Proposition 13 is one of California’s most popular and most protected laws. Voters passed it in 1978, and it caps property taxes across the state. But a long-running debate asks whether parts of it should be changed. This article lays out the strongest version of the argument for reform, using facts that can be checked against credible sources. Because this is a contested political topic, the last section presents the other side so you can weigh both.

An important note up front: most people who want to reform Proposition 13 do not want to repeal it. They want to keep the protection for regular homeowners while changing the parts they see as unfair. Keep that in mind as you read.

Proposition 13 set three main rules. According to the California State Board of Equalization and county assessor offices, property tax is capped at 1% of a property’s assessed value; that assessed value can rise no more than 2% per year, and a property is only reassessed to current market value when it is sold or newly built. It also requires a two-thirds vote to raise many taxes.

The key detail for the reform debate is this: the law does not only cover homes. It covers all property, including offices, factories, malls, hotels, and refineries. That single fact is the root of most reform arguments.

Reformers argue that Proposition 13 was sold as a way to protect homeowners, but it also gives a large, permanent tax break to corporations, which was never the point.

The evidence is strong and comes from a neutral source. According to the nonpartisan California Legislative Analyst’sOffice (LAO), commercial property owned for a long time pays far less tax than commercial property bought recently. In Los Angeles County in 2015, a new commercial owner paid about $2.69 per square foot in property tax. An owner of 10 years or more paid about $1.18. An owner of 20 years or more paid only about $0.87. Because large corporations often hold the same property for decades, they usually sit at the low end.

A clear real-world example is the Chevron refinery in Richmond. According to Contra Costa County records, Chevron has owned that property since 1902, so it is taxed on a very old base value rather than what the land is worth today. (It is worth noting the exact value is often disputed in court, so this shows the mechanism, not a simple “underpayment” figure.)

Reformers point to a specific loophole in how the law is applied to businesses.

According to the Legislative Analyst’s Office, a commercial property is only reassessed when a single person or legal entity buys more than 50% of it. Companies can structure a sale so that no single buyer crosses that 50% line, which means the property does not officially “change owners” and its taxes stay low. According to KQED, former Assemblyman Willie Brown, who helped write the rules after 1978, has said lawmakers got this part wrong. A 2010 bill (AB 2492) tried to close the loophole but died in committee.

A basic idea in tax policy is that two similar properties should be taxed in a similar way. Reformers say Proposition 13 breaks that rule.

According to the Legislative Analyst’s Office, property owners with similar properties often pay very different amounts, based mostly on when they bought. The office found large gaps even between neighbors on the same street and even among owners of similar age, income, and wealth. Reformers argue this is unfair and that it falls hardest on newer buyers.

Reformers connect the law to California’s housing affordability crisis.

According to the California Association of Realtors, only about 18% of California households earned enough to afford the median-priced home in late 2025. That home cost about $869,300 and required roughly $213,200 in income. Back in 2012, 56% of households could afford the median home, so affordability has fallen sharply.

Young families are usually below even that low number. According to the Terner Center for Housing Innovation at UC Berkeley, the average first-time buyer in California is now 49 years old, compared with 35 in the rest of the country. Because new homes are taxed at full current value, a young family often pays much higher property taxes than a long-time owner next door with a nearly identical home. Reformers call this an unfair advantage passed from one generation to the next.

Reformers argue the state’s finances are heading for trouble, partly because of how Proposition 13 reshaped the tax system.

According to a January 2025 report from the Public Policy Institute of California, the number of Californians age 65 and older will grow by 59% by 2040, while the working-age population stays nearly flat. That means more people will need services like Medi-Cal, while the pool of income-tax payers barely grows. The same report flags budget challenges from fewer income-tax payers and more older adults needing help.

This matters because of how California pays its bills. According to the Legislative Analyst’s Office, after Proposition 13 cut property taxes, cities and counties leaned much more on sales, hotel, and utility taxes, which grew far faster than property tax revenue. Income and sales taxes rise and fall sharply with the economy, which makes budgets less steady. Reformers argue that a more stable property tax base would help fund schools and services through good times and bad.

Perhaps the strongest reform argument is that the goal of Proposition 13 could be met with better-aimed tools.

Reformers note that the sympathetic case for the law is a fixed-income senior who might lose their home. But the law gives its break to everyone, including wealthy owners, landlords, second-home owners, and corporations. According to Rocket Mortgage and state program descriptions, other states protect vulnerable seniors more directly, using tools likeincome-based tax credits or programs that let older owners delay paying property taxes until the home is sold. Reformers argue California could protect the people who truly need help without giving a permanent tax break to those who do not.

The biggest reform effort so far was the “split roll.” According to Ballotpedia, Proposition 15 in 2020 would have taxed large commercial and industrial property at market value while leaving homes, apartments, small businesses, and farms protected. According to the nonpartisan Legislative Analyst’s Office, it would have raised $6.5 to $11.5 billion a year for schools and local governments. Voters rejected it, but the vote was close.

Voters have already trimmed some Proposition 13 benefits. According to the State Board of Equalization, Proposition 19 (passed in 2020) tightened the tax breaks families get when they inherit a home, showing that change is possible even for a law long seen as untouchable.

For fairness, here is how defenders of Proposition 13 respond.

They cite the same Legislative Analyst’s Office, which was doubtful that Proposition 13 is the main reason homeowners pay a slightly larger share of property taxes today, and which found little proof that the law hurts new business creation. They warn that a split roll would be costly and hard to run; according to news reports, county assessors opposed Proposition 15 for that reason. They argue higher business taxes could be passed on to small businesses that rent space, or push companies out of state. On homes, they say a growing population of fixed-income seniors is exactly the wrong group to expose to market-value taxes, and that predictability is the whole point. Finally, they point out that voters rejected the last major reform in 2020.

The strongest, most fact-based reform argument is narrow, not sweeping. It is not “repeal Proposition 13.” It is “reassess large commercial property, close the business ownership loophole, and better aim the homeowner protection at the people who need it.” Supporters of reform say this would raise steady money for schools and services and treat similar properties more fairly, without taxing seniors out of their homes. Defenders say the risks and costs are too high and the current system works. California voters keep being asked to decide, and the fight is not over.