If California undid its ‘original sin’ and matched Texas on taxing property, it would raise more revenue than the billionaire tax, economists say
California voters will decide on Proposition 40 soon, but looming over the controversial billionaire wealth tax proposal is another state ballot measure from nearly 50 years ago.
In 1978, voters approved Proposition 13, which capped property taxes at just 1% of assessed value, limited annual hikes to 2%, and allowed reassessments to market value only after sales or substantial renovations.
It came amid a wider tax revolt leading up to Ronald Reagan's election as president and an era of conservative governance in America. After Prop 13's passage, the state had to find other ways to raise more revenue and relied more on taxing incomes, including capital gains.
California now has the most progressive income-tax structure in the country with a top marginal rate of 13.3%. When combined with federal income tax rates, that can send the total to more than 50%.
The top 1% of earners account for up to half of state revenue, though it also means state coffers are volatile and swing on stock market returns. At the same time, the ultra-wealthy often d...