13 protections to those who are old and alive?


To: California Association of Realtors
From: Joe Mathews
Re: Death and Taxes

Yes, all Californians eventually will die. But why can’t our property tax discounts live forever?

That question was inspired by your glorious new idea: a ballot initiative to make our state’s Proposition 13 property tax savings even more generous.

Your “People’s Initiative to Protect Prop 13 Savings” is as Californian as the Golden Gate Bridge. It provides a concrete symbol of an undeniable reality: Limiting property taxes is the fundamental organizing principle of postmodern California.

Under our Prop 13 regime, the taxable value of every California home was frozen to its value as of March 1, 1975 (when Olivia Newton-John took home the Record of the Year Grammy for “I Honestly Love You.”) Beginning with that date, or whatever subsequent date a home was most recently purchased, the assessed value of a home cannot increase by more than two percent annually—no matter how much the actual value goes up.

In this way, Prop 13 provided homeowners with an ever-escalating discount on property taxes as the value of their homes rose. And groups like yours have labored to make this subsidy the most heavily protected part of our state’s finances. Californians will cut public school funding, or local government services, and they will raise the state income tax or sales tax, but property tax savings are untouchable.

But something as fundamental as Prop 13 can always use more protection. So your new initiative shores up a fundamental weakness: Homeowners don’t get to keep forever their discounted property taxes. Tragically, they lose the right to that discounted tax assessment once they sell their property and move on to a new home.

Fortunately, this is an outrage your initiative would end.

Your proposal would allow anyone over 55 to sell their California house and carry those same low property taxes to their next home, no matter the new home’s market value, or its location in the state, or the number of moves they make. Your tax savings would follow you—and not just your home—as long as you live in California.

This historic change would represent, to borrow a line from President Lincoln, a new birth of freedom. Prop 13 only protected older homeowners from being forced out of their homes by rising property values and property taxes. Your Son-of-Prop-13 also defends the very opposite freedom; it mercifully frees older homeowners who might feel trapped in homes by their own unwillingness to surrender their property tax savings.

If your initiative passes, longtime homeowners will finally be free—to sell their homes at the huge profit they’ve run up over the years, without losing their property tax discount in the process. Hallelujah!

(Yes, this would also create more commissions for realtors, but I believe you when you say that’s just a coincidence.)

No Californian, in touch with the established values of our state, could oppose such a proposal. But—forgive me—I must admit to one concern: Your plan does not go far enough.

So here I propose—very modestly—an amendment: Don’t limit Prop 13 protections just to those who are old and alive. To express the central importance of property tax discounts in our state, I propose that every California homeowner be entitled to property tax savings that continue even after you die.

It would be up to you—and your estate—how to exercise it. You could transfer the property tax savings—as a whole, or divided up into pieces—to whomever you want.

Think of the children—especially children related to these longtime homeowners with all their equity. Under my proposal, that equity could be passed on without a reassessment that would make higher property taxes cut into your inheritance.

I recognize that not everyone in California will see the genius of my plan, or yours. For one thing, your plan would cost local governments $2 billion, and mine would cost many billions more. For another, critics have argued that Prop 13 is generational theft. That it effectively reserves for older homeowners money that would be better spent on improving education and building housing and infrastructure so that California—with some of the nation’s highest rates of poverty and inequality—could live up to its image as a state that defines a better future.

And since your plan and mine would expand Prop 13’s tax protections, the critics say, you and I would just be making all the above problems worse.

Of course, the people who say such things may mean well, but they don’t recognize what our state has become. Don’t they know that old Californians are the future? The old represent the fastest-growing demographic in our state (the proportion of Californians 65 and older should double by the end of the next decade)—while the number of children is in decline and school enrollments are down. Why prioritize the education of the next generation, when so few of them will ever be able to afford to buy a home here?

Now, no plan rolls out perfectly, and mine might need a few brakes. For example, if new technologies allow Californians to live much longer, people could start hanging onto their subsidies past age 100, instead of dying and passing them on. But we could speed that transfer of property tax savings by amending the state’s aid-in-dying law to allow not only a doctor but a licensed realtor to oversee an assisted suicide. This would not damage the deceased homeowners, at least tax-wise, since under my plan their discounts would be immortal.

Sure, some people would call this extreme. Some people might even suggest that my whole plan prioritizes property tax savings over too many other concerns, including life itself.

Which is to say: Some people just don’t understand what California is all about.

Joe Mathews writes the Connecting California column for Zócalo Public Square.

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