ACA 9 Will Protect California Families Climbing The Economic Ladder

Every parent wants to help his or her kids and protect them from hardship. Many families that started out with nothing were able to build, with hard work and sacrifices over two or three generations, a bit of economic security that they hope to pass on to the next generation.

This is the reason that Californians voted overwhelmingly to abolish state inheritance and gift taxes. In 1982, there were two competing measures on the statewide ballot that repealed and permanently banned the hated taxes. Both measures passed with more than 60% of the vote.

Meanwhile, Californians were frustrated that rapidly rising property values had turned property taxes into what was effectively a death tax. Under Proposition 13, passed overwhelmingly in 1978, property tax assessments may rise no more than 2% per year until there is a change of ownership, at which time the property is reassessed to fair market value. Children who inherited their parents’ property often found that they could not keep it, because the new tax bill was more than they could afford to pay every year.

As a result, in 1986, the state Legislature unanimously passed the measure that became Proposition 58. It changed the state constitution to say that the transfer of certain property between parents and children would not be considered a “change of ownership” and would be excluded from reassessment, keeping the property tax bill the same. Proposition 58 passed with the approval of more than 75% of voters statewide. Ten years later, the voters approved Proposition 193, to apply the same rules to transfers between grandparents and grandchildren if the children’s parents were deceased.

Under Propositions 58 and 193, families could transfer a home of any value and up to $1 million of assessed value of other property. That protected families that owned a small business, or a duplex that was rented out for income, or a vacation cabin. It meant the death of a parent would not trigger a sudden reassessment of those properties to market value, thereby raising the annual property tax bill so high that the children were forced to liquidate their inheritance.

That’s why it’s a tragedy that a slick advertising campaign for Proposition 19 tricked voters into repealing Propositions 58 and 193 without realizing the impact it would have on their own families. Prop. 19 replaced the parent-child transfer exclusion from reassessment, which has been in the state constitution for 35 years, with a narrow exclusion that only applies to homes that the heirs move into within a year and make their permanent principal residence.

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Comments

  1. Really??? says

    The Democrats appealed to greed.

    The Democrats said it is about being fair.

    The Democrats are now raking in massive dollars and putting long term families out.

    Oh did I forget to mention the Democrats lie?

  2. HOW FUNNY, CALIFORNIA WANTS PARENTS TO WIPE THEIR KIDS ASSES UNTIL THEY ARE 18….WE ALL GO THROUGH HARDSHIPS, THIS IS JUST THE DEMOCRATS WAY TO PAY FOR ILLEGALS AND GET THEIR ILLEGAL VOTE…A DAY OF RECONNING IS COMING CALIFORNIA, ARM YOURSELVES BECAUSE “CIVIL WAR IS COMING”.,….FACT

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