By now, most people are aware that Gov. Jerry Brown is trying to raise taxes by billions of dollars in November. But did you know that the Franchise Tax Board (FTB), the entity responsible for administering state tax programs, has been moving forward with a plan to raise taxes on property owners simply by amending a tax form?
Recently, it was revealed that the FTB is in the process of launching an "education campaign," which includes amending tax forms to eliminate the tax deduction of the majority of "Mello-Roos" fees. Mello-Roos fees are local benefit taxes which have been used by communities as a way to fund projects without using traditional property taxes, which are limited by Proposition 13.
The FTB's effort will eliminate property owners' ability to deduct local benefit taxes for maintenance, interest or repairs — a common use of Mello-Roos fees — from their county tax bill. This would result in an estimated $12 million taken from Orange County taxpayers alone and $140 million statewide.
This action by the FTB is outrageous and has to be stopped. Even the Internal Revenue Service disagrees. The IRS sent FTB a letter stating that the FTB's position was not supported by statute.
That's why I introduced Assembly Bill 1552.
A.B. 1552 prohibits the FTB from going forward with its plan to raise taxes on homeowners. It codifies that all Mello-Roos fees are tax-deductible.
A.B. 1552 has received broad support from taxpayer advocates and property owners. These groups question the wisdom of the FTB raising taxes in a time when Californians are hurting financially. Clearly, this policy is little more than a creative way to bring more money to Sacramento.
Due to the pressure put on it by A.B. 1552 and its supporters, the FTB has announced it has decided to reverse its position and drop its campaign to increase taxes on Californians.
I applaud the FTB's decision to reconsider. California citizens are some of the highest taxed in the nation, and California is repeatedly called by executives as the worst state in the U.S. in which to do business. The last thing taxpayers need is for government to take even more out of their paychecks.
Stopping the FTB in its tracks was a rare win for California taxpayers. Since my goal has been accomplished without needing to go forward with legislation, I will have A.B. 1552 on hold until further notice. However, I will continue to keep my eyes on this issue. Protecting Californians from unnecessary taxes is my top priority.
Assemblyman JIM SILVA represents the 67th Assembly District, which includes the communities of Anaheim, Cypress, Garden Grove, Huntington Beach, La Palma, Los Alamitos, Rossmoor, Seal Beach, Stanton, Sunset Beach and Westminster.