While Peter Schrag continues to call for higher property taxes in his op-ed “Reform unfair commercial property tax system” (Viewpoints, Dec. 13), he fails to mention the consequences of a “split roll,” which proposes regular reassessments on commercial properties.
With legislative leaders having promised to undo Proposition 13 in 2014, it is important to have an honest debate about the facts and not the cooked data from special interests. For instance, Schrag’s claim that homeowners carry 70 percent of the property tax burden is simply a myth propagated by advocates for higher taxes. A study by CalTax finds that in 2011-12 homeowners accounted for 39.74 percent of all assessments while business and non-homeowner occupied property accounted for 60.26 percent.
Altering Proposition 13 would harm California’s fragile economy and continue to fracture our business climate. According to a study by Pepperdine University, a split-roll property tax will increase property taxes on businesses by an estimated $6 billion. Furthermore, the cost to the California economy would total $71.8 billion of lost output and 396,345 lost jobs over the first five years of a “split roll.”
Small businesses would be hit the hardest and would be forced to choose between laying off employees, raising prices, moving out of state or closing their doors as a means to cope with higher property taxes. Additionally, many business owners rent their properties, and increased property taxes would be passed on to them in the form of higher rent, when they can least afford it.
Opponents of Proposition 13 are eager to increase taxes because they want more money. But let’s not forget about what happened before Proposition 13 was enacted. In the 1970s, housing values skyrocketed and so did property taxes. If a “split roll” were passed, it would result in increased instability for local government finances, as they would become more directly susceptible to the historic bubbles in the real estate market.
Proposition 13 protects homeowners, small businesses, seniors and minorities by preventing them from being forced from their properties. Seniors and minorities would be unfairly targeted if a “split roll” were enacted, as apartment buildings are considered commercial properties. These groups can least afford another tax increase, as many are struggling just to get by.
A “split roll” proposal is dangerous for our state because it would harm our business climate, increase rent on business owners and California families, and make budget forecasts nearly impossible. Do not touch Proposition 13.
Rex Hime is president and CEO of California Business Properties Association.