Don’t Beat Up Buffett -- Prop. 13 Isn’t Written in Stone

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Too bad Arnold Schwar- zenegger is a weightlifter and not a sprinter.

He couldn’t run fast enough this weekend to put some real distance between himself and Warren Buffett, who suddenly became the skunk at the dinner party. It’s hard to get people to hate you when you’re the world’s second-richest man, but Buffett sure did.

He told the Wall Street Journal that Californians don’t pay enough property taxes, and he blamed Proposition 13.

This is the risk you take when you run a doughnut campaign.

Schwarzenegger has surrounded himself with political padding: Buffett, former governor Pete Wilson, former secretary of State George Shultz, and even actor Rob Lowe, whose political experience beyond partying at the 1988 Democratic convention in Atlanta and working on the “West Wing” set may extend to his $500 political contribution last year to Schwarzenegger’s brother-in-law, Mark Shriver.


They’re the doughnut -- the sugar and the dough. Schwarzenegger is the doughnut hole -- a lot of nothing so far.

Schwarzenegger even says he can’t remember meeting Enron capo Kenneth Lay on Thursday, May 17, 2001, when, for reasons that pass understanding, Schwarzenegger joined then-mayor Richard Riordan and financier Michael Milken and a few other big players with Lay at the Peninsula Hotel in Beverly Hills.

You and I would remember it, even without looking back at our electric bills. That was the day it looked like rolling blackouts were coming, the day that state investigators said they had evidence of a “cartel” of power companies shutting down plants to ratchet up prices. The energy crisis set Gray Davis on the path to recall. Pity it’s slipped Schwarzenegger’s mind.

(Schwarzenegger is sitting down tomorrow with Buffett and Shultz in a cabinet-type meeting; let’s hope he remembers that.) Anyway, who can blame Schwarzenegger for keeping his yap shut? Most candidates have to talk a blue streak just to get themselves noted, much less voted in. Schwarzenegger is already famous; as long as he keeps his mouth closed, people can choose to interpret just about anything they want in his cinderblock face. Every time he talks policy and says just what it is he stands for, he risks losing voters who believed he stood for something else.

So here comes this Schwarzenegger surrogate, Warren Buffett, the Boy Billionaire of the Platte, mouthing off about Proposition 13.

The thing with Buffett is, he may be right.

Before you start hollering -- the usual response if anyone so much as whispers about changing Proposition 13 -- and sending me e-mails lumping me with Osama bin Laden, read on.


The last time I checked the New Testament, the names Matthew, Mark, Luke and John were not followed by the Gospel according to Howard Jarvis.

Jarvis fathered Proposition 13, and Proposition 13 has its indisputable virtues. It’s kept roofs over the heads of tens of thousands of people who would otherwise have been taxed out of their own houses.

But it was not seared in letters of fire upon stone tablets. The Founding Fathers’ collective constitutional genius still needs adaption and interpretation; why expect Proposition 13 to be infallible?

It’s taken Buffett, the rich guy from Nebraska, to say the unsayable, because none of our politicians has the guts to -- not if they want to be elected ever again to anything bigger than the bake sale committee of the PTA.

Proposition 13, the property tax limitation measure, is 25 years old. It is showing its age. It has a lot of little unfairnesses -- people on same block paying wildly different tax rates, depending on when they bought their homes, but time will iron out most of those, as every house in California will eventually pass into other hands.

And it has one big unfairness. It makes no distinction between little old ladies and big old companies -- residences and businesses are taxed at the same rate and under the same rules.


Disneyland, as my colleague Dan Morain reported this summer, pays about a nickel a square foot in property tax, and sometimes as little as two or three cents -- because it hasn’t been sold since 1978. Capitol Records in Hollywood pays about a dime a square foot. I pay about a dollar a square foot for my house.

Warren Buffett pays a bit over $2,200 a year in taxes on his house in Laguna Beach, which is valued at $4.5 million. My house isn’t valued at a tenth of that, yet he and I pay about the same in property taxes.

Because commercial property isn’t sold as often as houses, businesses don’t get reassessed as often, and it’s homeowners who are shouldering more of the tax burden.

On top of that, corporations can do something you and I can’t. When we sell our houses, it’s obvious -- someone else is living there. When some businesses sell, they can keep their old tax rates with bookkeeping tricks that make it look to the taxman like nothing’s changed, wink wink.

If businesses were taxed at market value, economists calculate another two or three billion bucks in property taxes could make their way to the state. Sales taxes could be lowered, which would make a lot of businesses happy. Even the Howard Jarvis people say they could support some Solomonic divvying of Proposition 13’s residential and commercial rules.

This gaping Grand Canyon of a budget deficit is the perfect opportunity for a populist to give a long, slow look at Proposition 13, the perfect moment for a Republican to go to the mat on tax fairness. And Buffett gave Schwarzenegger the perfect opening.


A pity that Schwarzenegger the candidate doesn’t have the guts of Schwarzenegger the movie character. I guess voters are a whole lot scarier than cyborgs.