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Effects of Proposition 13

July 06, 1988

With due respect, something was left out of your editorial.

1. Tax collectors go for whatever is easiest to reach. Homes can't run away and hide. Stocks and bonds can.

2. Our society has never developed a social accounting system. There is no agreed accounting to determine the input/output of the police system, the waste-disposal system, the welfare system. No doubt bureaucrats care. But the public perceives them as less responsible, and is afraid that the home, the refuge of last resort, will unaccountably be taxed away. That perception will not go away just by raising property taxes.

3. Homes are disproportionately hurt by the marginal fallacy. If your neighbor's house is sold for $5,000 more than "the market" then your home and all around it are suddenly worth $5,000 "more." The banks will even solicit to lend money on your "new equity." That is a well-known fallacy, joked about, and widely practiced in our society. When the property sells for less, does the value go down? No, because then banks would have to write down their assets.

4. The purposes of taxation are two: (a) to provide revenues for collective services, and (b) to shape the course of change. All substances requiring collective services (if the ownership can be determined) should, therefore, be the subject of consideration for taxation, not just real property. As for the course of change, well, the representative republic is supposed to address that issue.

E. H. WOOLRYCH

San Diego

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