|
Developments this year indicate an accelerated spending lobby agenda in 2001 to increase
property taxes paid by businesses in the form of a split roll, which is clearly the single most
damaging tax policy change that could occur in California.
Splitting the roll - extracting more taxes from owners of commercial property - would
substantially undercut competitiveness, cost jobs and grow the size of government in California.
Here are soundings that point toward increased activity by split-roll advocates:
- Lenny Goldberg, leader of the public employee union-financed California Tax Reform
Association, called for several billions of dollars from additional property taxes paid by
businesses in a recent commentary that was circulated nationally. He has crusaded for
a split roll, so that commercial property can be taxed more than residential property. He
has supported several legislative measures and wrote Proposition 167, an initiative
rejected by voters in 1992.
- In the Legislature last spring, Assembly Member John Dutra introduced split-roll
legislation to require periodic reassessment of commercial property to current market
value. He dropped the bill, but the concept was kept alive in the context of a Senate-Assembly conference committee dealing with local government fiscal reform.
- Led by Senator Steve Peace and Assembly Member Dion Aroner, the local government
finance conference committee is slated to resume hearings after the 2001-02
Legislature convenes in December.
Responsible and thoughtful members of the California Legislature have been urged to consider
a split roll by the spending lobby (a.k.a. public employee unions), because of the substantial
infusion of tax revenue this represents for public agencies. The split roll would be a money
machine for government in California.
Based on these developments, California taxpayers and consumers should be forewarned that
there is greater risk of higher taxes on commercial property than at any time in recent years.
Ironically, this spending lobby effort seems to be getting louder despite billions of dollars in
budget surpluses in recent years. California's general fund spending (more than $70 billion) has
nearly doubled in the past decade.
Problems associated with a split roll include:
- Even the most limited split roll will increase taxes several billion dollars annually. In
1992, the Governor's Office of Planning and Research (OPR) said Proposition 167
would raise taxes up to $2 billion within two years.
- Split-roll property taxes are new hidden taxes on consumers, because businesses will
raise prices of products to cover the higher tax.
- Higher prices on products and services will make California industry less competitive in
national and global markets.
- Hidden taxes from a split roll will result in larger, more expensive government that is less
accountable.
- Retirees whose pension funds invest in California industries will see the value of their
funds reduced as these businesses become less competitive and less profitable.
- Employees who desire to live and work in California will see other states, even other
countries, use tax climates to entice business operations out of California. OPR said
Proposition 167 would cost nearly 75,000 jobs within two years, causing personal
income in the state to fall by $11.4 billion.
A split-roll property tax increase remains a destructive, ill-advised idea.
- Larry McCarthy is president of the California Taxpayers' Association.
|
Larry McCarthy
|
This
article is from Cal-Tax Digest, published