Split roll can’t fix what ails California
After several fits and starts, the battle over the defense of Proposition 13 began in earnest last week as progressive interest groups began gathering signatures for their new and hardly improved ballot measure to impose a multi-billion dollar “split roll” property tax on Californians. These same tax-and-spend interests had already qualified a previous version of their initiative for the 2020 ballot until they realized that it was full of drafting errors and were forced to try to replace it.
The proponents’ revised measure is no improvement and still represents the largest tax increase in the history of California. But that’s not what they will tell voters as they seek more than one million signatures to qualify the initiative. Indeed, their deception began immediately as their signature gatherers are already telling people that the property tax increase actually protects Prop. 13. But nothing could be further from the truth.
It is important for voters to understand the proposal. Here are the basics and why they should fear it. “Split roll” is a shorthand term for proposed changes to Prop. 13 that would allow higher property taxes on businesses than on homeowners. The “roll” is the county assessor’s property tax roll, the list of all real estate parcels that are subject to property taxes. “Split” refers to a division into two parts: residential and nonresidential property.
Under Prop. 13, which became part of the state constitution when voters approved it in 1978, all property in California is assessed under the same rules and taxed at the same rate. The tax rate is 1 percent, and the assessment is set at the property’s fair market value, usually the sale price, at the time it changes ownership. Thereafter, Prop. 13 limits increases in the assessed value to 2 percent per year or the rate of inflation, whichever is lower, until the property changes ownership again.
The initiative would revoke Prop. 13’s protection from nonresidential business and commercial property and require the reassessment of those properties to current market value. This would result in a tax increase on office buildings, retail stores, shopping malls, movie theaters, gas stations, supermarkets, warehouses, auto dealerships, car washes, restaurants, hotels and every other business in the state. Even very small businesses that lease space in a strip mall would see their operating costs jump sharply as a result of tax increases passed. The cost of living, already high in California, would be pushed even higher by this tax increase.
Perhaps the biggest misrepresentation perpetrated by proponents of the initiative is that it just hurts business owners. But any notion that split roll just hits businesses is foolish. When business costs go up, so do the prices consumers pay for goods and services. The “split roll” would would accelerate business flight out of California.
Another lie about this measure is the claim that the split roll initiative merely closes a “loophole” in Prop. 13. Proponents maintain that voters never intended Prop. 13 to apply to commercial property. But this is demonstrably false as California has had a single or “unified” roll, treating all property the same, since the 1800’s. Prop. 13 didn’t change that.
For homeowners, the biggest threat of the split roll measure is that many proponents have openly conceded that it is only the first step in the complete destruction of Prop. 13. If this latest initiative is successful, the tax-and-spend interests are sure to go after homes next.
Taxes are already too high in California. Until state lawmakers get their overspending problem under control, Californians are at risk of losing their savings, their jobs and their homes to higher taxes.
Jon Coupal is president of the Howard Jarvis Taxpayers Association.