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Past Brown-era tax law is not sacrosanct

February 11, 2011

Our health may be getting wobbly, but have you noticed that those of us in the 65-or-older age bracket seem to have it all over younger people when it comes to financial security?

Many of us have been grandfathered into the type of defined benefit retirement arrangements that few of our children or grandchildren will ever see. However, the most unique advantage we oldsters have in California is exceptionally low property taxes.

My wife and I are living in the house we bought in 1966, 45 years ago. Maybe I’m supposed to feel smug, but I’m actually embarrassed when I think of the property taxes my neighbors on either side must pay. Both are young families with children whom the parents will be putting through college soon. One family bought five years ago; the other, five months ago. Their property tax bills are probably three or four times higher than mine. Is that fair?

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One of the most frequently heard complaints from my age-bracket friends involves children or grandchildren moving back into my friends’ homes because they no longer have good enough jobs to pay for their own housing. Are we serious about wanting our children and grandchildren to enjoy a better, not poorer, lifestyle than we’ve experienced?

Gov. Jerry Brown didn’t mention Proposition 13 in his recent State of the State speech, but you can bet he realizes that the single most powerful action we can take to fix our state’s financial and economic mess is to rescind this law. It is not a coincidence that California began its decline in public education and economic competitiveness, relative to other states, when Proposition 13 went into effect.

Economists and social scientists have understood the disastrous effects of this law. Not only has it resulted in inadequate revenue to support public education and other basic infrastructure, it has negatively affected those who have recently entered the housing market, disproportionately impacting young families — our struggling children and grandchildren.

If we are looking for a way to improve the economy and especially the housing market, I can’t think of a better move than eliminating Proposition 13. The policy of favoring those who own their houses for many years while discriminating against all others has the result of artificially depressing activity in the housing market. The housing market would be reinvigorated if there were no tax benefit for merely holding onto a house a long time.

Proposition 13 also has deleterious effects on business and industry by establishing an uneven playing field in favor of established businesses as opposed to new businesses. It thus discourages new, entrepreneurial business growth.

Proposition 13 should be phased out over a period of time, perhaps five years.

As it is terminated, property tax rates should be lowered to a reasonable level, but a level that would produce more revenue than the present property tax system and that would do much to support renewal of our state’s crumbling infrastructure.

Gerry Rankin

Glendale

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