California officials discuss property tax reforms to tackle housing affordability crisis

The April 29, 2025, Board of Equalization (BOE) meeting in California focused on critical discussions surrounding tax relief, housing affordability, and property tax reform. The session highlighted concerns about the state's out-migration trends and the impact of current tax structures on both individuals and businesses.

The meeting commenced with a call for comprehensive tax relief measures aimed at both individuals and the business community. Board members expressed that lowering tax rates could stimulate economic growth and generate additional revenue by encouraging business investment and creating more job opportunities. A significant point raised was the alarming trend of residents leaving California, which has resulted in the loss of a congressional seat and could lead to further political power diminishment. This out-migration was attributed to the high cost of living, particularly housing unaffordability, which many participants linked to the existing tax system.

A discussion ensued regarding the need for a shift in tax policy, emphasizing the importance of taxing speculation rather than penalizing business investments. The board members agreed that addressing housing affordability is crucial for retaining residents and fostering a stable economy. They underscored the necessity of building more affordable housing and reforming the fee structures associated with home construction to facilitate this goal.

The conversation also touched on the complexities of distinguishing between residential and commercial properties for tax purposes, especially in light of the rise in home-based businesses due to the COVID-19 pandemic. Board members acknowledged the challenges faced by assessors in categorizing properties and the need for clear definitions to streamline the assessment process.

Professor Darien Shanske from UC Davis contributed to the discussion by providing insights into property tax theory and its historical context. He explained that property taxes are often viewed as a benefit tax, where individuals pay based on the services they receive from their local government. However, he noted that the current system, particularly following Proposition 13, has complicated local funding mechanisms and made it difficult for municipalities to raise necessary funds for public goods.

The meeting concluded with a consensus on the urgent need for tax reform that addresses both the affordability crisis and the structural issues within the property tax system. Board members agreed to continue exploring solutions that would balance the need for revenue generation with the imperative of making California a more affordable place to live and work. The discussions set the stage for future meetings focused on actionable steps toward reforming the state's tax policies.