There have been rumblings about some of our less than enlightened Republican legislators flirting with a Prop 13 sort of proposal, where properties are assessed based upon their acquisition cost. For the record, I am amazed that Utah's highly dysfunctional and one-partied state managed to produce something that I actually feel works rather well. It is called "truth in taxation." This provision in Utah law makes it so state and local government cannot reap a windfall from rising property values. This is something Utahns should be proud of. It makes the property tax much more fair than it otherwise would be. Utah's legislature has also instituted "circuit breaker" tax relief for those who risk losing their home due to property tax liabilities.
In many ways, Utah's response to the rising property values of the 1970's was enlightened by comparison to California's politically charged response. The one thing I would have changed, is to create the ability of the various entities to base their tax rates upon certain inflationary factors. The lack of such a provision has resulted in most state and local jurisdictions to rely upon fees that have had a tendency to be regressive.
Basing the property tax on acquisition cost creates inherent inequities. People with like properties will be assessed differently, based upon whether they bought their house during a time of residential inflation, or deflation. The property tax was designed to tax people equitably based upon the current value of their property, not based upon whether they moved here when the housing prices were high, or weak.
Democrats, need to be engaged in this process of defining policy options. My option, that I believe should be considered, is to base the residential exemption upon 45% of the median primary residential property in each county. This way, if new growth coming from starter McMansions drive up the value of Grandma Baker's house, it also increases the residential exemption available to counter it. You could also use the mean, but at this point, I would propose the median.
Democrats need to point out, that an acquisition cost property tax, will stifle companies moving their employees to this state, where they, with recent acquisitions, will shoulder the tax burden for those who have been here longer. It will also facilitate complex leasing arrangements rather than sales, and I haven't yet digested what that will mean to Utah's realtors.
My suggestion is this. We don't have a property tax problem that is not solveable. An acquisition cost system only worsens inequities, and potentially stifles economic growth here in Utah. This is my warning on the record, that this is a bad idea, proposed by people who haven't thought through the consequences, and are unlikely to stop because of them.