Term paper on The Effects Of Tax Reform On California
The Effects Of Tax Reform On California Essays
While the free essays can give you inspiration for writing, they cannot be used 'as is' because they will not meet your assignment's requirements. If you are in a time crunch, then you need a custom written term paper on your subject (the effects of tax reform on california)
Here you can hire an independent writer/researcher to custom write you an authentic essay to your specifications that will pass any plagiarism test (e.g. Turnitin). Waste no more time!
The Effects of Tax Reform on California
Prior to 1978, local governments in the state of California enjoyed own-source general revenues that were significantly higher than the national average. But, the passage of proposition 13 in 1978, and the subsequent passage of proposition 218 in 1997, has significantly reduced the ability of local governments to remain as fiscally independent from the state and federal government as they were prior to the initial passing of Proposition 13. It is my intention to show the history of Proposition 13, the differing opinions regarding it, the laws that govern Proposition 13, and the effect that Proposition 13 has had on the ability of local governments to raise revenue.
In the mid 1970 s the real estate market in the state of California began to boom. At the current time, property taxes were based on the full-assessed value of property. Real estate speculation began to push the value of California s property higher and higher. The increase in assessed values of homes in California, with the owner as the primary resident increased one hundred and eleven percent, in just three years (1975-1978). At the same time that owner occupied residential properties were seeing gigantic increases in assessed value, commercial property was increasing in assessed value at the rate of twenty six percent. Another sharp contrast would be the values of renter occupied residential housing, which like the commercial properties only increased moderately at the rate of thirty four percent in the period between 1975-78.
The increased assessed value of owner occupied residential property during 75 -78 began to shift the balance of tax burden increasingly towards the homeowner. In 1975 the percentage share of property tax burden is as follows: 26% property occupied by the owner, 22% property occupied by renters, and 53% to industrial, and commercial properties. In just three years we saw a dramatic increase on the property tax burden of the owner occupied residential properties. The following is a breakdown of the property tax burden by property category in 1978. 36% property occupied by the owner, 19% property occupied by renters, and 45% to industrial and commercial properties. It is not difficult to extrapolate the data from these findings, in just three short years the amount of property tax paid by owner occupied properties rose 10%. At the same time we see a drop of 3% for rental properties, and a staggering 8% decrease in the property tax paid by industrial and commercial properties.
Following the defeat in the legislature of a homeowner tax relief plan, the stage was certainly set for some type of property tax reform in the state of California. Instead of relief, the people of California got Howard Jarvis, the man responsible for the decimation of local finances. Howard Jarvis set out on a mission to unite the property owners of California as one, and initiate a taxpayer revolt known as Proposition 13, the property relief act. Instead of a well thought out plan of reducing the property tax burden on the owner occupied properties, California s local governments were single handedly stripped of their primary source of funding. The proponents of Proposition 13 did have noble ideals. They wished to expand freedom, and hold back the unnecessary burdens of government.
Proposition 13 as written would set the rate of property tax to one percent of the assessed properties value. In addition to setting the property tax at one percent, the date of the assessed properties value was rolled back to the 1975 level for tax purposes. Proposition 13 also limited the increase in the value of assessed value to 2% every year, or the rate of inflation whichever is greater. Properties could only have their values reassessed is when the property is sold, or newly built. If the property is sold, or new it will be assessed at the full market value and then the assessment will start to rise at the rate of 2% per year.
Proposition 13 also placed restrictions on the ways local governments could initiate new taxes to pay for vital public services. Proposition 13 requires that local governments who wish to introduce a new tax to pay for special taxes for specific purposes. Local governments would now be required to put the tax to a vote of the people, and that the tax must receive a two-thirds vote of the people to pass. Local government taxes for general purposes could be approved by a majority of the governing body or a majority vote of the people. The state too was limited in the way it could increase or create new taxes. The state would need to pass any new tax by a majority vote of the legislators, in addition to the signature of the governor.
In the month of June 1978 the voters of California turned out and voted on Proposition 13. The results were 65% in favor of the proposition, and 35% against. Immediately following the passage of proposition 13 the effects were felt almost immediately. The effects of proposition were serious indeed, 6.1 billion dollars or 53% of local property tax revenues evaporated almost instantly.
One of the most immediate effects of proposition 13 was against the states school age children. Prior to Prop 13, California schools enjoyed being ranked in the top five states for achievement for children grades kindergarten through twelfth. After the implementation of proposition 13 our children have dropped to the bottom ten of all fifty states in achievement for the same grades. The reason for this is clear; the voters went against their own children, and grandchildren and removed the funding that enabled us to keep our children educated in the best way possible. No longer would school districts be able collect property tax, and then distribute it locally by the school district board. Now the school districts would need to depend on the state and federal governments for the majority of their funding. The problem with this scenario is that because of prop 13, the state was beginning to enter into a fiscal crisis of their own, and could not afford to give our children the level of education, that the people who voted for proposition 13 were afforded.
It became apparent soon after prop 13 was passed that there were huge differences in the property taxes paid my individual homeowners. Because property taxes were locked at 2% per year and the value of property increasing more than 2% per year created a unique phenomenon. The phenomenon was that the longer one held on to the same property the larger the gap between its market value, and the value that it was assessed at for property tax purposes. The only time that a home was assessed at its market value was either when it was sold, or when a home is newly built. Therefore, you could have one home with a market value of $300,000 and an assessed value of $100,000 in a ritzy upscale neighborhood, at the same time we could have a home that was newly sold, with a market value and assessed value at approximately $100,000. Both homeowners in this example would pay approximately the same amount in property tax, because of the assessed value of the homes. This shows the true inequality of proposition 13 you could have next-door neighbors where the difference in property taxes differ at the ratio of ten to one....
MLA Style
. EssayMania.com. Retrieved on 12 Feb, 2012 from
<http://essaymania.com/132413/the-effects-of-tax-reform-on-california>
More College Papers
Lord Of The Flies
In the novel Lord of the Flies written by William Golding the character of Simon is suggested to be a Christ-like figure. Simon is the stabilizing factor throughout the novel. He is the only one who stays true to his personal morals and beliefs even away from society just as Christ did.
The savag
The Effects Of Race On Sentencing In Capital Punishment Cases
The Effects of Race on Sentencing in Capital Punishment Cases
Throughout history, minorities have been ill-represented in the criminal justice system, particularly in cases where
the possible outcome is death. In early America, blacks were lynched for the slightest violation of informal laws
and
A Doll's House
A Doll s House
After reading A Doll s House by Henrik Ibsen, and examining the roles of the three main characters, Nora, Christine, and Torvald, the differences between them and their roles in society and the way the handle and deal with those roles are completely different.
Christine, throughout