While the legislature is in session, the National Federation of Independent Business/California will be profiling anti-small business bills and initiatives and the adverse effect they would have on California’s job creators. This is the third column of the 2014 series.
This week, small business owners will arrive in Sacramento as part of NFIB/California’s 6th Annual Day at the Capitol. It is a time for our members – the state and nation’s job creators – to meet with their legislators and talk about the challenges they face as business owners in California. Challenges that seem to grow larger every year, from higher taxes to increased regulations and other business-unfriendly proposals created under the Capitol dome.
This week’s Main Street Menace is just another proposal that will take more money out of the pockets of small business owners. Senate Bill 1021 (Wolk) will allow more than 1,000 California school districts to impose unlimited tax increases on commercial property owners – potentially at a higher rate than residential property.
Under the bill, school districts could split parcel tax assessments within a district based on one or more of the following rates:
- Flat amount
- Square footage of a parcel
- Square footage of improvements on a parcel
- According to the property’s classification — commercial, industrial, single-family residential or multifamily residential.
And they could do so as long as the same tax rate is levied on all properties within the same classification of how a parcel is used. Under state law, any school district that imposes a parcel tax must do so fairly and equally to all taxpayers in the school district. SB 1021 is in direct contradiction to that.
It also unfairly places an additional burden on small business property owners and those who rent. If property taxes go up for the landlord of a small business, you can bet that the small business owner’s costs will go up as well. For those who don’t know – most commercial leases allow increases to be passed on to those who lease space for their businesses.
So let me see if I have this right – we increased minimum wage last year, and there is proposed legislation this year that would increase the minimum wage once again and add the cost of mandated paid sick leave. And now small business owners also have to worry about the potential of increased costs in their property taxes, or leases? Politicians like Senator Wolk think they’re smacking it to the “big guys”, the larger property owners, when introducing parcel or property tax increase policy like this. I guess they don’t really believe – or want to believe – that these costs are in fact passed on to the small business tenants and ultimately through higher prices for those small business customers. Another classic example of how out of touch our Sacramento politicians are with who small businesses are.
SB 1021 also hurts every landowner in a potentially big way by effectively disallowing parcel tax deductions on tax returns. IRS and state tax rules require that for any parcel tax to be deductible, it must be levied “at a like rate on owners of all properties.” This means that if a school district taxes commercial property differently than residential, for instance, then no homeowner or business property owner can claim the deduction.
It is time that those in the Legislature figured it out – increasing taxes plus adding more mandates equals less job creation by small business. And fewer jobs aren’t good for local communities – including school districts – and the state as a whole.
When NFIB/CA’s small business owners walk the halls of the Capitol on Tuesday, they will be urging their legislators to vote “NO” on SB 1021. Small businesses, their communities, and the state can’t afford it.
For more than 70 years, the National Federation of Independent Business has been the Voice of Small Business, taking the message from Main Street to the halls of Congress and all 50 state legislatures. NFIB annually surveys its members on state and federal issues vital to their survival as America’s economic engine and biggest creator of jobs. NFIB’s educational mission is to remind policymakers that small businesses are not smaller versions of bigger businesses; they have very different challenges and priorities. Learn more at www.NFIB.com/ca.