By Michael Stewart Foley
In California, as in most of the country, tax policy rarely showed up as a political issue prior to the late 1960s. With the economy chugging along, most Americans paid their taxes without complaint. It seemed that the American economy provided enough to go around—including to the government, which most people trusted to put the money to good use. But by 1978, anger over taxes had been building for more than a decade. Trouble began with a series of corruption scandals in which either whistleblowers or investigators found that elected tax assessors engaged in a variety of unscrupulous practices, including taking bribes to keep assessments on business properties down. In response, the state assembly passed modernizing legislation to centralize, professionalize, and standardize assessment practices. The implementation of standardized assessment at precisely the moment when inflation, invisible and inscrutable, took home prices into the stratosphere resulted in every property, home or business, being “reassessed every three years at 25 percent of market value”—much higher than usual. Most California homeowners felt as though a phantom pickpocket had relieved them of their wallets altogether. “Bring back the crooked assessor!” bumper stickers could be seen on cars up and down the state.
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Many Californians had been lured to the state by the promise of an affordable American dream, but by the early 1970s, the dream was dying. As the California journalist Peter Schrag notes, only a generation before, in the 1950s, one could buy a three-bedroom, two-bath home built in a former citrus grove for $14,000 with a mortgage payment of $70 a month. By the early 1970s, the value of those homes had increased substantially, even before inflation sent prices even higher. “For nearly two decades it was lovely to see what had been a $12,000 tract house go up to $30,000,” Schrag later wrote. “But when it doubled again to $60,000, or tripled to $90,000, and the taxes went with it, it was fun no longer.” Inflation saw the average price of a Los Angeles single-family house jump 120 percent in value, from $37,800 to $83,200. It became common, therefore, to see property taxes on a two-bedroom house spike from $400 a year to $1,200. Suddenly, the prospect of losing one’s home, particularly for the elderly and others on fixed incomes, became very real. In states that had enacted property tax classification laws, in which business and residential property tax rates were standardized but at different rates depending on the classification, the consequences were less dire. Minnesota tax laws, for example, included thirty-one separate classifications for property taxes, and consequently, Minnesota saw no tax revolt. By the time California voters passed Proposition 13, seven other states had passed classification laws.