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Vote No on Proposition 15’s destructive property tax hikes

August 17, 2020 • Source: Los Angeles Daily News • Posted in: Market News

Proposition 15, which would raise property taxes on commercial and industrial buildings by as much as $12.5 billion annually, is the most significant tax measure to reach the California ballot in decades. Based on the “mom and apple pie” ballot title drafted by the attorney general, it’s easy for voters to overlook the true nature of the measure.

Simply put, Proposition 15 would begin to dismantle Proposition 13 — the historic ballot measure that limited taxes to 1 percent of a property’s sales price, plus local bond assessments. Passed by voters in 1978, Proposition 13 embodied the heart of the California Tax Revolt.

As property values soared, tax bills were forcing people — especially retirees — out of their homes. At the time, tax assessments had averaged 2.67 percent of market value, which led to punishing tax bills given the high prices of California real estate. Voters overwhelmingly approved the measure, which gained nearly 63 percent of the vote and passed in 56 of 58 counties.

In the ensuing years, Proposition 13 has remained the “third rail” of California politics. Any politician who touched it would meet an untimely political demise. Liberal activists and unions loath the measure, because it has limited the ability to raise taxes. They’ve incorrectly blamed it for the state’s financial travails, and have dreamed of a time when voters would overturn it.

These groups have tried to chip away at Proposition 13 over the years, but Proposition 15 — known as the split-roll — is a frontal assault. Supporters argue that it merely closes a “loophole,” by splitting away commercial and industrial properties from a unified tax roll. There is no loophole. The state has had a single tax roll since the 1800s.

Despite the attorney general’s depiction of the measure as a benign effort to increase school and local-government funding by simply “changing” the assessment, Proposition 15 is a pure tax grab.

California is one of the highest-taxed states, with its property tax collections one of the rare areas where it’s middle of the road. The state refuses to reform how it spends its revenue, as pension debts and outsized public-employee salaries consume local and school budgets. Property tax hikes would let governments continue along their profligate path.

Passing Proposition 15 would pummel California’s economy at the very worst time. The commercial market is struggling now, as Californians increasingly work from home and as many brick-and-mortar retailers and restaurants remain closed.

It must never be forgotten that when taxes go up, there are downstream consequences. This measure would raise the cost of living, as grocery stores, retailers and other businesses face higher costs.

Increases to California’s cost of living fall hardest on those with less means. With about one-in-five Californians living in poverty even before the pandemic, the regressive impacts of this measure will be significant.

Is it worth it to undermine California’s economic recovery and burden the poor simply to bail out governments who waste the money they do have? We don’t think so.

Proposition 15 does not raise residential property taxes, but if voters signal that Proposition 13 no longer is sacrosanct, it might not be long before tax-hike supporters come after those protections, too.

The measure’s supporters dismiss that possibility, but the foundation of their argument is that Proposition 13 is fundamentally unfair in the way that it assesses a higher rate on newer owners than older ones. Consider yourself warned.

We urge a “no” vote on Proposition 15.

External Link: https://www.dailynews.com/2020/08/17/vote-no-on-proposition-15s-destructive-property-tax-hikes/