{"id":46803,"date":"2026-02-20T12:22:29","date_gmt":"2026-02-20T20:22:29","guid":{"rendered":"https:\/\/occupysf.net\/?p=46803"},"modified":"2026-02-20T12:22:30","modified_gmt":"2026-02-20T20:22:30","slug":"move-over-wealth-tax-usf-prof-says-prop-13-should-be-focus","status":"publish","type":"post","link":"https:\/\/occupysf.net\/index.php\/2026\/02\/20\/move-over-wealth-tax-usf-prof-says-prop-13-should-be-focus\/","title":{"rendered":"Move over, wealth tax: USF prof says Prop. 13 should be focus"},"content":{"rendered":"\n<ul>\n<li><a href=\"https:\/\/www.sfexaminer.com\/users\/profile\/Troy_Wolverton\">By Troy Wolverton | Examiner staff writer<\/a><\/li>\n\n\n\n<li>Feb 19, 2026 (SFExaminer.com)<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/bloximages.chicago2.vip.townnews.com\/sfexaminer.com\/content\/tncms\/assets\/v3\/editorial\/e\/cc\/eccfa0e8-2b7f-4aed-8b2e-b2e1bb112d29\/6994ff5dab1c9.image.jpg?resize=400%2C267\" alt=\"University of San Francisco Professor Patrick Murphy proposes a reform on Proposition 13\"\/><figcaption class=\"wp-element-caption\">University of San Francisco professor Patrick Murphy is proposing significant reforms to a voter-approved measure that many consider the third rail of state politics: Proposition 13.<a href=\"https:\/\/www.sfexaminer.com\/users\/profile\/Craig\">Craig Lee\/The Examiner<\/a><\/figcaption><\/figure>\n\n\n\n<p>As California considers taxing the wealth of billionaires, one San Francisco academic said he believes it\u2019s long past time to rethink and revamp what many consider to be the original wealth tax \u2014 the state\u2019s property-tax system.<\/p>\n\n\n\n<p>The system voters put in place through Proposition 13 in&nbsp;1978 is costing the state about $45 billion per year \u2014 and possibly a lot more, according to an analysis by Patrick Murphy, a professor of political affairs at the University of San Francisco. The people who benefit from the system tend to be white in a minority-majority state and both wealthier and older than the average Californian, Murphy said.<\/p>\n\n\n\n<p>In a kind of draft policy proposal, Murphy argues that California could have a much fairer system that helps out less-affluent home owners and first-time buyers if the state were to replace one of Prop. 13\u2019s key provisions related to property valuations.&nbsp;<\/p>\n\n\n\n<p>The revision he\u2019s pitching would take \u201cwhat\u2019s easily the biggest tax subsidy that we have on the books and tries to use it towards what I would argue is a state goal,\u201d Murphy told The Examiner.<\/p>\n\n\n\n<p>A key piece of the so-called tax revolt of the 1970s and \u201980s, Prop. 13 was sparked by concern that people were being priced out of their own homes because their property taxes were rising faster than their incomes.<\/p>\n\n\n\n<p>At the time, California property values were rising rapidly. So too were residents\u2019 property taxes, because those impositions were determined by the market values of the properties.&nbsp;<\/p>\n\n\n\n<p>Prop. 13 made two key changes to the state\u2019s property-tax system. It generally set the tax rate on properties to 1% of their worth,&nbsp;<a href=\"https:\/\/lao.ca.gov\/Publications\/Report\/3497\" target=\"_blank\" rel=\"noreferrer noopener\">down from a statewide average of about 2.7% at the time it was passed<\/a>. It also set a baseline for assessed value as the last purchase price, and it limited how much property values could appreciate to 2% annually.<\/p>\n\n\n\n<p>That second provision generally means that the longer someone owns a home or other property, the greater the difference between its assessed worth for taxes and its actual market value. It also means, in effect, that the longer a person owns a home, the greater their Prop. 13 tax break.