This week, progressive interest groups announced they had sufficient signatures to qualify an initiative for the 2020 ballot that is a direct attack on Proposition 13. Specifically, this so-called “split roll” initiative would raise property taxes on the owners of business properties to the tune of $11 billion every year, according to the backers. Because many small business owners rent their property via “triple net” leases, they too would be subject to radical increases in the cost of doing business.
Although there is a statewide election this November, the “split roll” measure will not appear on the ballot until 2020 because the proponents, either intentionally or not, did not submit their signatures in time for the 2018 ballot. They say they anticipate a better voter turnout in two years, which in itself may be wishful thinking. Ben Grieff, a community organizer with the ultra-progressive group Evolve, also said that the later election would be necessary to lay the groundwork for “a long two-year campaign” and that, “we need all of that to educate people.”
Well, educating people about Prop. 13 cuts both ways. And if past campaigns and polling are any indication, the more Californians learn about Prop. 13, the more they like it.
So let’s start today’s lesson with an overview of a class we’ll call “Why Prop. 13 is Good for California.” Here are the benefits of it in a nutshell.
Prop. 13 limits the tax rate on all real estate in California to 1 percent. Increases in the taxable value of property — often referred to as the “assessed value” — are limited to 2 percent per year. This prevents “sticker shock” for property owners when opening their tax bills compared to the previous year’s bill. Property is reassessed to full market value when it is sold. This system of taxing property benefits homeowners, because Prop. 13 makes property taxes predictable and stable so homeowners can budget for taxes and remain in their homes.
Renters benefit because Prop. 13 makes property taxes predictable and stable for owners of residential rental property, and this helps to reduce upward pressure on rents. If one believes that California’s current housing crisis is bad now, imagine how high rents would be if the owners of the property were forced to pass along their higher tax bills to their tenants. In truth, Prop. 13 increases the likelihood that renters, too, will be able to experience the American dream of homeownership.
Business owners, especially small business owners, benefit because Prop. 13 makes property taxes predictable for businesses, and it helps owners budget and invest in growing their businesses. This helps create jobs and improves the economy. California has ranked dead last among all 50 states in business climate by CEO magazine every year for more than a decade. Prop. 13 is one of the only benefits of doing business in California. …
11 Billion? Just what they need to cover the CALPERS and CALSTRS Deficits. What a way to hide increased taxes which we will all pay in the products and services we buy! Another nail in the business coffin of California.
“Only two things are infinite, the universe and human stupidity, and I’m not sure about the former” We are social animals and pressure to be loyal to party or tribe is strong, especially if you won’t be deported.
Jon, this is a good article. It is also worth mentioning that the absence of proposition 13 would depress home prices but not the cost of homeownership.
Most people have to obtain financing to purchase a home and the bottom line is it all comes down to the monthly expenditure for housing that can be made. Principal Interest Taxes and Insurance (PITI) all add up to a set amount of dollars for a monthly housing expense. Increases in the level of property taxes forces the principal and interest payments to be reduced to get to the same monthly PITI payment.
If buyers qualify for less financing that means fewer dollars supplied to buy properties therefore reducing the amount of money that people can offer for homes.
Proposition 13 helps the middle class build wealth by allowing more of monthly household expenses to go to principal and interest. Makes the cost of home ownership more predictable thereby helps communities maintain stability.