I see my error
I was increasing the rate by 2% a year instead of increasing the tax by 2%.

Still the point I was trying to make is EVERY homeowner will NOT experience a substantial increase

Another ex. (I'll double check my math) :
If you purchased a house 11 years ago for $75,000 and now it's worth $80,000.
With prop 13 you would pay $914 ($75,000 x 1%= $750 then increase $750 by 2% for 10 more years)
If they repealed it you would pay $2400 ($80,000 x 3% = $2400)

So inorder for B to be true that would mean that everyones properties would have to increase in value at a considerable rate.

I dont see how you can guarantee that by the passage.

The only thing that leads me to think that your right is that it says every homeowner is likely to experience a substantial increase in property taxes. I guess you could interpret that as 'definitely maybe'.

So I guess that gives you some room to make assumptions. And without D I would go with B. The problem is that I can find any scenario to disprove D. The only way D would not be correct is if under prop 13 everyone ALWAYS bought identical properties at the exact same time. Because if that doesnt happen, identical properties will be taxed at different rates.

I know B is the OA so I'm beginning to thing this was just a problem that was not thought all the way through.

Sorry for dragging this out.

Walker between B and E ...I would still go with B

Read question stem again....what is author likely arguing for?

The tone of the arguments is not about "some people getting benefited more than others"

It is more about increase in tax due to repealing of proposition 13.

Wasi, N. and White, M.J. (2005). Property tax limitations and mobility: The lock-in effect of California’s Proposition 13, NBER Working Paper No. W11108.

or

INTERNATIONAL REAL ESTATE REVIEW
2007 Vol. 10 No. 1: pp. 26 - 47
Residential Stability or Rational Bubble: Proposition 13 in Southern California
Mark Hoven Stohs

For example, a buyer A purchases a house for $100,000 in 1975. Suppose
further that the property tax rate is 1%, property value increases at the rate of
10% per year and the inflation rate is 2%.4 In 2005 buyer A’s taxes would
have risen to $1,811. In 2005 buyer B would pay $1,744,940 for an
identical house and receive a property tax bill of $17,449. Therefore, buyer
A’s annual property subsidy is $15,638 (= $17,449 – $1,811). ..........


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walker located Proposition 13 on the net, and having read the relevant excerpt, it looks like (E) is the correct answer since it explicitly mentions A's subsidy in the last statement (hence A benefited more than B). The OA is incorrect.

One can argue that this question is incomplete as the author does not make any argument in the given statements. Which is why they should refrain from having such answer choices in the actual exam.
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