California Tax Revolt, 40 Year On

1101780619_400I was in high school and still remember the Time Magazine cover with Howard Jarvis.  I remember thinking he was a scary looking guy, but lookking at it today he seems less so.  I am not sure if I have changed or if public figures have. Maybe a little of both.

I did live briefly in the Bay Area and saw the high real estate prices and heard the complaints about taxes.  Yet the schools and infrastructure were looking pretty strained by the time I got there in the late 1990s. People told me it was all because of “Prop 13“, the tax revolt in the late 1980s that limited increases in property taxes.

All this was true, but the bit I didn’t learn until another decade later was that commercial rates were essentially frozen since 1987.  That is 40 years without a tax increase in commercial properties.  When I originally heard this I didn’t think it could be true.  A google turned up nothing but articles about how bad it would be to raise taxes on job creating businesses (thanks google) like this nonsense written by a commercial real estate broker in the Orange County Register:  How would splitting Prop. 13’s tax rolls affect California’s commercial real estate?

An article from the San Francisco Chronicle from late 2017 explains it all a bit better (but not completely, as I understand the loophole — and surely the costs are higher than $9b a year).  So this is how “reform” goes, at least in modern Tax Cutting Conservative America. Read it and weep, especially if you are in California.  I am sure there are similar “loopholes” (can you really call this a “loophole”?) in other places, especially here in Texas.  The upshot is the “little guy” pays more and gets less.  So much for grass roots, populist revolutions.

Close the Prop. 13 commercial property tax loophole

“California’s property tax system is broken. Nowhere is this more apparent than in Prop. 13’s corporate tax loophole. Big corporations such as Chevron are able to take advantage of protections that should be reserved for small businesses, homeowners and renters. These big corporations are paying taxes on property valued at the same amount it was in 1978 — 40 years ago! Meanwhile, startups and newer companies sometimes pay 10 to 20 times higher property tax for identical properties.”

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