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Proposition 5 – Property Taxes

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General Election, November 06, 2018

Overview:

California local governments raise more than $60 billion a year from local property taxes.

A property owner’s annual tax bill is equal to the taxable value of his or her property multiplied by the property tax rate.  In the year a property is purchased, the taxable value of the property is the purchase price of the home.  Each year after that the property’s tax value is adjusted for inflation by up to 2 percent.

Because the market value of most homes grows faster than 2 percent, the taxable value of most homes is less than their market value.  However, when a homeowner moves and buys a different home, the purchase price of their new home often exceeds the taxable value of the new home, resulting in a higher tax bill.

In some cases, special rules allow a homeowner to move to a different home without paying higher property taxes.  These special rules apply to homeowners (1) who are over age 55, (2) are severely disabled, or (3) whose property has been impacted by a natural disaster or contamination.  When moving within the same county, these special rules allow these homeowners to transfer the (lower) taxable value of their existing home to a different home.  In addition, ten counties allow eligible homeowners to transfer their taxable values from homes in different counties.  Except in limited circumstances, homeowners can transfer their taxable value only once in their lifetime.

Proposition 5 would expand these special rules to apply to more individuals and more circumstances by:

  • Allowing eligible homeowners to transfer the taxable value of their existing home to another home anywhere in the state.
     
  • Allowing eligible homeowners to transfer the taxable value of their existing home to a more expensive home.
     
  • Reducing taxes for less expensive homes by adjusting the taxable value downward when an eligible homeowner moves to a less expensive home.
     
  • Removing the limit on how many times a homeowner can transfer their taxable value.

A YES vote on Proposition 5 means all homeowners who are over age 55 (or meet other qualifications) would be eligible for property tax savings when they move to a different home.

A NO vote on Proposition 5 means only eligible homeowners who meet the qualifications of current law would be eligible for property tax savings under the current conditions placed on these special rules.

Fiscal Impact:

According to the Legislative Analyst Office (LAO), schools and other local governments each probably would lose over $100 million in annual property taxes early on, growing to about $1 billion per year.  There would be a similar increase in state costs to backfill school property tax losses.

CCC Position:

No position.

Reflections on Church Teaching:

"It is the duty of citizens to contribute along with the civil authorities to the good of society in a spirit of truth, justice, solidarity, and freedom.  The love and service of one's country follow from the duty of gratitude and belong to the order of charity. Submission to legitimate authorities and service of the common good require citizens to fulfill their roles in the life of the political community.  Submission to authority and co-responsibility for the common good make it morally obligatory to pay taxes, to exercise the right to vote, and to defend one's country."  Catechism of the Catholic Church, nos. 2239-2240.

“There were many ‘discarded’ by society. Today we have invented other ways to care for, to feed, to teach the poor, and some of the seeds of the Bible have blossomed into more effective institutions than those of the past. The rationale for taxes also lies in this solidarity, which is negated by tax avoidance and evasion which, over and above being illegal acts, are acts which deny the basic law of life: mutual care.” – Pope Francis, Address to Participants in the Meeting of the Economy of Communion, 2017

"In a system of taxation based on justice and equity it is fundamental that the burdens be proportioned to the capacity of the people contributing."  Saint Pope John XXIII, Mater et Magistra , Encyclical of Pope John XXIII on Christianity and Social Progress, May 15, 1961 (132).