Trying to reply via web-mail from a dial-up machine has been frustrating--but will try again, even if this is mostly off-topic.
John, what's really different about deferred taxes and captial gains taxes? Don't know if the states can grab a piece of that pie--but sounds like it is basically the same idea?
Bernard--If you don't feel you are paying enough tax, please feel free to send some extra to the powers that be. Maybe you should run for office on a platform of MORE TAX---but please wear your kevlar vest!
Seems to me (and others) that there are only two 'fair' taxes. INCOME TAX--you have to have income to be able to pay tax. Holding property provides ZERO guarantee that you have money available for taxes. Of course income has to be ANY income coming to you from any source. Then you have SALES TAX. If you have money to spend, then some of that spending gets taxed. The advantage to this kind of tax is that you can exempt some basic needs (basic foods, some base level of energy needs, etc.) so as not to unduly penalize the 'poor'. You can save your money without penalty, but when you go buy all the useless and/or expensive stuff that powers our economy--you get taxed. Everyone pays through the sales tax, and in my mind that is good. Having a large percentage of the population paying little or no tax is not healthy in that those people have no real ownership of the government. Through shear numbers they can maybe vote in people who will hand them more services, even money, but they have put nothing in. Sales taxes give them some ownership.
Now whether or not to mix the two, have one or the other, have graduated income taxes or flat taxes, how many entities--federal, state, county, city get a piece of you, is all food for political debates--and not much to do with the list. Property tax--which usually is used for schools--is fair game, but is hardly fair taxation. It often works out that those getting the fewest services end up paying the biggest piece of the pie and with apartments usually taxes way lower than houses, the burden is often not shared at all fairly. I will also argue that there really are no business or corporate taxes. Those all end up being paid by individuals. OK, if a company does most of its business overseas it may look like someone else is paying the freight, but surely foreign companies exporting to the U.S. are paying their taxes with consumer dollars as well.
I don't know the details of Prop 13 but let me guess that part of the problem with the taxation was the ridiculous inflation of property values in California (whole West Coast--East coast too for that matter). While I have little sympathy for someone who pays a million for what would be a 200k house elsewhere, I do sympathize with those who bought the 200k house and now find it taxes as a million dollar property. That million dollar value is useless unless you are willing to sell and move, and I suspect many are not.
Last summer visited my grad school mentor and he recently retired after a carreer in San Jose California and moved to Sharp's Chappel Tennessee--BECAUSE of taxes. So some California people might argue with being undertaxed. Property taxes have caused a serious revolt here in Indiana and the legislature is currently trying to pass a cap (1% of assessed value) with a 1% increase in sales taxes because of the uproar. In other words--raising property taxes anywhere is not going to win you friends.
Too long and too off topic, but I'll try and send this anyway.