Newsletter: Who’s taxed and how much: The Proposition 13 debate begins again in California
It’s doubtful anyone would dispute that California is a far different state now than it was in 1978. Its population has almost doubled in the last four decades, Latino residents have eclipsed whites as the dominant ethnic group, and Republicans have lost their grip on statewide and legislative elections.
And so perhaps it’s not surprising that a coalition of liberal activists and powerful labor unions want a new generation of California voters to consider a long-discussed change to Proposition 13, the landmark tax-limiting law that took effect 41 years ago this summer.
THE ‘SPLIT-ROLL’ EFFORT GAINS MOMENTUM
Last week, that coalition announced it would retool last year’s proposal to carve most business properties out of Proposition 13’s strict protection of low property values — an effort known as the “split-roll” proposal, bandied about dozens of times over the last 40 years.
Given the deep pockets of the public employee unions involved, the chances of the initiative earning a spot on the Nov. 3, 2020 statewide ballot are very good. Here a few key points to keep in mind:
- The mechanics matter: Proposition 13 uses the assessed value of property at the time of its purchase as the base for imposing a 1% tax. The property’s value can go up no more than 2% a year, which means market values for thousands of properties are far higher than those used in calculating taxes. The ballot measure would require market rate assessments of business properties every three years, resulting in significantly higher property taxes for those industries.
- Protecting homeowners and small businesses: Supporters know that removing tax limits on homeowners would be a non-starter with voters and those remain in place under the initiative. So, too, do limits for small businesses, though there’s going to be considerable debate about whether enough mom-and-pop operations would actually be protected by the provisions in the measure.
- Clash over cash: Corporations and large industries are prepared to wage a campaign that asserts higher property taxes would simply raise prices on all sorts of products. Liberal backers of the Proposition 13 overhaul will focus on how billions of new tax dollars would go to schools and local government services.
Fun fact: Only about one-third of the state’s roughly 22.4 million registered voters are old enough to remember the Proposition 13 debate or possibly to have voted on the law. More than that weren’t even alive when it happened — and could weigh the iconic law’s legacy using a very different set of standards than those of their parents and grandparents.
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Essential Politics is written by Sacramento bureau chief John Myers on Mondays and Washington bureau chief David Lauter on Fridays.
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