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April 26, 2011

Proposition 13: A case study in unintended consequences

The Economist:

DURING JERRY BROWN'S first term in the 1970s his hair was still full and dark. His voice was not yet gravelly. Unlike his back-slapping father, he still bore traces of the Jesuit seminary where he had once studied to become a priest. He meditated on Zen koans. He declined the governor's mansion and slept on a mattress in a rented flat. He dreamed of large things whose time had not yet come, such as green energy. And yet, or perhaps because of all this, Jerry Brown failed to notice the anger boiling over in his state.

Californians were angry about property taxes. These local taxes were the main revenue source for school districts, cities, counties and California's many specialised municipal jurisdictions. And they had been rising. A homeowner's property tax was determined by two factors. One was the tax rate, the other the assessed value of the house to which the rate was applied. These assessments were soaring: between 1972 and 1977 home prices in southern California more than doubled, thus doubling homeowners' tax bills. Mr Brown and the legislature fiddled with relief measures, but their bills were half-hearted and the taxpayers were angry.

Posted by Jim Zellmer at April 26, 2011 1:28 AM
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