June 10, 2020
In November, voters in California will get to decide whether property tax increases should be passed on industrial and commercial land. If the tax increase goes through, it could help to raise nearly $12 billion for city halls and public schools around the state every year. Pro-labor groups and mayors of big cities are locked in a battle with the business community on this issue, and that debate is only heightened by the recession occurring due to the pandemic. Advocates of the tax increase are adamant that the biggest landowners in the state are benefiting from a loophole in the current tax law. That loophole keeps local governments and schools from getting proper tax revenue, which can mean they don’t have the money for important programs.
The secretary of state for California said that the measure was added to the ballot due to campaigners turning in over one million signatures from voters concerned about the issue. Now it will be up to the voting public to decide if more tax should be paid by owners of industrial and commercial land, or whether the schools and local governments will have to continue to make do with the tax revenue they’re currently receiving.
California voters in November will decide whether to increase property taxes on commercial and industrial land to raise up to an estimated $12 billion annually for public schools and city halls across the state. The mayors of larger cities such as San Francisco and Los Angeles say proceeds from an increase in taxes would give local governments the opportunity to spend money on community colleges, education at the K-12 level, fighting homelessness, and other needs in the community. Critics, though, aren’t convinced that this is the way to handle those issues. They say that this will further hurt businesses that are already struggling due to the pandemic and the loss of revenue they’ve experienced from it.
Another concern is that, if the tax hike is approved, the cost of everything from daycare to groceries and gasoline may rise. That could hurt a lot of people, including families who are just trying to get by in what is already a relatively expensive area of the country. If the cost of living rises significantly and businesses need to raise prices to stay afloat. In the end, business leaders argue, this could end up being a larger problem than the current issues with a lower amount of revenue coming in. With billions of dollars in education spending expected to be cut to meet the state’s big budget deficit, those who are for the tax increases say there’s an urgency to the situation that needs to be considered.
A ballot measure back in 1978 limited the property tax for businesses, homes, and land to just one percent of the value of the property based on the last time it was sold. If someone has owned their property for a long time, their taxes are very lower compared to what they would be based on current-day tax assessments. The passing of the proposed measure would mean that the property taxes would be charged on the current market value of commercial and industrial land, and reassessed every third year.
Not everyone agrees that the tax increase would cause prices to go up, either, as only six percent of industrial and commercial properties would make up 78 percent of the increased revenue. In short, it would come mostly from large corporations that have seen significant tax benefits through the use of loopholes. With $7.5 billion to $12 billion in increased revenue, the tax hike — if it passes — could be extremely helpful to local governments and school systems in need of additional funds.