[vc_empty_space height=”24px”][qodef_custom_font font_family=”Poppins” font_size=”56″ line_height=”67″ font_weight=”400″ letter_spacing=”-2″ text_transform=”capitalize” text_align=”left” content_custom_font=”PROPOSITION 15.” color=”#0a0a0a”][qodef_custom_font font_family=”Poppins” font_size=”36″ line_height=”67″ font_weight=”900″ letter_spacing=”1″ text_transform=”capitalize” text_align=”left” content_custom_font=”Revising taxation on commercial property” color=”#0a0a0a”]

WHAT WILL IT DO?

Require commercial and industrial properties to be taxed based on their market value rather than the price the property was bought for. This would raise property taxes on many large businesses, increasing the funding available for public services (schools, construction, police etc.)
This would be a phased process beginning in 2022. Commercial properties mostly occupied by small businesses would see the tax change in 2025 (or later depending on legislature). There are exceptions for Small Business Owners and commercial agriculture.

CONTEXT:

In 1978 voters passed Proposition 13 which tied all property taxes (commercial, industrial and residential) to the purchase price of the property. Taxes are adjusted yearly to account for up to 2% inflation, which is a full percentage point below the average inflation rate for California. This means that if you bought a home in 1980 for $100,000 and never sold your home, no matter what your home is worth in today’s market, you would only be paying property taxes on the $100,000 purchase price (plus the yearly inflation adjustment).
Because private homes are sold more frequently than large commercial properties, this tax advantage has been a huge benefit to corporations, especially those who may have gotten a bargain on their land.
This proposal to assess taxes on commercial and industrial properties at market value, while continuing to assess taxes on residential properties based on the purchase price, is known as split roll.

ARGUMENTS FOR:

Companies like Disneyland and Universal make huge profits and should be paying market value for the land on which they make these revenues. Since the 1978 decision, home owners have contributed 3/4ths of the collected property taxes and unlike large businesses, cannot raise prices on products or grant themselves raises to offset the tax increases. This is a way to raise billions for public services without asking more of homeowners.

ARGUMENTS AGAINST:

California would become more unattractive to businesses looking to build or purchase existing property. This “fixed” taxation schedule has enabled California to attract and retain jobs in the state. Rex Hime, president of the California Business Properties Association stated “a split-roll property tax will just increase pressure on many businesses that are already finding it hard to make ends meet.”
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