California economist says state should dump Proposition 13

By Marla Dickerson

March 30, 2012 12 AM PT

Economists generally don’t go into politics, which is probably a good thing for Christopher Thornberg, who has declared war on Proposition 13.

The popular 1978 ballot measure that capped property taxes in California is “one of the most horrendous, unfair, regressive taxes in the history of the United States,” the former UCLA economist declared at a televised hearing in Sacramento earlier this month. (You can view it here, starting at about 31:36 minutes.)

Zap! That was the sound of Thornberg touching the third rail of California politics.

Lawmakers cringed. Thornberg’s inbox was flooded with angry emails telling him where he could stick his analysis.

But the founder of Los Angeles-based Beacon Economics said his research has convinced him that Prop 13 has caused more problems than it has solved.

“Nothing is more hypocritical than Prop 13,” Thornberg said in a phone interview this week. “We’ve been told it’s a godsend to homeowners and seniors when it’s really about preserving and expanding the wealth of the old bulls of real estate…People don’t understand how they’re being taken advantage of.”

Before you join the haters flaming Thornberg, he wants you to know that 1) he doesn’t dislike old people; 2) he’s a “middle of the road,” decline-to-state voter, not a “left-leaning nutcase”; 3) he’s a homeowner, so he has skin in the game, and 4) he says that the state needs to rethink its entire tax system, not just Prop 13, to make it broader-based, less cyclical and more equitable to all.

So why does Thornberg think Prop 13 is strangling California? He has plenty of reasons, which you can read about here at length. But to name a few:

*Prop 13 is regressive. Those who have owned their properties the longest – and therefore have accumulated the most wealth in the form of home equity – are taxed the least.

*Prop 13 has worsened housing affordability. Because property tax revenue is capped, cities looking to fund public services have an incentive to push retail and industrial development over home building.

*Prop 13 has fueled California’s “business unfriendly” reputation by forcing lawmakers to hike sales taxes, corporate taxes and personal income taxes to make up for the property tax shortfall. Those revenue sources rise and fall with the economy, so they’ve also exacerbated boom-and-bust budgeting in state and local government.

It’s probably safe to say that Thornberg won’t be running for office anytime soon. But he’s not backing down from his criticism of Prop 13. And he said he’s gotten plenty of supportive emails for his outspoken stance.

“People are starting to get it,” Thornberg said. “This needs to change.”