Ted Gaines: Proposition 15’s defeat a victory for California’s future
As the media focuses overwhelmingly on the drawn-out presidential election, we shouldn¹t 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 state¹s 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% 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, andother 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.
Ted Gaines serves on the State 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 http://www.boe.ca.gov/Gaines.
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