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As the media focuses overwhelmingly on the drawn-out presidential election, we shouldn’t ignore the defeat of Prop. 15, a massively consequential outcome for Californians. Even in this most liberal state, where sales taxes, income taxes and gas taxes march ever upward, Prop. 15’s loss shows that Prop. 13 taxpayer protections remain important, popular, and necessary.
Once again, Prop. 13’s deep roots proved tough to tear out. Prop. 15 was the latest of many attempts to dismantle the state’s most famous taxpayer reform. Prop. 15 would have eliminated a key business property protection by subjecting these properties to reassessments at least every three years, exposing them to massive tax increases far above the 2-percent cap guaranteed by Prop. 13.
It would have gutted the agricultural industry by requiring reassessments of barns, silos, processing facilities, mature fruit and nut trees, and other property that currently falls under Prop. 13’s protections. Small business owners with “triple net” leases, already reeling from COVID, would have faced a wave of property tax increases as they look to rebound.
California’s business climate is already terrible – it’s earned CEO Magazine’s worst place to do business “honor” for a decade straight – and Prop. 15 would have certainly made it worse. But besides avoiding the direct damage Prop. 15 would have inflicted on business, its election day defeat is important for the precedent it continues.
Prop. 13 is the single most important tax law in California and must be defended completely. Voters sent yet another signal that it cannot be weakened. It can’t be torn down piece-by-piece. It can’t be carved up for special exemptions supposedly aimed only at big business.
Voters know that once Prop. 13 suffers a single chip in its exterior then the entire pillar is primed for collapse. This time it was big (and small) businesses in the crosshairs, but next election cycle it will be homes worth more than $2 million, then homes worth $1 million, then assessments every 20 years, then they will be coming after YOUR home. A Prop. 13 patchwork of gradually shrinking exclusions would soon exist only as a memory.
I’ve spent nearly two decades in public service as a taxpayer advocate and champion of Prop. 13. The law is a savior for overtaxed Californians. It’s saved homeowners and business property owners billions over the past 42 years and provided them with a stable, predictable bill every year, allowing for planning and budgeting and eliminating the tax spikes the led to closed store fronts and seniors losing their homes in the 1970s. Prop. 13’s enduring effectiveness is what makes it a constant target.
A check on taxes is also a check on government growth and a boon for the economy. Defeating Prop. 15 will keep more than $11 billion a year out of government slush funds and in the pockets of business owners who can use it to expand, invest, and hire more employees. That is critical as California businesses scramble to stay alive and rebuild out of the pandemic.
To create a vibrant post-COVID economy, we must be partners in prosperity with our private sector. Defeating Prop. 15 stops our tax climate from getting worse and everyone interested in a thriving California economy should celebrate its loss, for now, but be ready to defend Prop. 13 again in 2022.
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Senator Ted Gaines (Ret.) was elected to represent the Board of Equalization’s First District. He is a leading taxpayer advocate and is committed to providing trustworthy and transparent representation for nearly ten million constituents in 30 counties of northern, eastern, and southern California. For more information, visit www.boe.ca.gov/Gaines.