ABOUT PROPOSITION 13
Before Proposition 13, property taxes were based on the market value of a property every year, and the statewide average tax rate was 2.67 percent of the market value of the property. Imagine paying 2.67 percent of the current market value of your home or other property every year as a condition of keeping it.
Proposition 13 limited the annual increase in the assessed taxable value of property to 2 percent for as long as you own your property and capped the statewide property tax rate at 1 percent.
Only new construction or a change of ownership will trigger reassessment to market value, and then only for the value of the new construction, not the whole property, or for the percentage of the property affected by changing the title to add or remove an owner.
Proposition 13 added other taxpayer protections to the state constitution as well. Local taxes must go on the ballot for voter approval. State tax increases require a two thirds vote in each house of the legislature. Real estate taxes based on value, ad valorem, are prohibited, as are taxes on the sale or transfer of real estate except for a pre existing documentary transfer tax of 0.11 percent.
Court created loopholes have weakened the taxpayer protections in Proposition 13. The Local Taxpayer Protection Act to Save Proposition 13 will restore and strengthen Proposition 13, preventing and reversing unconstitutional tax increases that are costing Californians billions of dollars every year.
RESTORE THE 2/3 VOTE PROTECTION
Proposition 13 requires local taxes to go on the ballot for voter approval. Special taxes, for a dedicated purpose, require a two thirds vote, 66.67 percent, to pass. But in 2017, the California Supreme Court suggested that a tax increase might only need 50.01 percent to pass if it was put on the ballot by a citizens initiative.
The ambiguous language used by the court in this 2017 case, California Cannabis Coalition v. City of Upland, created a new loophole for tax increases of all kinds. Local governments that wanted to raise taxes simply had to work with special interest groups to collect signatures to put a tax increase on the ballot, and the requirement for a two thirds vote vanished.
Many of these tax increases were challenged with legal actions, but the appellate courts cited the Upland case and allowed them. The loophole grew wider with every decision.
The Local Taxpayer Protection Act to Save Proposition 13 closes the loophole. Tax increases proposed by a citizens initiative will require the same vote threshold to pass as tax increases proposed by a City Council, County Board of Supervisors or any other government body.
END REAL ESTATE TRANSFER TAXES
A real estate transfer tax is like a sales tax on real estate, collected on the full market value of the property when it is transferred from one owner to another, regardless of whether the transaction is at a profit or loss.
Proposition 13 specifically prohibited real estate transfer taxes in excess of a pre existing documentary transfer tax of 0.11 percent. But in the 1990s, California courts created a loophole that allowed charter cities, cities that have adopted their own local constitution called a charter, to enact local taxes on the transfer of real estate as long as the money was used for general purposes.
The Local Taxpayer Protection Act to Save Proposition 13 closes this loophole by prohibiting the adoption of any real estate transfer tax in excess of the 0.11 percent documentary transfer tax that was allowed by law before Proposition 13 passed.
REPEAL EXISTING TRANSFER TAXES
Because of court created loopholes that weakened Proposition 13, dozens of cities in California have enacted real estate transfer taxes as high as 5.5 percent of the market value of the property.
The Local Taxpayer Protection Act to Save Proposition 13 sunsets these existing taxes two years after voter approval of this initiative, with the exception of 0.11 percent documentary transfer taxes that were allowed by law prior to the passage of Proposition 13.
This initiative would repeal Measure ULA in the city of Los Angeles, a real estate transfer tax of 4 percent to 5.5 percent of the market value of a property that is sold or transferred if the value is above 5 million dollars.
SAVE PROPOSITION 13
The Upland loophole allows any local special tax to evade the requirement for the approval of two thirds of voters. But it does not stop there. Any unconstitutional tax increase could get through the loophole if a court interpretation allows it.
Measure ULA in the city of Los Angeles is an unconstitutional real estate transfer tax for a special purpose, a type of tax that would not have been allowed even under previous court created loopholes for transfer taxes. But the Upland loophole was applied by a lower court to let it go through.
This represents a very grave threat to taxpayers. If the plain language of the state constitution can be ignored and overwritten by a local initiative tax increase, no part of Proposition 13 is safe from being interpreted away through the Upland loophole.
The Local Taxpayer Protection Act to Save Proposition 13 will secure the taxpayer protections that voters have placed in the state constitution over the last five decades.
Go to www.SaveProp13.com, print page 2 and follow the instructions for signing and mailing. Sign the petition and help close the court created loopholes.
