&gt;Its hard to imagine the current real estate inflation in the case where home owners had to pay taxes against the fair market value.<p>Prop 13 <i>exists</i> in California because that&#x27;s exactly what was happening.  Prior to its passage you paid on the assessed value of you house, and it didn&#x27;t stop prices from double digit percentage increases every year.<p>People who&#x27;d owned their homes for decades were being forced to sell because the assessed value of the house had gone up so much they could no longer afford to pay the taxes.