(July 10, 2008) The California Chamber of Commerce and a statewide coalition of business and taxpayer groups have launched an effort to educate California opinion leaders and the public about the devastating impacts of increased property taxes.
Californians Against Higher Property Taxes will provide studies, analyses and other information to raise awareness about how higher property taxes, including the “split roll” tax, burden small businesses, consumers, seniors, renters and damage California’s economy.
“Split Roll” Tax
A “split roll” tax seeks to divide the tax treatment of commercial and residential properties by removing Proposition13 protections from commercial properties, while leaving those protections intact for residential properties.
When passed, Proposition 13 capped property tax rates at 1 percent of assessed value, and restricted that value from growing more than 2 percent a year. Only when ownership changes or there is new construction may the value of the property be reassessed at more than 2 percent. These protections were extended to both residential and commercial properties under the 1978 landmark proposition.
Proposition 13 resulted in a very stable property tax structure that is top ranked nationally — fifth best in the nation in the Tax Foundation’s 2008 State Business Tax Climate Index.
By contrast, California’s other major tax revenue sources — personal income tax, corporate tax and sales tax — are considered extremely volatile and ranked 50th, 40th and 42nd nationally, with 50 being worst.
Adverse Effects
A “split roll” tax would undermine the intent of the protections cemented in Proposition 13, and have a negative effect on job-producing operations and the state’s well-regarded property tax structure.
Commercial properties already contribute significantly in tax dollars — generating approximately two-thirds of the property tax revenues, just as they did before the passage of Proposition 13. Implementation of a “split roll” tax would mean tax increases for California businesses likely to exceed $3 billion per year.
Increasing commercial property taxes will not occur in a vacuum — it will harm not only businesses, but also their ability to provide jobs, benefits and cost savings to tenants and customers. Consumer costs could increase as a result of the increased cost of doing business.
The coalition notes that in several recent polls, California voters indicated they do not want to see property taxes increase and support the protections provided by Proposition 13. In fact, a June 2008 Field Poll found that more than twice as many Californians would still support Proposition 13 (57 percent) today as would oppose it (23 percent).
Californians Against Higher Property Taxes, which also includes the California Restaurant Association, California Taxpayers’ Association, California Business Properties Association, Howard Jarvis Taxpayers Association, California Business Roundtable, National Federation of Independent Business-California, Orange County Business Council, California Retailers Association and many others, will educate Californians through events, forums, the media and the coalition website, www.stophigherpropertytaxes.com.
Additional Materials
Taxation