It’s primary home to primary home only and only $1m worth is prevented from being reassessed. $2m homes (majority in the Bay Area) will end up with new $1m assessed and pay $12.5k / year. Median taxes across the US are more like $5k / year.
I'm not sure of the exact value of the median home in CA, but I think it may still be less than $1M (hopefully).
Whereas rent for that Bay Area home is how many thousands per year? Probably $60k-100k, and not subject to a 2% annual increase? $12.5k is an absolute steal.
Makes me think that we should have greater estate taxes. Maybe limit inheritance to 5x the median annual income in the area or something like that. Capitalism does not function well when wealth becomes a caste system.
The just can't rent it out and continue the low tax rates.