By Joel Fox
One of the more consequential cases to come out of California argued before the United States Supreme Court while Justice Antonin Scalia served was a test of Proposition 13’s constitutionality. Nordlinger v. Hahn was argued before the court on February 24, 1992. The plaintiff, a Los Angeles homeowner, claimed that she was not treated fairly under the equal protection clause of the constitution because she was required to pay more in property taxes when she purchased her home than her neighbors who had resided in similar properties for a number of years. Kenneth Hahn, the Los Angeles County Assessor at the time, was sued in his official capacity.
On an 8 to 1 vote, the Supreme Court ruled that Proposition 13 did not violate the equal protection clause of the constitution and that there was a legitimate state interest in protecting property taxpayers by the method created by Prop 13.
Justice Scalia spoke a number of times during the oral arguments, questioning attorneys on both sides and offering his thinking, often in his characteristic acerbic way.
We’ve never insisted that in any public policy field the State has to choose the most precise way of solving the problem. This is not very precise, but you must admit it solves that problem.
And it seems to be the main problem at which it’s been addressed, that people can’t keep up with constantly increasing taxes on unrealized gains in their home.
And therefore, to solve that problem we have this new tax system.
It’s rough and ready, it’s not perfect, but close enough for government work.
Scalia also noted the certainty Proposition 13 provided taxpayers. When Nordlinger’s attorney said that she had to stretch financially to buy her house, Scalia responded:
But she knows she won’t be stretched any further, doesn’t she?
She knows that next year it’s not going to be anything more than 2 percent worse, and the next year after that no more than 2 percent worse.
Isn’t that some advantage to the people of California?
Later, in considering the pluses and minuses of an acquisition-type property tax system, Scalia declared it a “good trade”:
What she is getting in exchange for that is the assurance that that little house, however much it cost her, is going to be hers and she is going to be able to afford it as long as she has her current level of income, and the people of California say that’s a good trade.
We’re willing to have the one for the other.
She may disagree with it, but why is that an irrational deal to make?
Scalia also posited that California could have solved the tax crisis that brought on Proposition 13 without resorting to an initiative.
Of course, an easy way to solve it would just be as inflation pushes the price up and up, just lower the tax.
There’s no reason why the fact that there’s an unreasonable inflation in the value of property has to result in unreasonably high taxes.
A simple solution…not pursued by those in government.
To read a transcript of the entire Supreme Court hearing on Proposition 13, go here.
Interesting that, like Milton Friedman, who over a period of nearly 40 years called a tax on land values the "least bad" tax, Antonin Scalia saw the answer --- but didn't push it!
Don't rock the boat!