Economists Say Property Tax Could Outraise Prop 40
Two economists argue that changing California's property-tax system could raise more revenue than the proposed Proposition 40 wealth tax.
Updated on Oct. 31, 2026 in Regional Economics
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Economists Owen Zidar and Eric Zwick argued that changing California's property-tax system could outraise Proposition 40, a measure voters will decide on November 3. Proposition 40 would impose a one-time 5% tax on certain taxpayers with wealth above $1 billion.
Why it matters
The debate centers on how California funds schools, counties, cities and special districts under Proposition 13, which generally limits property-tax rates to 1% of assessed value. The economists' hypothetical higher rate is not on the November 3 ballot.
California recorded about $100 billion in statewide property-tax revenue in fiscal 2024-25, with $53.5 billion going to schools and $46.5 billion to counties, cities and special districts. The economists' projection of about $100 billion from 2027 through 2031 rests on an assumed 10% avoidance rate that the analysis does not verify.
The players
Owen Zidar
Owen Zidar is an economist who co-authored the analysis arguing that changing California's property-tax system could raise more revenue than Proposition 40.
Eric Zwick
Eric Zwick is an economist who co-authored the analysis arguing that changing California's property-tax system could raise more revenue than Proposition 40.
The details
Under Proposition 13, assessments generally reset when a property is sold, and annual increases are capped at the lower of inflation or 2%. The economists' scenario compares California's 0.8% residential property-tax rate with a 2% rate in Texas, a hypothetical that is not part of the November 3 measure.
Timeline
Fiscal 2024-25, which ended June 30, 2025: California recorded about $100 billion in property-tax revenue.
2027 through 2031: Economists project about $100 billion in Proposition 40 revenue over this period.
Tuesday, Nov. 3: Voters decide on Proposition 40.
Regional Context
Proposition 13, approved by California voters in 1978, generally limits property-tax rates to 1% of assessed value and caps annual assessment increases at the lower of inflation or 2%. The economists' argument and Proposition 40 both test how far that framework can be adjusted to raise revenue.
Property-tax rules under Proposition 13 directly affect how much homeowners pay and how much funding flows to local schools and services. Any future change to the system would alter these bills and budgets depending on the final design.
The takeaway
Property-tax policy and wealth-tax proposals represent two different ways California could raise revenue, and voters' choices on Proposition 40 will shape that debate. Readers should watch how the measure's outcome affects state funding priorities.
What happens next
Voters will decide on Proposition 40 on Tuesday, Nov. 3.
Further reading
Explore more on Regional Economics to see how state tax policy shapes local budgets.
Source note: This article includes information reported by TokenPost.
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