Proposition 13 (officially named the People's Initiative to Limit Property Taxation) is an amendment of the Constitution of California enacted during 1978, by means of the initiative process, to cap property taxes and limit property reassessments to when the property changes ownership, and to require a 2/3 majority for tax increases in the state legislature. The initiative was approved by California voters in a primary election on June 6, 1978, by a nearly two to one margin. It was upheld by the Supreme Court in 1992 in Nordlinger v. Hahn, . Proposition 13 is embodied in Article XIII A of the Constitution of the State of California.
The proposition decreased property taxes by assessing values at their 1976 value, limiting the rate of taxation to 1% of the assessed value, and restricting annual increases of assessed value to an inflation factor, not to exceed 2% per year. It prohibits reassessment of a new base year value except in cases of (a) change in ownership, or (b) completion of new construction. These rules apply equally to all real estate, residential and commercial—whether owned by individuals or corporations.
Significantly, the initiative also requires a two-thirds majority in both legislative houses for future increases of any state tax rates or amounts of revenue collected, including income tax rates. It also requires a two-thirds majority in local elections for local governments wishing to increase special taxes. (A "special tax" is a tax devoted specifically to a purpose, e.g., homelessness or road repair: money that does not go into a general fund.)
Proposition 13 has been described as California's most famous and influential ballot measure; it received enormous publicity throughout the United States. Passage of the initiative presaged a "taxpayer revolt" throughout the country that is sometimes thought to have contributed to the election of Ronald Reagan to the presidency during 1980. Of 30 anti-tax ballot measures that year, 13 passed. The proposition has been called the "third rail" (meaning "untouchable subject") of California politics, and it has generally been unpopular for lawmakers to attempt to change it.
As a consequence of Proposition 13, homeowners in California receive a property subsidy that increases the longer that they own their home. It has been described as a contributor to California's housing crisis, as its acquisition value system (where the assessed value of property is based on the date of its acquisition rather than current market value) incentivizes long-time homeowners to hold onto their properties rather than downsize, reducing the housing supply and raising housing prices.
Purpose Limit the tax rate for properties
Proposition 13 declared property taxes were to be assessed their 1976 value and restricted annual increases of the tax to an inflation factor, not to exceed 2% per year. A reassessment of the property tax can be made only when a) the property ownership changes or b) there is construction done.California Tax Data What is Proposition 13?
State responsibility The state has been given the responsibility of distributing the property tax revenues to local agencies.
Voting requirements state taxes In addition to decreasing property taxes and changing the role of the state, Proposition 13 also contained language requiring a two-thirds (2/3) majority in both legislative houses for future increases of any state tax rates or amounts of revenue collected, including income tax rates and sales tax rates.
Two-thirds voter approval requirement for local special taxes
Proposition 13 also requires two-thirds (2/3) voter approval for cities, counties, and special districts to impose special taxes.
In Altadena Library District v. Bloodgood, 192 Cal. App. 3d 585 (June 1987), the California Court of Appeal for the Second District determined that the two-thirds (2/3) voter approval requirement for special taxes under Proposition 13 applied to citizens initiatives. California law was clear for decades that local special tax initiatives were subject to two-thirds voter approval under Proposition 13.
2017 California Supreme Court Upland decision
In 2017, a divided California Supreme Court in the Upland case made a distinction between taxes proposed by the governing body of a local government and taxes proposed under the local initiative power for purposes of applying taxpayer protection laws such as Proposition 13.California Cannabis Coalition v. City of Upland (2017) 3 Cal.5th 924. This distinction created a legal loophole that has allowed tax increase supporters and politicians to evade the two-thirds voter approval requirement for special taxes under Proposition 13 by using the initiative power to propose tax increases.
As a result of the Upland case, special taxes qualifying for the ballot under the initiative power are no longer subject to two-thirds voter approval under Proposition 13. However, special taxes placed on the ballot by the governing body of a local government such as a city council or a county board of supervisors remain subject to two-thirds voter approval under Proposition 13.Cal. Const., art. XIII A, § 4.
Exploitation of the Upland loophole, which was created by the courts and not by the voters, has resulted in many special tax increases being imposed without two-thirds voter approval under Proposition 13. This includes the controversial Measure ULA (2022) “mansion tax” in Los Angeles and many local sales tax and parcel tax increases that would have not been approved without use of the Upland loophole.
