Content of Proposition
CA voters approved Prop 13 (1978, with 65% of the vote in favor) which required residential, commercial, and industrial properties be taxed at 1% of their purchase price, with an annual adjustment equal to the rate of inflation or 2%, whichever is lower. Prop 13 has enjoyed public support since. Even as recent as 2014, former Gov. Jerry Brown (who was also governor in 1978) has said the initiative was “sacred doctrine that should never be questioned.” According to the Legislative Analyst’s Office, property market values in CA tend to increase faster than 2%, meaning that the taxation scheme under Prop 13 leads to lower taxable value than if it were under a taxation scheme based on market value.
Specifics & Figures
Taxes: All commercial and industrial properties will be taxed at their market price starting in 2022-2023.
Exemptions: Commercial agriculture properties will be taxed at purchase price. Properties of smaller businesses will have later phase in date (2025-2026), with businesses under $3 million in worth continuing to have their properties taxed purchase price.
Government: increased funds will be directed toward K-12 public schools, community colleges and local governments. Funds for education will supplement, not replace, existing school funding guarantees.
Legal: Assigns responsibility of passing laws for phase-in and other taxation mechanisms to the CA State Legislature.
Estimated to generate for the state between $8-12.5 billion each year. Much of the expected revenue will go towards funding K-12 public schools and community colleges. It is also expected that the additional revenue for local governments will result in less strain on city and county budgets. The likely greatest impact of the Prop 15 will be on the top California businesses, which have been paying 1970’s property tax amounts for the last several decades. Most small businesses (under $3 million in property value) are expected to not see significant changes in their tax bills.
Prop 15 will close the de facto corporate tax loophole by requiring the top businesses in California to pay property taxes that are more in-line with fair market values. The resulting revenues will go to fix resource inequities that exist between school districts, greatly improving the prospects of underserved and underrepresented minority communities. Small businesses and minority-owned businesses will not be affected by Prop 15, which aims to remove the large property tax cuts that big corporations currently enjoy. A portion of the revenue generated from Prop 15 will also go towards local government, which are about to face massive budget problems in light of the COVID-19 financial impacts.
Apart from Prop 13 enjoying popular support in the past and in modern times, this is simply not the right time to even consider raising taxes on businesses, which are already facing immense challenges from the economic impact of COVID-19. In all its coverage, Prop 13 is a valuable law that protects taxpayers from further payments. Prop 13 provides reliability in tax estimates for any taxpayer in California, rather than leaving property tax values to the whims of the market. Furthermore, Prop 15 would severely harm the ability of California to attract and retain businesses, causing the state to lose potential jobs and growth to other states like Texas and Arizona. Finally, Prop 15 hurts the next generation of Californians when businesses have to increase prices, pushing up the cost of living even more and further threatening our low-income communities.
Endorsements In Support
Several CA US House Reps, several mayors of California’s biggest metropolitan regions, CA Governor’s office, CA Democratic Party, CA Green Party, many labor unions/organizations, state and national progressive organizations [website]