Opinion: Proposition 13 is outmoded


By Russell Hancock and Emmett D. Carson

Ever since its passage, Proposition 13 has been the “third rail” of California politics: Political leaders touch it at their peril.

We think it’s time to take a fresh look.

Our two organizations released last week the 2012 Silicon Valley Index, a comprehensive analysis of our region’s health. The report is filled with encouraging news about our regional economy, including a rebound in the tech sector and the revving up of our innovation engine.

But the same report shows local governments in a state of crisis, with decreasing revenues and rising expenses, no longer able to provide the essential social services and capital investments we need to sustain vibrant communities.

Even a stunning economic recovery won’t address our fiscal woes. That’s because our state’s tax system, geared toward an early 20th century economy, no longer tracks with the 21st century economy that is being invented in Silicon Valley.

Our current system is based on taxing sales in brick-and-mortar establishments, on the most volatile sources of personal income (stock options and capital gains), and – increasingly – on property taxes.

However, today’s knowledge economy increasingly provides goods and services through the Internet without providing needed tax revenue for state and local governments.

Russell Hancock is president and CEO of Joint Venture Silicon Valley. Emmett D. Carson is CEO and president of Silicon Valley Community Foundation.

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Comments (11)
  1. earl zitts says - Posted: February 19, 2012

    These two big government clowns want your hard earned money for themselves and their friends. We, you and I, know how incrediably wasteful government is and their appetite for cash is insatiable.
    Let’s start with the exorbitant salaries for too many government employees and welfare for illegals, legals, and big business.
    The more money your masters take from you the less freedom you have. Real simple.

  2. Dogula says - Posted: February 19, 2012

    We (especially property owners) are NOT undertaxed. Our government overspends egregiously.

  3. Steve says - Posted: February 19, 2012

    Thanks to Proposition 13, millions of seniors have been able to remain in their longtime homes in later years and retirement, instead of being booted out due to government’s insatiable excesses and wasteful spending.

    Don’t mess with Prop. 13.

  4. dumbfounded says - Posted: February 19, 2012

    I find it incredible that, once again, an argument is made that places further tax burden on those least able to pay while the successful business interests are relieved of responsibility.

    The assumed change in tax rates that a revision of Proposition 13 would precipitate will affect people who have lived in their homes for long periods, i.e.- seniors. These are the people who have worked hard, payed their bills and taxes and now have fixed incomes. The elimination of Proposition 13 would necessitate increases in government to reassess every property in the land.

    More bureaucracy, more government workers, more salaries, more pensions and less efficiency is hardly an answer to our current economic situation. Less spending is the answer. After every ounce of waste is cut, then a discussion of revenue can be initiated.

    Go back to Silicon Valley and write an app for paying your fair share. Don’t expect non-business property owners to pick up the slack.

  5. Bob Fleischer says - Posted: February 19, 2012

    Every year or three, ‘rethinking Prop 13’ is floated in the media. It amounts to running it up the flagpole and seeing if enough folks will bite. Prop 13, as well as the little known Prop 60, 90, and 110 (which allow tax-carry between certain Counties, etc.); were all passed for really good reasons….some of which were mentioned by others in this Lake Tahoe News thread. It is, as stated, very good for seniors and others on more or less fixed incomes, steady homeowners who don’t move often if at all; who might otherwise not be able to afford the property taxes on their homes as the homes appreciated in value over the years. Those that oppose Prop 13 tend to be neighbors who purchased houses much more recently and their houses are assessed much higher, so their beginning taxes (~1% of value) are much higher and they would like them much lower; together with the commercial property owners who have their taxes treated differently than homeowners, and would love to have their taxes lowered.
    If Prop 13 was modified, I will bet that would be scheduled to happen over quite a few years; otherwise the mods would fail. I doubt 13 will be modified at all, hopefully this will be so. Prop 13 has helped society in many ways far more extensively than just keeping Senior’s taxes down.
    BTW….I wonder how many homes here at Tahoe have been re-assessed LOWER, since 2008/2009. ?

  6. dogwoman says - Posted: February 19, 2012

    Yeah, Bob. I pay about $100 less now than I did two years ago. Huge whoopee. But I’ll see if that’s still true next year when they add my new rural fire fee and whatever other fees they can think up between now and then.

  7. John says - Posted: February 19, 2012

    Dogwoman, that is one advantage of Prop 13 to government. Your taxes cannot go up precipitously, nor do they go down precipitously… so tax collections dont go down precipitously, well except in a great recession with foreclosures. The point is that government has a steady revenue base with no big spikes up or down. It makes budgeting easy and collections reliable.

    How did the authors just skip the income tax?

    This is probably as poorly written as a discussion on taxes can be. I wont get into the details because probably only I find it interesting. But these guys are basically frauds.

  8. PubworksTV says - Posted: February 19, 2012

    John, So right on the fraud part.

    These guys run a couple of non Profit groups

    Joint Venture Silicon Valley & Silicon Valley Community Foundation.

    which in a significant way take money from tax payers for lavish salaries without the pressures of competition and value.

    Just more pigs at the tax trough spewing their own selfish interests.

    Give-me give-me give-me

  9. DAVID DEWITT says - Posted: February 19, 2012

    It really bothers the political class that there is a tax they can not raise.

  10. tahoegal says - Posted: February 19, 2012

    these guys should learn not to mess with Prop 13. Or medicare. Or social security. Or, women’s reproductive rights. They should just go sit in the corner and don’t communicate, and count their money of course.

  11. George says - Posted: February 20, 2012

    The quote; “no longer able to provide the essential ‘social services’ and capital investments we need to sustain vibrant communities.” Do you realize the absurdity?

    Prop 13 rewards those industrious enough to be able to afford a house; most with great sacrifice. What you are suggesting is penalizing these individuals so you can reward the lazy XXX looters (social services recipients) and corrupt government bureaucrats, who are the 2 segments of the population that would benefit from this stealing.

    Get the entitlement programs under control, stop the illegal immigration, and immediately CEASE any and all entitlement benefits to any illegal alien, and use some God given common sense for once to keep some things that make California a state that not every “producer” will want to flee.

    Getting the fiscal house in order and reducing spending is what is needed, NOT higher taxes and more spending.