A mansion style home is seen July 12, 2005 in Atherton, a small town with some of the most expensive real estate in the nation. A land value tax has the potential to capture more of that wealth than currently possible under Prop 13 or the proposed billionaire tax. 

Last week, California certified a one-time billionaire wealth tax for the November ballot: a 5% levy on the state’s billionaires — about 1% a year over five years — to raise some $20 billion annually for health care, food aid, and schools after federal cuts.

The impulse is understandable. The state has a real revenue hole and billionaires can afford to help close it.

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But this approach fails to address the source of California’s budget instability: Proposition 13.

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Prop 13 froze property valuations for tax purposes at 1970’s values, then limited assessment increases to no more than 2% a year, regardless of what the actual market was doing. This effectively cut the state off from its most stable revenue source. It’s now forced to chase that lost money everywhere else, giving the state the highest income tax rate in the nation.

It is a vicious cycle: cap property taxes, raise income taxes, watch people leave, then squeeze whoever remains. The billionaire tax is just the most desperate squeeze yet.

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