Prop. 13 Overhaul Puts California Taxpayer Protections at Risk

Supporters of an effort to gut Prop. 13’s taxpayer protections have introduced (6/10/15) a constitutional amendment to increase property taxes on California businesses. Under the guise of “reforming Prop. 13,” SCA 5 will create a split-roll property tax that will cost small businesses and taxpayers billions of dollars and worsen the state’s business climate. While citing the need to adjust Prop. 13’s “structural flaws,” supporters of SCA 5 actually worked last year to defeat a bill in the Legislature that would have closed the very loopholes they claim SCA 5 would address. The bill, AB 2372 (Bocanegra), was strongly supported by the business community.

Last week, the California Business Roundtable, which has previously stated it would aggressively fight any effort to implement a split-roll property tax, released a statewide survey showing strong, continuing voter support for Prop. 13.

Roundtable President Robert C. Lapsley joined taxpayer advocate and president of the Howard Jarvis Taxpayers Association Jon Coupal in authoring a recent guest opinion piece in the Los Angeles Daily News cautioning against a split-roll tax like that advocated by supporters of SCA 5.  Excerpts from, their opinion piece follow:

Los Angeles Daily News: Prop. 13 overhaul puts California taxpayer protections at risk

… Thanks to hard-working California taxpayers from all income levels, our current state budget is in the black with an annual surplus of almost $2 billion. An additional $20 billion in new taxes will negatively impact our current recovery for small businesses, jobs and our overall economic competitiveness.

One initiative that is currently being pursued will strike at the heart Proposition 13, one of our most important tax protections for homeowners and businesses.

That initiative is called split roll — a $6 billion to $10 billion tax increase that would result from changing Proposition 13 so that commercial property is reassessed every year, affecting the rent payments of every small and minority-owned business and non-profit foundation in California.
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These groups argue that Proposition 13 should be changed because a few clever investors use tax lawyers to pursue loopholes to avoid reassessments in large, complex property transactions.

Since this was not the intent of Proposition 13, we joined together and sponsored a reform bill last year to prevent any potential abuses in these transactions. AB 2372 was authored by the chair of the Assembly Revenue and Taxation Committee, Raul Bocanegra, and San Francisco-area Assemblyman Tom Ammiano and supported by a broad coalition of business and taxpayer organizations. Most importantly, we also had the support of the California Tax Reform Association (who is pursuing the split roll initiative) as it passed overwhelmingly off the Assembly floor.

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Numerous studies have shown just how bad higher commercial property taxes would be for California. Studies by former Legislative Analyst William Hamm and Dr. Steven Frates, president of the Center for Government Analysis, show a loss of 400,000 jobs and real hardships imposed on the monthly rents paid by California’s small, minority- and women-owned businesses.

If our state budgets already have a $2 billion surplus then why would you raise taxes again?

The predictability of property taxes under Proposition 13 is one of the best advantages homeowners and businesses have in high-tax California. Now is not the time for a massive and arbitrary increase in property taxes unless our goal is to drive more companies and jobs to leave.