There was another hearing on Proposition 13, the iconic property tax cutting measure, at the legislature yesterday. San Francisco Assemblyman Tom Ammiano wants to clarify change of ownership rules when business property changes hands and raise more tax revenue from businesses. But, what the public hears behind all this rhetoric is the chipping away of Prop 13’s taxpayer protections.
Supporters of changing Proposition 13 on business claim they want to go after big-bad corporations. The California Tax Reform Association presented a study at the hearing, which stated, “the richest corporations in the world” pay practically nothing on land taxes. What the public understands is that supporters of high taxes hope to use the age-old argument that corporations are somehow evil so that the voters would let down their defenses on Prop 13.
As revealed in a study issued yesterday by Pepperdine University’s Davenport Institute, it is not the corporations that would take the brunt of a business property tax increase but rather small business that often lives on the margins of profitability. (Full disclosure: my organization helped pay for the study.) The report stated that assessing business property at full value would result in $71.8 billion in reduced economic activity and a loss of 396, 345 jobs over the first five years.
Much of that hit would occur to small businesses.
Ammiano says he is only concerned with business property change of ownership laws. However, the voters understand the real story. Legislators want more money to pay for their largesse. How to do that: first you go after change in ownership rules; next you change the property tax law for all business. Finally, you change Prop 13 for homeowners.
Why do voters think that?
How about Ammiano bringing in as a star witness to his hearing economist Christopher Thornberg who said, “I can’t think of one reason in the world that Prop 13 should exist.”
How about Ammiano’s quote about Prop 13 when he first introduced a change-in-ownership bill in 2010, “If it takes an incremental approach, so be it … my tendency is to want to nuke it.”
Voters can connect the dots. That’s why Prop 13 is still so strongly supported in the most recent Field Poll by 63% of the voters. Voters know the end game and they don’t want to see the measure taken apart piece by piece so in the end all property owners lose their taxpayer protections.