Tuesday morning, Senator Kelly Seyarto (R-Murrieta) held a press conference at the State Capitol introducing Senate Constitutional Amendment 4, to restore taxpayers’ property rights by reversing the state’s “death tax” written into in Proposition 19. Deviously titled “the Property Tax Transfers, Exemptions, and Revenue for Wildfire Agencies and Counties Amendment,” Prop 19 passed in 2020 by voters who were deceived.
SCA 4 would reverse one of the largest property tax increases in state history, a little-noticed provision of Proposition 19 that revoked the ability of families and parents to pass property to their children without any change to the property tax bill, according to the Howard Jarvis Taxpayers Association.
Sen. Seyarto said SCA 4 will allow Californians to keep their childhood homes and family businesses when their parents or grandparents pass away.
In 2020, Proposition 19 capped the value of family homes that could be inherited with their Prop 13 tax base to 1 million dollars and restricted the ability for parents to transfer property to their children by adding a requirement that they live in the home for the remainder of their life.
Prior to Prop 19’s passage, both parents and grandparents were able to pass their homes and businesses to their children and grandchildren without such implications, giving families a chance at economic mobility through inheritance.
“Prop 19 changed the way intergenerational transfers of property were handled, all to the detriment of Californians who had worked so hard for many years to solidify a future for themselves and their families,” said Senator Seyarto. “Simply put, Prop 19 resurrected the death tax. We should be making it easier for Californians to inherit property without asking them to absorb the burden of additional taxes. Upward economic mobility cannot be achieved unless we let people own what they create through decades of hard work.”
Jon Coupal, President of the Howard Jarvis Taxpayers Association said SCA 4 is such a critical bill. People who voted for Prop. 19 had no idea that the generational transfer of wealth would be taxed if it passed. Coupal added, “SCA 4 would reinstate Propositions 58 and 193, giving Californians back those protections of being able to inherit property from parents and grandparents. Prop 58 was passed by unanimous vote in both houses. They put it on the ballot, and the voters supported it by 76%. It’s clear that voters in this state want to restore that protection.”
HJTA elaborates on how Proposition 19 hurts taxpayers:
Proposition 19, had two main elements. The first was expanded “portability” of base-year property taxes. Homeowners who are 55 years of age or older, who are victims of a wildfire, or who are disabled may now move to a replacement home anywhere in the state, of any value, and take the base-year property tax assessment of the old home with them to a new home up to three times.
Now to the other part of Proposition 19. Previously under the state constitution, property transfers between parents and children, and sometimes grandparents and grandchildren, were excluded from reassessment. These family members could transfer a home of any value and up to $1 million of assessed value of other property, such as a small business property, a vacation cabin, or a rental property, without any increase in the property tax bill. This taxpayer protection was added to the state constitution in 1986 by Proposition 58 (parents and children) and in 1996 by Proposition 193 (grandparents and grandchildren) with overwhelming public support.
Proposition 58 was approved by more than 75% of California voters, and Proposition 193 was approved by nearly the same margin. Now, these taxpayer protections are gone.
Proposition 19 has replaced 58 and 193 with a very narrow exclusion for family transfers of property. Only a principal residence that the inheriting child occupies as his or her permanent primary residence is eligible for an exclusion from reassessment. Unless the new owner can move in within one year, the property is reassessed to market value. Business properties and rental properties lose the protection entirely.
Lynda Chac, a realtor from Elk Grove, said that her clients work hard to be able to purchase their forever home that they want to leave to their children when they pass away.
Sen. Roger Niello (R-Fair Oaks), co-author of the measure, said “I don’t think we can emphasize enough the terribly and intentionally biased title and summary of [Prop 19]. Titled The Home Protection for Seniors, Severely Disabled, Families, and Victims of Wildfire or Natural Disasters Act, they should have added to that ‘and the largest tax increase the state has passed,’ but that was left out. We are going to correct that error with SCA 4, of which I am a proud co-author.”
Veronica Nelson, First Vice President and Legislative Chair of the Sacramento Realtist Association, and Dr. Rosie Milligan, an author and estate planner who holds a PhD in Business Management, also voiced their support for the measure. “I support SCA 4 because the intent is to repeal the devastating impact of Prop 19 and protect California families from being taxed out of their homes,” said Dr. Milligan.
“This legislation has one purpose, to RESTORE protections for taxpayers and to keep the intrusive reach of the government away from their family inheritance,” said Senator Seyarto. “I urge everyone to join with us, contact your Representatives and tell them to vote yes on SCA 4 so we can bring this measure back to the people and restore taxpayer protections.”
SCA 4 will be up for a special hearing in the Senate Committee for Governance and Finance on May 10. Visit sgf.senate.ca.gov for instructions on participation. .
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