<\/p>\n\n\n\n<p>In a report last year using data provided by online brokerage Redfin, the San Francisco Chronicle scrutinized the&nbsp;<a href=\"https:\/\/www.sfchronicle.com\/projects\/2025\/prop-13-subsidy-california\/\" target=\"_blank\" rel=\"noreferrer noopener\">size of the gap between assessed and actual values<\/a>&nbsp;and the resulting tax breaks in counties around the state.<\/p>\n\n\n\n<p>In The City, the average home was assessed at $1.01 million but had an actual market value of $1.58 million, according to the Chronicle\u2019s report. Thanks to that difference, typical homeowners were paying about $5,700 less in property tax each year than they would have if Prop. 13 wasn\u2019t capping valuations.<\/p>\n\n\n\n<p>While the gap between assessed and actual values \u2014 and thus the implied tax breaks \u2014 varies across the state, collectively it adds up to tens of billions of dollars in lost revenue.<\/p>\n\n\n\n<p>Prop. 13\u2019s provisions cover both residential and commercial properties. In 2018, researchers at the University of Southern California dug into how much the law benefited owners of commercial properties. They reported that if such properties were assessed at their market value, their owners would have been paying about&nbsp;<a href=\"https:\/\/dornsife.usc.edu\/eri\/publications\/getting-real-about-reform-2017-update\/\" target=\"_blank\" rel=\"noreferrer noopener\">$11.4 billion a year more in taxes on them<\/a>.<\/p>\n\n\n\n<p>Murphy and his collaborators have been trying to do a similarly thorough study of the effect of Prop. 13\u2019s limit on valuations on residential property taxes, but haven&#8217;t yet been able to get access to the parcel-by-parcel data they\u2019d need to do that.<\/p>\n\n\n\n<p>But using the less fine-grained data from the Chronicle\u2019s report, Murphy and his collaborators estimated that statewide, residential property owners were getting about a $35.8 billion annual tax break thanks to the Prop. 13 valuation limit.<\/p>\n\n\n\n<p>Although commercial property values \u2014 and the value of the Prop. 13 benefit they receive \u2014 have declined a bit in the wake of the COVID-19 pandemic, Murphy estimated that the likely cost of the law\u2019s valuation provision is in the neighborhood of at least $45 billion to $50 billion. And it could be as high as $70 billion, he said.<\/p>\n\n\n\n<p>To put that in perspective, an expenditure of that size by the state government would be the&nbsp;<a href=\"https:\/\/ebudget.ca.gov\/2025-26\/pdf\/Enacted\/BudgetSummary\/SummaryCharts.pdf\" target=\"_blank\" rel=\"noreferrer noopener\">third largest budget item<\/a>&nbsp;after health and human services and K-12 education.&nbsp;<\/p>\n\n\n\n<p>Although the exact number is uncertain, Murphy\u2019s estimate looks to be a fair one, said Kirk Stark, a law professor and tax-policy expert at UCLA School of Law.&nbsp;<\/p>\n\n\n\n<p>\u201cIt\u2019s a lot of money,\u201d Stark said. \u201cIt\u2019s a major expenditure.\u201d<\/p>\n\n\n\n<p>From a public-policy perspective, that money isn\u2019t well spent, Murphy and other tax experts argue. Instead of middle-class or lower-income people, Prop. 13\u2019s tax breaks largely flow to the well-to-do. As of 2014, about half of all the benefits it provided went to&nbsp;<a href=\"https:\/\/lao.ca.gov\/Publications\/Report\/3497\" target=\"_blank\" rel=\"noreferrer noopener\">homeowners who made at least $120,000 a year<\/a>, according to a 2016 study by the state Legislative Analyst\u2019s Office. At the time, the median household income in the state&nbsp;<a href=\"https:\/\/fred.stlouisfed.org\/series\/MEHOINUSCAA646N\" target=\"_blank\" rel=\"noreferrer noopener\">was about $60,000<\/a>.&nbsp;<\/p>\n\n\n\n<p>Prop. 13 is \u201cthe worst kind of tax expenditure along almost every dimension,\u201d said Darien Shanske, a professor at UC Davis\u2019 law school who focuses on state and local tax policies.