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    Proposition 13/Financial Crisis

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    California"s Proposition 13, enacted in 1978, limits the property tax on real estate to one percent of the market value when purchased, and a maxium annual increase in the tax amount of 2 percent. Followers of Henry George contend that Prop 13 deprived local governemtn of this most suitable tac base, real estate tax and forced the state to increase other ttaxes that hurt business activity and shifted power from local government to the state. According to the Georgists, Prop 13 did not constrain state spending and caused the budget deficit to grow so that claifornika was hit with a fiscal crisi in 2008-2009.

    Question: What could be done to solve California's financial crisis?

    © BrainMass Inc. brainmass.com October 10, 2019, 6:09 am ad1c9bdddf
    https://brainmass.com/economics/taxation/proposition-13-financial-crisis-531329

    Solution Preview

    This is a detailed background statement but a very ambiguous question. From reality, the government of California's fiscal crisis (not the state of California, and not a financial crisis) is due to overspending, high taxation that ironically reduced tax receipts (through business flight), and inflated wage bills due to the intractability ...

    Solution Summary

    California"s Proposition 13, enacted in 1978, limits the property tax on real estate to one percent of the market value when purchased, and a maxium annual increase in the tax amount of 2 percent. With this constraint, what could be done to solve California's financial crisis?

    $2.19