March 4, 2024

Fair Tax California

I got a little obssessed with California’s Prop 13 recently. I knew it was very bad but I didn’t grasp the full magnitude. So I dug in and channeled my ire into building something.

My goal was to build a sort of inverse of this Howard Jarvis obscenity. The result: Fair Tax California.

So far I have:

  • A calculator. It accepts an “assessed value” and a “market value” and computes your savings or additional obligations under a fairer tax regime.
  • A comparison tool that highlights some particularly egregious mismatches between pairs of very similar properties.
  • A leaderboard for champion property tax freeloaders. The current leader is my example from San Diego. Second place is @Rohin’s example in San Francisco.

The “fairer tax regime” envisioned by that calculator: in San Diego county, the average value of the parcels with assessed values in the most recent available year (2022) is $1.6M. The average assessed value of all the other parcels is $639k.

That means that if the overall average were equal to the recent average, the tax base would be $1.8 trillion, vs. the current value of $695 billion. [Aside: America is unfathomably wealthy. A single county in California — $1.8 trillion!]. I think of the ratio of these numbers as the Prop 13 Distortion Index. For San Diego county it’s currently 2.59, and growing every year.

The upshot: if we used market valuations for assessment, the tax rate could fall from an average of 1.2% to just 0.46% and produce an equal tax take as currently. Without the distortion of Prop 13, the tax rate could be lowered by almost two thirds with no loss of revenue.

Is this how we ought to reform Prop 13? I’m not sure! But I think we ought to consider something along these lines. We could start by just making the system more fair, without making the overall tax burden any higher. Our deliberations on whether to raise more revenue can then be subject to normal democratic processes.