&gt; This is such a hard problem to solve<p>Actually, it&#x27;s an easy problem to solve technically; the hard part is selling the solution politically.<p>All you have to do is, instead of capping the growth of the <i>tax</i> rate, you cap the growth of the required <i>payment</i> against the tax.  If the tax is greater than the required payment in a given year, the locality gets a lien on the property for the difference; <i>but</i>, critically, that lien does not become due until the property is sold.<p>This system would let localities collect, in the steady state, as much property tax as they would have before; it&#x27;s just that they wouldn&#x27;t actually receive part of the tax on a given property until it was sold, so the money coming in would be a little lumpy.  But that doesn&#x27;t seem like a serious problem.<p>Anyway, the point is, if localities could still collect the amount of property tax on residential properties that they need, they would be more inclined to encourage residential construction.<p>It&#x27;s been done in places, and it should have been done in California.  Prop. 13 is destroying the state.