Coming to an election near you in 2020: the future of Proposition 13, California’s landmark law limiting property taxes.
Secretary of State Alex Padilla announced Monday that an initiative to scale back the protections for commercial and industrial properties is eligible for the November 2020 ballot. The proponents, led by a coalition of civil rights groups and community organizations, could still decide before then not to move forward with the measure.
Approved by voters in 1978, Proposition 13 set state property taxes at 1 percent of the purchase price and capped annual increases at 2 percent or the rate of inflation, whichever is lower.
Californians who hang onto their property for a long time can, as a result, end up paying far less in taxes than what new buyers would pay. Critics complain the state is losing out on billions of dollars per year in revenue from commercial and industrial property, and it has long been a dream of unions and other liberal advocacy groups to overturn at least parts of the law.
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The new initiative would tax commercial and industrial properties at market value while leaving in place the Proposition 13 protections for homeowners, a concept known as “split roll.” Small businesses, agricultural land and up to a half million dollars worth of tangible property, such as equipment, would be exempted from the change.
The money raised by the tax increase — estimated by the state at between $6 billion and $10 billion — would go to local governments and schools.