☆ Prop 19 perspective: the good, the bad, and the ugly
Bay Area-raised Anne Gray volunteers with For Californians, focused on restoring Prop 58 parent/child transfer rights that were lost when Proposition 19 passed in 2020. In this Opp Now exclusive, Gray walks us through her Top Five observations about Prop 19: how it works, who's impacted, and where she thinks we're headed.
There are many things that continue to amaze me about the issue of Prop 19. Here are my Top Five observations. I am not an expert, attorney, or accountant, just someone impacted.
1. Most California voters who plan to pass property to their children don't realize that Prop 19 gutted our Prop 58 parent/child transfer rights and often makes it impossible for a child to keep inherited property. This includes the parent’s primary residence, family business properties, and rentals.
2. Parents think children are protected by estate plans and deeds. They aren’t. A complex, costly LLC [limited liability company] may work for some, but this isn’t the norm. Families generally are not protected by legal instruments.
3. Most renters don’t know Prop 19 impacts them because they aren’t owners. But if they live in a family-owned rental, when the parent/owner dies, the County Assessor will reassess its value—what it would sell for. An educated guess upon which the inheriting child then pays taxes. If higher taxes are passed on through rent increases, tenants can become displaced—forced to move to less desirable places, or become homeless.
4. Parents think if their child already lives in the family home, they are immune to Prop 19. Not so, as the inheriting child no longer simply takes over the parents’ usually lower Prop 13 taxes (plus special bonds, etc.). The child now pays additional taxes on the reassessed value minus the parent’s Prop 13 tax basis and a $1 million exclusion on the primary parental residence, and must make it their legal new home within 12 months of the parent’s death. Under this calculation, the child may, or may not, owe extra taxes. If so, it can be a little or staggering. Moreover, rentals, restaurants, stores—many family businesses—rely on lower Prop 13 taxes in order to survive. Under Prop 19, those inheriting family business property now pay taxes based on full market reassessment. Can children inherit the family business when slapped with higher market-based taxes? For those who can’t, cherished local businesses are lost for good.
5. People think signing the Fix Prop 19 to Repeal the Death Tax petition would have been "voting for it,” but it would only get it on the 2024 ballot. This would give voters another shot at deciding based on facts and policy considerations, not based on hype and propaganda about “Billionaire Trust Fund Babies” and “East Coast Investors” paying “No Taxes via Loopholes.” There were no loopholes; and most of us aren’t trust fund babies.
I have a sixth (bonus) observation. What will California be like in 10, 30, or 50 years under Prop 19? Portability between counties is a welcome change, and is not included in the repeal Prop 19 movement. But what else will Prop 19 bring us?
Answer: Fewer multi-generational Californians and deeply rooted communities. Children who grow up here but can’t afford to stay as adults raising their own families; they'll find it hard to nurture lifelong friendships based in childhood communities. Parents grow old alone, without needed care and love from nearby children. More real ownership by “East Coast Investors” rather than the people who live in the area. California families who acquired property to build generational wealth as part of the American Dream … now lost. Many will become renters, wondering why they are paying for Prop 19 through high rents.
Prop 19 was rushed through without adequate public discourse or planning—to put it mildly. California’s 58 County Assessor offices were given 68 days working days to implement one of the most complex new property tax laws in California history … during a pandemic. No wonder horrific stories and regressive socioeconomic shifts are emerging. Just ask Los Angeles County Assessor Jeff Prang, a Fix Prop 19 proponent who has had to deal with the fallout up close.
Time goes by fast when wading through difficult decisions and exhausting work while grieving a parent’s death. Getting a large and unexpected property tax increase, or suffering because you missed new and complex technical deadlines, is proving to be ugly.
The Fix Prop 19 petition drive results were announced on February 20, 2024. While 560,000 petitions were received, representing an impressive 40% increase from the previous 2022 effort, it was still short of the 875,000 required to get this on the 2024 ballot. The work to Fix Prop 19 continues.
For more on opposition to Prop 19: www.repealthedeathtax.com.
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