Who saw this coming? Oh, right, everybody:
Across California, businesses are paying a far smaller share of property tax than homeowners since Proposition 13 was approved because of legal loopholes that allow companies to avoid a reassessment upon a change of ownership, a new study says.
The disparity exists in virtually all of California’s 58 counties, according to the 122-page report by the California Tax Reform Association and the Alliance of Californians for Community Empowerment. The full study is available here.
In some counties, residential property is shouldering two-thirds of the property tax load, sharply higher than when tax-cutting Proposition 13 was approved more than 30 years ago. (CapWkly)
The Right won this battle by showing commercials of little old ladies getting kicked out of their homes b/c they couldn’t pay their taxes. But the fact of the matter is that Prop 13, rather than shifting the burden off of home owners, has been shifted to them from commercial property.
Asm. Tom Ammiano is working on a bill to close the loophole that allows mega corporations to merge or sell off a subsidiary and avoid re-assesment. The issue here is that some of the biggest buildings in the state are still being assessed at 1978 levels despite the fact that they’ve changed ownership, sometimes slowly, sometimes through a quick corporate move. But Prop 13 is rigid and won’t allow us to update the values on these corporate hijinks, and the homeowners pay ever increasing portions of the property tax pie.
This is fundamentally unfair, and it exposes the truth behind Prop 13. It is a corporate dream come true, and anything but a friend to the people of California.
Brian –
Thanks for bringing attention to this important problem.
As Calitics readers know, I am the only candidate for Governor fighting for an end to this loophole.
We can raise $3 billion to $5 billion by ending it — money that will directly address the state’s most critical problems, from jobs to school class size, to health care for our elderly, to keeping our domestic violence shelters open.
There’s still time to turn our beloved state around if we work together. Join us in the fight at:
http://Peter4Gov.org and http://bit.ly/PSleadership
– Peter Schurman
as you CAREFULLY craft this as a Pro homeowner, Anti-business amendment to close a loop hole, I think most people will buy it.
Like I said they have successfully sold this (Prop 13) as a permanent tax cut for the middles class typically homeowners.
As long as you don’t allow the Right to steer the debate towards hurting business, I don’t see any problems.
how it applies to commercial property.
Business gets some benefit out of a predictable and steady tax rate, and this benefit is valuable to the community as well. I would not suggest that property tax be a function directly of market value, which can increase precipitously and out of proportion to the current use. For example, a piece of land might be worth $6 million as tract housing, but be generating $100k a year as a cattle ranch. A small bakery might be worth more as a parcel with a high rise, but be unprofitable if the parcel is taxed at its highest and best value.
The reassessment on sale does not make sense, because with commercial property it is too easy to structure its sale so that it is never “sold” even though it changes control through a series of incremental steps. Perhaps a reassessment every 10 years, or on change of use, is appropriate, along with a larger annual step, and in exchange drop the reassessment on sale.
Here’s a story from 2003 with fun facts about what the property taxes are on various high profile corporate parcels, like Disneyland.
http://www.shorenstein.com/med…