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Tax Equity

February 26, 1989

By striking down tax laws that treat citizens unequally, the U.S. and now the California Supreme Court may be starting to polish off Proposition 13. The state would benefit from that.

The latest case represents a temporary setback for beleaguered school districts trying to raise money with taxes or fees imposed on developers. Voters in five Santa Clarita Valley school districts who were seeking more construction funding had imposed a tax that could have added as much as $6,300 to the cost of each new home. The California Supreme Court last week let stand a state appellate court ruling that struck down that tax. That could have wide effects because many California cities, counties and other election districts have imposed similar fees. They use the money to repair roads, build jails and provide other services that lost funding after Proposition 13 slashed property taxes in 1978.

But the decision could be a long-term victory if its inherent logic leads to repeal or revision of Proposition 13. And there is nothing obscure about the direction of the appellate court's thinking: The tax was considered illegal because it was not imposed uniformly on residents and property owners but would be borne only by developers and future residents. The burdens of Proposition 13 are distributed the same way.

For one thing, commercial property changes hands less frequently and so its owners often pay taxes at lower rates than homeowners. Even among homeowners, property taxes are not imposed uniformly. People who bought houses before Proposition 13 was passed had their property-tax assessments frozen at 1975 levels; those assessments can only be raised by 2% a year while people who purchased their homes since then pay taxes based on the purchase price.

The future of Proposition 13 was jeopardized earlier this year when the U.S. Supreme Court struck down a West Virginia tax law. In that case, the court said the Constitution requires "rough equality in tax treatment of similarly situated properties." Clearly, Proposition 13 does not provide that rough equality.

In his opinion in the Santa Clarita case, Appellate Justice H. Walter Croskey wrote that because the special tax was not uniformly imposed on residents, it doesn't meet the requirements of Proposition 13. The public has long known that that ballot measure provided relief for many people from unbearably high property taxes but also imposed sharp restrictions on how much money state government could raise. Now, after it has snatched financial support from so many government services essential to Californians, Proposition 13 may be losing the legal support so essential to its future.

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