The California Tax Reform Association released a 124-page report on property taxes, and used the deeply flawed report to bolster its claim that California should enact a split roll property tax.
The report comes to two conclusions:
· "In virtually every county, commercial property is paying a far smaller share of the property tax since Proposition 13 passed in 1978."
· "Commercial property is able to exploit huge loopholes in the law to avoid reassessment upon a change in ownership as required by current state law."
(Cal-Tax: The report is so full of holes that it should have been printed on Swiss cheese. For example:
· To imply that Proposition 13 has shifted the tax burden to residential property is an incredible sophistry. Every property owner knows that property taxes have not been shifted to their property. Their property is protected from such shifts by Proposition 13, and the tax cannot exceed 1 percent [plus bonds] of what they paid for it, plus a maximum 2 percent increase per year. Property owners would be paying vastly higher taxes if Proposition 13 did not exist.
· The report is full of rather meaningless data purporting to show that the gross value of residential property has increased since Proposition 13 passed in 1978, in different amounts in different counties. Duh! Anyone who has driven around California during the past 32 years [and has been subjected to major traffic jams] knows that substantial amounts of formerly non-improved property has been converted to residential property. There has been a great deal of construction of new homes for the roughly 15 million people who have been added to California's population since 1978, while many major businesses have closed or relocated out of state due to California's overall tax burden. These changes have nothing to do with the effectiveness of Proposition 13, but do affect the percentages of who is paying.
· Unfortunately, the data used by Mr. Goldberg – to show what we already know – is defective. The data is incomplete, based originally on unofficial estimates, and without any standard definitions or tests of its validity. We don't know what is included in the term "residential property," but we can surmise that it includes property purchased and sold by home speculators who drove up the prices of homes, leading to the real estate crash. It also includes income-producing residential property owned by businesses.
· The few examples of non-residential properties that have not been reassessed should come as no surprise. Since Mr. Goldberg got much of his data from the State Board of Equalization's assessment practices surveys, he should have noticed that some properties are under-assessed and some are over-assessed. Yet, most assessors are doing a fabulous job of keeping the assessment rolls up to date, and these same BOE reports routinely find that the assessment rolls in the counties hover between 99 percent and 100 percent of correct values. One glaring exception is San Francisco.
· A Cal-Tax report on property taxes shows that Mr. Goldberg's research is incorrect, and that the gross value of homeowner property has grown slower than the gross value of income-producing property subject to Proposition 13. Since passage of the initiative, the assessed value of all business and other non-homeowner property subject to Proposition 13 has grown an average of 8.4 percent per year, while the assessed value of homeowners' property has grown an average of 8.1 percent. In fact, in 2008-09, the assessed value of business and other non-homeowner property was $827 billion higher than that of homes.)
Mr. Goldberg's report includes a statement saying that it "could not have been done without the generous contributions of the David Bohnett Foundation, Community Economics, Inc, the American Federation of State County Municipal Employees, the California Federation of Teachers, California School Employees Association, SEIU Local 1000, SEIU State Council, and the California Federation of Labor AFL-CIO."
Cal-Taxletter
May 10, 2010
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