California voters decide business property taxes

Cal Matters
Published 6:00 a.m. PT Nov. 3, 2020

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Proposition 15 asks California voters to hike property taxes on big businesses, raising billions for schools and local governments. 

Currently, owners pay property taxes based on the price they originally paid for that real estate — typically a lot less than what it’s worth today. If this measure passes, property taxes for many large businesses would be elevated to the property’s current, probably higher, market value. That would net $6.5 to $11.5 billion — 60% for cities, counties and special districts, and 40% for schools and community colleges.

Not (directly) affected: homeowners, and businesses with under $3 million in California property. Farmland would be exempt. An analysis by the nonpartisan Legislative Analyst’s Office wasn’t able to determine whether the buildings and other improvements on that land would be too.

Back in 1978, California voters famously passed Proposition 13 — a huge permanent tax cut for landowners. It amended the state constitution to reset property taxes based on the purchase price of a home or business, and capped how much the tax could increase each year after that.

To strip businesses of this protection, a majority of voters must approve Prop. 15 — amending the constitution again.

Supporters said Proposition 13 provided a massive break to some of the state’s larger businesses. If 2020’s Proposition 15 passes, a small fraction of those would pay the vast majority of the higher taxes. All that money would go to cities, counties and school districts — and these days, they could really use it.

Opponents said it would be senseless to pass one of the biggest tax increases in California history in the middle of a cataclysmically bad recession. And while small businesses are technically exempt, large landlords may end up passing the costs to some of their tenants and customers.

Among those supporting Proposition 15 were: Democratic Presidential nominee Joe Biden and Gov. Gavin Newsom, the California Teachers Association, the California Democratic Party and Facebook founder Mark Zuckerberg.

Opponents included the California Chamber of Commerce, the California Retailers Association, the Howard Jarvis Taxpayers Association and the California NAACP.

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