A handful of far-left, Bay Area activists think they have come up with a clever plan to chip away at Proposition 13. Specifically, they are attempting to persuade local school boards and city councils to pass resolutions in support of removing Prop 13 protections for business property. While “resolutions” are not laws, they nonetheless can lay the groundwork for future political action.
To bolster their argument in favor of higher taxes on businesses, these activists falsely claim that homeowners are paying a greater percentage of the total property tax today than they were when Proposition 13 passed 36 years ago. In fact, the percentage paid by non-homeowner occupied property accounted for 58.16 in 1978-79 and has increased to 60.26 percent of all assessments in 2011-12, which means the percentage paid by homeowners has declined. They further justify the increase in property taxes they advocate by saying that Proposition 13 has decimated education while ignoring that, after adjusting for inflation, California is spending 30 percent more per pupil than prior to the passage of the landmark taxpayer protection.
Apparently unimportant to the radical activists is that a system where business pays more (called a “split roll” property tax) would result in a loss of nearly 400,000 thousand jobs and a reduction of billions of dollars in economic activity, according to a recent Pepperdine University study. Of course, the hardest hit by this proposed change in our property tax system would be small businesses and owners of residential rental property – renters could be expected to see an escalation in their rents.
For homeowners, higher taxes on commercial property would also be bad news because if business no longer is invested in protecting Proposition 13, homeowners would have to stand alone against the attack. When it comes to protecting Prop 13, there is surely strength in numbers.
A massive tax increase on business property would be counterproductive. As Howard Jarvis used to say, business does not pay taxes, we pay their taxes through higher prices. The best way to generate more revenue in our already high tax state is to encourage the private sector to prosper, adding jobs and improving the quality of life for all Californians. Rather than tearing down Proposition 13, those concerned about our state’s future would do better to build on the foundation Proposition 13 represents. Proposition 13 not only protects property owners from unpredictable tax increases, but the certainty in taxation allows both home and business owners to spend and invest in ways that boost the economy. Even without the increased economic activity, a portion of which is captured by taxation, the Proposition 13 system provides local government with its most stable source of revenue.
Proposition 13 is like a goose that that lays golden eggs. The problem is not the goose, but the predators who want to eat it.
For sensible school boards, city councils, organizations and clubs who want to reassert their support for Proposition 13, the Howard Jarvis Taxpayers Association makes available, on its website www.hjta.org under “Taxpayer Action Tools” a resolution commending Proposition 13 for the benefit that it provides to individual homeowners, renters, local governments and to the state’s overall economy. All are welcome to use it.