2026 California Proposition 43
Proposition 43 on the November 2026 ballot in California is a proposed constitutional amendment that would prospectively close the court-created Upland loopholeAssem. Const. Amend. No. 22, Stats. 2026 res. ch. 132. and restore the two-thirds voter approval requirement for local special taxes under Proposition 13 to once again include special taxes placed on the ballot under the initiative power. Proposition 43 would have the effect of restoring the state of the law that existed in California for decades (under the 1987 Altadena Library case)Altadena Library District v. Bloodgood (1987) 192 Cal.App.3d 585. prior to the 2017 Upland decision.
The Upland decision had the resulting effect of taking away from voters their constitutional right to vote on local initiative special taxes under Proposition 13, a right that was previously upheld in the 1987 Altadena Library case. The primary purpose of Proposition 43 is to restore that constitutional right to vote on all local special taxes under Proposition 13, including local special taxes proposed under the initiative power.
Proposition 43 was placed on the ballot by the California LegislatureAssem. Const. Amend. No. 22, Stats. 2026 res. ch. 132. with strong bipartisan support from both Democrats and Republicans by a 68–2 vote in the State Assembly and by a 35–1 vote in the State Senate.
Origins
There are several theories of the origins of Proposition 13. The evidence for or against these accounts varies.
Displacement of retired homeowners
One explanation is that older Californians with fixed incomes had increasing difficulty paying property taxes, which were rising as a result of California's population growth, continued growth in state and local government spending, increasing housing demand, government restrictions on new developments and inflation. Due to severe inflation during the 1970s, reassessments of residential property increased property taxes so much that some retired people could no longer afford to remain in homes they had purchased long before. A 2006 study published in Law & Society Review supported this explanation, reporting that older voters, homeowners, and voters expecting a tax increase were more likely to vote for Proposition 13.
Proposition 13 is not the only law in California designed to prevent tax-induced displacement. The California Tax Postponement Program, passed in 1977, ensures that "homeowners who are seniors, are blind, or have a disability to defer current-year property taxes on their principal residence if they meet certain criteria".
School funding equalization
Another explanation is Proposition 13 drew its impetus from the 1971 and 1976 California Supreme Court rulings in Serrano v. Priest, which somewhat equalized California school funding by redistributing local property taxes from wealthy to poor school districts. According to this explanation, property owners in affluent districts perceived that the taxes they paid were no longer benefiting their local schools, and chose to cap their taxes.
A problem with this explanation is that the Serrano decision and school finance equalization were popular among California voters. While Californians who voted for Proposition 13 were less likely than other voters to support school finance equalization, Proposition 13 supporters were not more likely to oppose the Serrano decision, and on average they were typically supportive of both the Serrano decision and of school finance equalization.
Regressive tax distributions
A 2020 study by Joshua Mound published in the Journal of Policy History challenged the idea that wealthy property owners' desire to cap their property taxes was the impetus for enacting Proposition 13, instead saying the "tax revolt" was rooted in lower and middle-income Americans' longstanding frustration with unfair and highly regressive tax distributions during the post-World War II decades.
The study said pro-growth Kennedy-Johnson "Growth Liberals" cut federal income taxes in the highest brackets in the 1960s while local officials raised regressive state and local taxes, creating a "pocketbook squeeze" that made voters less likely to approve local levies and bonds, which eventually led to the passage of Proposition 13. The study said the tax revolt was not limited to white voters nor associated with rising conservatism associated with the collapse of the "New Deal order" and the election of Ronald Reagan.
Expansion of state government
Another explanation that has been offered is that spending by California's government had increased dramatically during the years prior to 1978, and voters sought to limit further growth. The evidence supporting this explanation is limited, as there have been no studies relating Californians' views on the size and role of government to their views on Proposition 13. It is true that California's government had grown. Between 1973 and 1977, California state and local government expenditures per $1,000 of personal income were 8.2% higher than the national norm. From 1949 to 1979, public sector employment in California outstripped employment growth in the private sector. By 1978, 14.7% of California's civilian work force were state and local government employees, almost double the proportion of the early 1950s.
Junior college expansion
One example of the massive expansion of government in California in the decades before Proposition 13 was the rapid growth of public postsecondary education and its expansion into almost every urban area in the state. In 1900, California had only a single public university at Berkeley, the University of California, and state normal schools which provided two-year teacher training programs at Chico, Los Angeles, San Diego, and San Francisco. In 1907, the American junior college movement was launched in California when the state legislature authorized high schools to offer lower-division college-level coursework, thereby enabling more high school graduates to attempt such courses without having to move away for college. (At p. 4.) California was the proud leader of this movement, in that the United States went from zero junior colleges in 1900 to nineteen by 1915, of which eight were based in California.