<\/p>\n\n\n\n<p>The law also has had its share of unintended consequences, policy experts say. It discourages people from selling their homes to buy new ones, because they could face major increases in their taxes. It has also prompted the state to rely much more heavily on income taxes, which can be notoriously volatile and can lead to major budget adjustments from year to year.<\/p>\n\n\n\n<p>Because property taxes are largely local taxes, the caps Prop. 13 put on them stripped much of the power local governments had to control their own finances, Stark said. And because commercial properties tend to sell less frequently than residential ones \u2014 and thus are reassessed less often \u2014 the law has increasingly shifted the burden of property taxes in the aggregate onto homeowners, he said.<\/p>\n\n\n\n<p>\u201cI can\u2019t really articulate a useful policy goal that I think Prop. 13 accomplishes,\u201d said Brian Galle, a tax-law professor at UC Berkeley&#8217;s law school who, along with Shanske, is one of the&nbsp;<a href=\"https:\/\/www.sfexaminer.com\/news\/politics\/billionaire-tax-author-argues-for-its-fairness-necessity\/article_47e0cf1a-ac8a-4b72-9fce-04a996dffe76.html\" target=\"_blank\" rel=\"noreferrer noopener\">co-authors of the proposed billionaire tax<\/a>.<\/p>\n\n\n\n<figure class=\"wp-block-image size-full\"><img decoding=\"async\" loading=\"lazy\" width=\"4\" height=\"3\" src=\"https:\/\/occupysf.net\/wp-content\/uploads\/2026\/02\/image-50.png\" alt=\"\" class=\"wp-image-46804\"\/><figcaption class=\"wp-element-caption\">Brian Galle, a professor at UC Berkeley\u2019s law school who is a co-author of a proposed wealth tax: \u201cI can\u2019t really articulate a useful policy goal that I think Prop. 13 accomplishes.\u201dCraig Lee\/The Examiner<\/figcaption><\/figure>\n\n\n\n<p>A representative of the Howard Jarvis Taxpayers Association \u2014 the anti-tax group named after the activist who successfully pushed through Prop. 13 \u2014 did not respond to a request for comment on Murphy\u2019s critique.<\/p>\n\n\n\n<p>But for his part, Murphy argues there\u2019s a far better way to do property taxes.<\/p>\n\n\n\n<p>He proposes getting rid of Prop. 13\u2019s limit on valuation growth. To protect less-affluent homeowners from skyrocketing property taxes, he would instead greatly increase the state\u2019s valuation exemption.<\/p>\n\n\n\n<p>Under current law, homeowners get to deduct $7,000 from the assessed value of their home, which amounts to a $70 tax break. Murphy would increase that exemption to $500,000. That would mean someone in a $500,000 home wouldn\u2019t pay any property taxes, and someone in a $1 million home would only pay tax on half that amount. Instead of owing $10,000 a year in property tax, they would pay $5,000.<\/p>\n\n\n\n<p>Murphy would also limit that exemption to owner-occupied homes. Vacation homes wouldn\u2019t qualify, and neither would residences owned by investment companies or people who don\u2019t live in the state.<\/p>\n\n\n\n<p>Murphy estimated that at $500,000, the exemption would deprive the state of about $26 billion, or about half the estimated total from Prop. 13\u2019s valuation provision. The exemption could be larger or smaller, depending on policymakers\u2019 preferences for redistributing the Prop. 13 tax break, he said. One possibility might be actually giving a tax refund to those whose homes are worth less than the exemption, he said.<\/p>\n\n\n\n<p>\u201cI like $500,000, because it\u2019s super easy,\u201d he said.<\/p>\n\n\n\n<p>Although they quibbled about some of the details, other tax-law experts said Murphy\u2019s proposal has merit.<\/p>\n\n\n\n<p>\u201cOverall, it\u2019s a great idea,\u201d Shanske said.<\/p>\n\n\n\n<p>\u201cIn general, what he is proposing makes a lot more sense than an upside-down, arbitrary tax expenditure,\u201d he said.