The Effects of California’s 1978 Propositions 10 and 13
California Proposition 13, or the People's Initiative to Limit Property Taxation was on the June 6, 1978 statewide primary ballot in California as an initiated constitutional amendment, where it was approved. Among other provisions, Proposition 13 returned property assessments to 1975 levels and capped annual property tax increases at 2% But who understood the Proposition 10 Trojan Horse?
California was inundated by ever higher property values as cities and the state basked in new-found cash while homeowners, especially the aged suffered. Howard Jarvis promoted Proposition 13 that cut all California property taxes. Tax reform was needed, but soon municipalities found they lacked funds for infrastructure maintenance and public services - including schools. They turned to the state and the state in turned looked to the federal government to backfill their funding shortfall. Today, the threat of losing Federal funding is used as a threat for compliance – like same-sex bathrooms and gay “marriage” for example.
Many businesses and homeowners were blinded by the bright light of the tax reduction benefits of Proposition 13. Proposition 10 appeared on the ballot in the same election. California - once governed by fiscally restrained legislators and chief executives - had a usury law like many southeastern states. The maximum interest that could be charged by law was 10%. Banks loans became difficult to obtain in California, so many middle-income families couldn't buy household appliances or automobiles on credit. With so much financial stress, California voters also enthusiastically voted for Proposition 10, which eliminated the 10 percent maximum on interest charged, or usury law.
Soon interest rates climbed rapidly as more money re-entered the economy without the previous restraints – eventually pushing nominal 5-7% mortgages to as much as 21% for a time. The higher the rate, the less home a family can buy, so the typical buyer – then, the husband's salary alone – required many stay-at-home wives and mothers to take jobs outside the home, and the inevitable stresses on family life this brings. In either case, the ability to make the mortgage payment would suffer, along with the marital relationship and the children who were relegated to day care.
Former Federal Reserve Bank Chairman Paul Volcker, who presided over this situation at the national level, noted that "to bring about societal change, we must manipulate rates and taxes." I could write a litany of the societal disaster that came about from California's manipulations backed by the Fed. Societal change we got as the moral, spiritual and financial condition of California collapsed with family breakdown. Women yielded to abortion on demand, couples to no fault divorce, the Feminist movement that led to a sexual revolution we are painfully suffering under today. Roads, highways, public transportation, education public services all suffered as even other propositions to protect the family structure and discourage illegal aliens were voted in strongly by the people only to be overturned by judges claiming “unconstitutionality.” "So goes California, so goes the nation."
Jerry Todd is a brilliant conservative thinker whose essays and analyses appear online at several websites including AmericaC2C.com and WEBCommentary. He has been in the environmental technology field for over 40 years, and in semi-retirement represents rainlikewater.com - Magnation Corporation water and energy saving crop enhancement technology.