(Editor’s Note: The Hoover Institutions’ EUREKA newsletter this month examines California’s Revenue Conundrum. The following article was one of a series of articles published discussing California’s tax system.)
Two of California’s historical ballot initiatives – one brought by government outsiders to limit government revenue, the other brought by government insiders to expand government revenue – face an uncertain future if changes to these laws appear on the 2016 ballot.
The legendary Proposition 13, passed overwhelmingly by the voters in 1978, was a tax revolt heard round the world. While limiting property taxes in California – to 1 percent of the acquisition price of property with annual tax increases of up to 2 percent depending on inflation – and setting strict vote requirements before other taxes could be raised, Proposition 13 also served as a springboard for centering the tax issue in national politics. The late Martin Anderson, a Hoover Institution Senior Fellow and top advisor to Ronald Reagan, told me that following the passage of Proposition 13, “The idea of Reagan cutting taxes was now politically viable and rolling. Proposition 13 was a clear political signal that the public was fed up with taxes.”