Raise Taxes, Kill Businesses – Must be California

42 years later, California’s Proposition 13 continues to inspire attempt after attempt to kill it. This Election Day – er, Election Season – is no different. Passed in 1978 – back when the aerospace and oil industries were still vibrant enough to pepper the state with conservatives – the law allows property tax rates to be increased only upon a sale of the property and limits any increase to a 2% rate of inflation. Nothing a politician hates more than limits on taxation. Since ’78, progressives have thrown more propositions, lawsuits, and legislation at the hated law, and despite California’s voters electing bluer and bluer representatives, they still somehow continue to protect lower property taxes. There’s something about voting on actual legislation, with its provisions in black-and-white, rather than voting for personalities, that sobers the voters’ minds. Propositions cannot hide so easily behind a flashy smile or perfectly-creased pants.

It’s easy to imagine these tax-loving cretins in their Sacramento offices, watching with envy as property values throughout the state sprout ever higher. The Federal Housing Price Index shows that the House Price Index for California has risen almost 700% since 1979. This drives the politicians crazy, that in the wake of these gains, their hands remain cuffed, unable to pick the pockets of its citizens. Progressive dreams of income redistribution, even in the navy-blue Golden State, remain at least somewhat limited.

The latest attempt to undo Prop 13 is Prop 15. Prop 15 promises to raise property taxes by setting the tax rate at the market rate. But, knowing California voters’ reluctance to mess with Prop 13, the authors of 15 have limited its effects to only commercial properties. They presumably suspect the progressive voters here may not mind raising taxes on capitalist endeavors, so long as their own homes are left out of it. One can only marvel that California may pass yet another anti-business law, even as business flee the already-stratospheric taxes and cost-of-living.

A survey of California likely voters released ten days ago reveals 49% favor Prop 15, while 45% oppose it.

Don’t be surprised to see more moving trucks headed for parts east come 2021. And as the businesses flee, the Sacramento tax coffers will fall, and the politicians will look for where else they can raise tax rates. Why do I suspect those eyes will fall upon residential properties?

One effect of California’s feeble educational system: the local politicians educated in it never learn. Tuesday will tell if the voters have.

2 thoughts on “Raise Taxes, Kill Businesses – Must be California

  1. Passage will drive house prices down, as many Californians will not be able to keep their homes under the much higher tax levy.

    On the other hand, Prop 13 is grossly unfair to new home buyers who must foot the whole bill for government services while long established home owners get a free ride.

  2. There is already a bloodbath coming in commercial real estate as leases expire and are not renewed or are greatly downsized post-COVID. Leave it Cali to push commercial property owners off the cliff.

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