Nordlinger v. Hahn
Case Summary
U.S. Supreme Court rejects CLIPI’s equal protection challenge to Proposition 13’s “welcome stranger” method of property tax assessments by which new purchasers are taxed at full market value, while long-held properties are taxed at typically far lower amounts based on earlier purchase prices; Court acknowledges that huge disparities in taxes for similar properties have resulted, based on time and price of purchase, and that Prop 13 vests its benefits in a “broad, powerful and entrenched segment of society,” but determines that the initiative measure is “not palpably arbitrary.”
Additional Information
In 1992, the United States Supreme Court entertained argument in Nordlinger v. Hahn, CLIPIs equal protection challenge to the Proposition 13 mandate that property taxes must be assessed on the market value of real estate when purchased, rather than at current market value. Under Proposition 13's "welcome stranger" assessment scheme, taxpayers owning nearly identical properties pay wildly different taxes, simply because they purchased their properties at different times. By the early 1990s, recent home buyers commonly paid 10 to 17 times more in taxes than owners of similar homes who bought their property before 1978, when Proposition 13 was enacted.
New property owners consequently bear a much greater share of the cost of services (such as sewage and schools) used by all community residents. Local taxing authorities, seeking to recoup lost revenues, impose a wide variety of fees on new construction, making home ownership less affordable. Although the U.S. Supreme Court's ensuing opinion agreed that Proposition 13 "appears to vest [its] benefits in a broad, powerful and entrenched segment of society" and that "ordinary democratic processes may be unlikely to prompt its reconsideration or repeal," the Court nonetheless ruled that Proposition 13 is "not palpably arbitrary" and so should not be overturned.
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