Misguided Reform Effort

Proposition 13, the 1978 initiative measure promoted by Howard Jarvis and Paul Gann, launched the taxpayer revolt in California with an exceedingly complex and far-reaching tax law, only part of which dealt with rolling back and limiting the property tax. There are significant portions of Proposition 13 that need to be corrected, while maintaining a reasonable limit on homeowner levies. But another blunderbuss voter initiative measure is not the way to fix the defects of Proposition 13 or to provide needed tax reform in California.

Such an initiative is being drafted by Voter Revolt of Los Angeles, the organization that sponsored Proposition 103, the auto insurance measure narrowly approved by voters in 1988. It would create a split property roll in California, allowing businesses to be taxed at a higher rate than the 1% now applied to both commercial property and homes. The business rate would be raised to 2.2%, and business assessments could grow at a faster rate than those of homes. The basic homeowners’ rate would remain at 1%.

The proposal would raise $9.4 billion a year, Voter Revolt officials said. About half of that would be earmarked for “California life style” programs such as housing and to generate additional revenue for local government. The other half would finance an increase in the homeowners’ property-tax exemption and renter tax credits. The higher exemption would result in a $500 property-tax cut each year on houses valued at less than $1 million.

Many of these goals are worthy ones. There is a need for more moderate and low-cost housing in California. Local government is desperate for more revenue. There is a substantial argument in behalf of a split-roll property tax on the basis of equity, including evidence that business has received proportionately more tax relief from Proposition 13 than homeowners.

But an initiative measure, where voters have only the choice of yes or no, is not the proper way to write complicated tax law. Modern initiative campaigns in California do not provide for a serious discussion of such complex issues. Nor is this the way to allocate and earmark massive amounts of tax revenue. And the Voter Revolt measure apparently would not correct one of the biggest flaws in Proposition 13, the growing disparity in property taxes levied against homes remaining in ownership since 1978 and homes that have sold more recently.

Since Proposition 13 is part of the state Constitution, it can only be amended by a vote of the people. The preferred manner of doing this is approval of a proposed amendment by two-thirds of the members of the state Assembly and Senate, a process that provides for extended debate, technical examination and development of consensus through negotiation and compromise.

California voters, of course, would find it difficult to resist the allure of cutting their own taxes again through an initiative, and some might enjoy socking it to business. But whenever such an initiative petition begins to circulate, they should think carefully about the unexplored implications of such a drastic plan and respectfully decline to sign it.