California Property Tax

Property Tax Experts

For taxpayers who may be experiencing difficulty in paying their property taxes, there may be help. Most
cities in the United States have Property Tax Poverty Exemption Policy and Guidelines. You may be eligible to
waive your annual property tax for one year read more

Proposition 13, officially titled the "People's Initiative to Limit Property Taxation," was a ballot
initiative to amend the constitution of the state of California. The initiative was enacted by the
voters of California on June 6, 1978. It would eventually be upheld as constitutional by the United
States Supreme Court in the case of Nordlinger v. Hahn, 505 U.S. 1 (1992). Proposition 13 is
embodied in Article 13A of the California Constitution.

The most significant portion of the act is the first paragraph, which capped real estate taxes:

“SECTION 1. The maximum amount of any ad valorem tax on real property shall not exceed One
percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by
the counties and apportioned according to law to the districts within the counties.”

The proposition's passage resulted in a cap on property tax rates in the state, reducing them by
an average of 57%. In addition to lowering property taxes, the initiative also contained language
requiring a two-thirds majority in both legislative houses for future increases in all state tax rates
or amounts of revenue collected, including income tax rates. Proposition 13 received an
enormous amount of publicity, not only in California, but throughout the United States. Passage of
the initiative presaged a "taxpayer revolt" throughout the country that is sometimes thought to
have contributed to the election of Ronald Reagan to the presidency in 1980. However, of 30 anti-
tax ballot measures that year, only 13 passed.

A large contributor to Proposition 13 was the sentiment that older Californians should not be
priced out of their homes through high taxes. The proposition has been called the "third rail"
(untouchable subject) of California politics and it is not politically popular for Sacramento
lawmakers to attempt to change it.

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In the 2003 California recall election in which Arnold Schwarzenegger was
elected governor, his advisor Warren Buffett suggested that Proposition 13 be
repealed or changed as a method of balancing the state's budget.
Schwarzenegger, believing that taking such a step would be to touch a political
third rail that could end his gubernatorial career, said, "I told Warren that if he
mentions Proposition 13 again he has to do 500 sit-ups." A 2004 Los Angeles
Times Magazine cover story that detailed the proposition's damaging effects and
advocated its repeal drew heavy criticism from its supporters.