[kqr2]

Phasing out Proposition 13 is not the same as immediately repealing it and going back to pre proposition 13 taxes.

If you read the OP's detailed comment, he proposes limiting the yearly tax payments. Consequently it would be no worse than now if someone wants to stay in their home. What would change, however, is that the person would pay more of the gains to the city when the house is sold. In your senior citizen example, the elderly will most likely stay in their home until they pass so this will affect only the inheritance.

This would also discourage property owners from just sitting on their property. There are empty lots in Palo Alto because the owner only needs to pay $1000 year in property taxes. This would encourage them to sell the land to people who could use it more productively.