Coupal: The harms of Prop. 19 will soon be clear

We saved ourselves $12 billion a year in property taxes and the decline of commercial and industrial property values by defeating Prop. 15.  While our attention was on that massive destruction of our economy, we did not put enough attention on Prop. 19, which passed with 51% of the vote and is a $2.5 billion property tax increase, each year, plus the destruction fo the family farm and other family owned businesses.

“Under the 1986 measure, a parent could transfer a primary residence and up to $1,000,000 of assessed value of other property to their children, and such properties would see no change in their tax bill when transferred. They would retain the Prop. 13-protected base-year value for property tax purposes. But under Prop. 19, that only remains true if both the parent and the child use the property as their primary residence.

None of the paid advertising about Prop. 19 alerted voters that they were losing important taxpayer protections. In fact, the primary sponsor of the bill, the California Association of Realtors, spent $50 million on campaign ads claiming it was beneficial to taxpayers, not disclosing the billion-dollar property tax increase. Their deceptive tactics were successful and will undoubtedly advance their underlying motivation of churning real estate sales.”

Watch as family farms are sold, to pay the new, higher property taxes.  Watch as major agriculture corporations take over family farms.  Prop. 19 will change the California economy, away from families and into major corporations.  Just as the Democrats like.

The harms of Prop. 19 will soon be clear

By Jon Coupal, OC Register,  11/22/20   

This column has previously described Prop. 19, which barely passed with 51 percent% of the vote, as a steak laced with cyanide. It may look good, but you don’t want to eat it.

While there are some benefits from expanding property tax “portability” to allow homeowners to transfer their Proposition 13 base-year value to anywhere in California, the cost of this benefit is outweighed by the damage it will inflict on families planning to transfer property from parents to children.

Few voters were aware of this downside of Prop. 19. Specifically, beginning on February 16, 2021, no longer will parents and grandparents be able to transfer their property to their children or grandchildren without triggering a massive increase in property tax liability. These “intergenerational transfer” protections — placed in the California Constitution in 1986 and 1996 with overwhelming support from voters — have been sharply cut back.

Under the 1986 measure, a parent could transfer a primary residence and up to $1,000,000 of assessed value of other property to their children, and such properties would see no change in their tax bill when transferred. They would retain the Prop. 13-protected base-year value for property tax purposes. But under Prop. 19, that only remains true if both the parent and the child use the property as their primary residence.

None of the paid advertising about Prop. 19 alerted voters that they were losing important taxpayer protections. In fact, the primary sponsor of the bill, the California Association of Realtors, spent $50 million on campaign ads claiming it was beneficial to taxpayers, not disclosing the billion-dollar property tax increase. Their deceptive tactics were successful and will undoubtedly advance their underlying motivation of churning real estate sales.

But Prop. 19 is bad public policy. It was placed on the ballot by the Legislature with the passage of Assembly Constitutional Amendment 11. It rushed through the Legislature at lightning speed without going through the extensive analysis and public review typically associated with a legislative constitutional amendment. The ACA 11 language was amended on June 20, 2020, and the amendment fully cleared the Legislature on June 26, 2020 (technically past the legal deadline for the November 2020 ballot, which necessitated additional legislation to extend the deadline). The Legislature missed many policy and legal issues that would have been uncovered had the amendment gone through the regular and more extensive public review process.

Among the problems now recognized is that under Prop. 19, rents will increase. Buildings owned by aging “mom and pop” landlords, when passed to their children, will incur sharply higher property taxes.

Another problem for property owners is the impact of Assembly Bill 3088, which forces property owners to accept a 75 percent decrease in rent with a moratorium on evictions. It contains the unrealistic expectation that tenants will come up with a balloon payment after January 31st. Should they default, a landlord can only collect in Small Claims Court beginning March 1, 2021. Meanwhile, Prop. 19 takes effect on February 16, 2021. Families that suffer the loss of a parent will face huge property tax increases on rental property, while being unable to collect full rents.

Let’s dispel the myth that everyone who takes ownership of a parent’s property is wealthy. Many such families are middle- or low-income. Some rely on the rental income from inherited property to pay bills for medical care or assisted-living facilities.

Prop. 19 is a painful tax increase on hundreds of thousands of ordinary Californians.

Jon Coupal is president of the Howard Jarvis Taxpayers Association.

About Stephen Frank

Stephen Frank is the publisher and editor of California Political News and Views. He speaks all over California and appears as a guest on several radio shows each week. He has also served as a guest host on radio talk shows. He is a fulltime political consultant.

Comments

  1. As a result, I will be selling the apartments my family built in the 1950’s. The cost basis of the property is going to go up, and the comparatively low rents (300-400/mo lower) would have to go up. I cannot do that to the middle class and lower middle class renters currently on the property.

    The other side note is the family house I grew up in, and is rented to cover a significant mortgage, I will now have to evict the family with 3 under 7 year old kids so I can move into the house to save the Prop. 13 basis.

    Nice going Democrats, once again you screwed the people of Calif. to fund your out-of-control Socialist/Communist State. But what the heck you will continue to lie about saving the people from those greedy Republicans.

  2. William Hicks says

    The fruits of election results can be sour.

  3. Give me strength! I voted NO, how could any taxpayer go for this?

  4. Maybe the vote-counting got jiggered on this, too?

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