Market Correction

13 June 2009

News Editor, WTOP Radio
Washington, DC

Dear Editor:

Interviewing a guest this morning, anchor Nathan Roberts suggested that California's fiscal problems would have been avoided had Proposition 13, enacted in 1978, not "tied the hands of local governments to raise revenue by taxing property values."

Not so. In 1980-81 (the earliest date for which consistent data are available), property-tax revenues in California were (in 2009 dollars) $16.86 billion. In 2006-07 these revenues were $45.47 billion (again in 2009 dollars). This fact means that inflation-adjusted property-tax revenues were, in 2007, higher than they were in 1981 by 170 percent. Over these same years, California's population increased by 58 percent.*

Whatever the causes of California's current fiscal fiasco, a lack of adequate property-tax revenues isn't one of them.

Sincerely,
Donald J. Boudreaux
Chairman, Department of Economics
George Mason University

* http://weblog.signonsandiego.com/weblogs/afb/archives/034048.html