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The erosion of public services since 1979 directly follows the passage of Proposition 13 in June 1978. The initiative cut local property taxes by nearly 60%, capped property tax rates at 1%, and prohibited all reassessment of California property except for an annual 2% inflation adjustment, although it allowed reassessment upon sale of the property. Any further taxes levied on the value of property were prohibited.
The proponents of the law cited an unfair burden on homeowners whose homes increased in value because of runaway housing inflation while their ability to pay the accompanying higher taxes was limited. The real winners, however, were corporations occupying or owning vast amounts of property. Their taxes stay low even as their stockholders change continuously.
This is why many proponents of fair taxation call for a "split-roll" tax, which would maintain the tax limitation on residential property while allowing taxes on corporate property to rise with its value.
Meanwhile, the legacy of Prop 13 is ever-increasing inequality. To make up for loss of revenue, local governments have increased sales taxes, which fall more heavily on the poor. When localities want to soften the damage to schools or libraries, they must institute parcel taxes, which are property taxes levied per parcel or per square foot, without regard to value. The tax per parcel is the same for a small home or a large shopping center; the tax per square foot is the same for a large building in a poor neighborhood as it is for a mansion in Beverly Hills.
After the passage of Proposition 13, the state took over the responsibility of funding the schools. To cover the additional costs, the state has been taking increasing amounts of property and sales tax funds from local governments, who are still supposed to cover the costs of health care, welfare, libraries, transportation, and other local infrastructure with less money. So when you find your local library is closed or there is no clinic providing required school vaccinations for your child, or the bus you need to get to work has been discontinued, it is probably because of a mis-directed "tax rebellion" in 1978.
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