After the defeat of the recent ballot measures in May’s special election, many small businesses thought that perhaps they would be able to breathe a sigh of relief. The massive tax increases imposed as part of the February budget deal would expire in a few short, but bloody years. With all the stimulus talk and love for small business throughout the Capitol, some of California’s job creators began to think that a new dawn of realization was on the legislative horizon. They shouldn’t have been so optimistic.
The ink was barely dry on the ballots when the attacks on small business started with talk of eliminating their Proposition 13 protections. Proposition 13 limits property taxes to 1 percent of a property’s acquisition value, with increases limited to 2 percent a year. Prior to Proposition 13, Californians were burdened with higher taxes based on over inflated property values and a lack of consistency when assessing properties.
Now some are proposing a “split roll” system that singles out business owners for higher taxes by stripping away the Proposition 13 limits that California voters afforded all property owners. This is not a new proposal by tax-increase advocates; it seems to come up whenever extra tax revenue is needed in our state. With the current crisis that is facing California, it was just a matter of time before it was resurrected yet again. What these new-cost proponents don’t understand is the effect such an onerous new cost would have on already struggling small businesses.
With an unemployment rate of more than 11 percent, mom and pop employers will be forced to lay off employees or cut wages and benefits in order to keep their doors open. Most small businesses operate survive on low profit margins to begin with – this would only exacerbate the problem. If the majority of legislators actually knew what it took to run a business, they would see that taking more money out of our small businesses, especially during a recession, violates the first rule in getting yourself, or your state, out of a hole: Stop digging!
Split roll comes at a high price to business owners – literally. Whether our business-friendly leaders try to fool voters with a split roll system that increases the tax rate on small business property or one that reassesses values on an annual basis, the impact is the same, a major tax increase. With a large number of small businesses mortgaging their homes in order to keep paying the bills and their employees, the cruel joke of a split roll system is the newly unemployed Californians will have to pay higher prices for the most basic of necessities.
Our state leaders need to be focused on job creation and economic recovery – and only small businesses can provide that true, long-term stimulus. Let‘s talk about how we can encourage entrepreneurs to expand and employ more people. Let’s get rid of some of the barriers that prevent businesses from coming to and staying in California. And above all, let’s do everything we can to help small businesses do what they do best…support their communities and create jobs.