<\/p>\n\n\n\n<p>Even so, don\u2019t expect a major revamp of Prop. 13 anytime soon. Murphy\u2019s analysis and proposal is still in the formative stages; he said he\u2019s still hoping to do a more thorough study of Prop. 13\u2019s actual costs.<\/p>\n\n\n\n<p>Murphy said that while he\u2019s spoken with politicians and other policymakers about his ideas, he hasn\u2019t gotten much traction with them yet. For decades, Prop. 13 has been considered the third rail of California politics \u2014 no one wants to touch it for fear of their political life.<\/p>\n\n\n\n<p>Almost 50 years after its passage, Prop. 13 still enjoys broad support: 65% of California adults who responded to a 2024 Public Policy Institute of California survey \u2014 and 69% of likely voters \u2014 said they&nbsp;<a href=\"https:\/\/www.ppic.org\/publication\/ppic-statewide-survey-californians-and-their-government-june-2024\/\" target=\"_blank\" rel=\"noreferrer noopener\">considered the proposition \u201cmostly a good thing.\u201d<\/a><\/p>\n\n\n\n<p>The last major effort to reform the law came in the form of Proposition 15, a 2020 measure that would have lifted Prop. 13\u2019s protections on commercial properties. Despite the backing of unions and being what policy experts thought of as an obvious and needed reform, that&nbsp;<a href=\"https:\/\/ballotpedia.org\/California_Proposition_15,_Tax_on_Commercial_and_Industrial_Properties_for_Education_and_Local_Government_Funding_Initiative_(2020)\" target=\"_blank\" rel=\"noreferrer noopener\">initiative failed on a 52% to 48% vote<\/a>.<\/p>\n\n\n\n<p>But Murphy said he has half a hope that one of the candidates in&nbsp;<a href=\"https:\/\/www.sfexaminer.com\/news\/politics\/meet-leading-2026-california-governor-candidates\/collection_ba144ed7-5ab9-47b2-88fd-49494c8d4f54.html\" target=\"_blank\" rel=\"noreferrer noopener\">this year\u2019s governor&#8217;s race<\/a>&nbsp;might take up his ideas, if only to stand out from the crowded pack or to pitch as an alternative to the wealth tax, which would impose a one-time 5% tax on anyone with $1 billion or more in assets.&nbsp;<\/p>\n\n\n\n<p>\u201cYou bill it as the O.G. of the wealth tax,\u201d he said.&nbsp;<\/p>\n\n\n\n<p><em>If you have a tip about tech, startups or the venture industry, contact Troy Wolverton at&nbsp;<\/em><em><a href=\"mailto:twolverton@sfexaminer.com\">twolverton@sfexaminer.com<\/a>&nbsp;or via text or Signal at (415) 515-5594.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>As California considers taxing the wealth of billionaires, one San Francisco academic said he believes it\u2019s long past time to rethink and revamp what many consider to be the original wealth tax \u2014 the state\u2019s property-tax system. The system voters put in place through Proposition 13 in&nbsp;1978 is costing the&#8230; <a class=\"continue-reading-link\" href=\"https:\/\/occupysf.net\/index.php\/2026\/02\/20\/move-over-wealth-tax-usf-prof-says-prop-13-should-be-focus\/\"> Continue reading <span class=\"meta-nav\">&rarr; <\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"_links":{"self":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/46803"}],"collection":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/comments?post=46803"}],"version-history":[{"count":1,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/46803\/revisions"}],"predecessor-version":[{"id":46808,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/posts\/46803\/revisions\/46808"}],"wp:attachment":[{"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/media?parent=46803"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/categories?post=46803"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/occupysf.net\/index.php\/wp-json\/wp\/v2\/tags?post=46803"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}