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  1. TopTop #1
    Barry's Avatar
    Founder & Moderator

    Proposition 15: Property taxes

    PD Editorial: Prop 13 rewrites are bad tax policy

    September 17, 2020

    For public employee unions, Proposition 15 on the Nov. 3 ballot is the preferred solution to California’s pension crisis: a steep tax hike on someone else.

    Proposition 15 would raise property taxes by an estimated $12.5 billion a year by taking Proposition 13 protections away from some commercial and industrial properties.

    The chief advocates, unions representing school teachers and other government employees, say small business owners would be protected. That may have been their intention, but it almost certainly wouldn’t be the result.

    Proposition 13, passed by voters in 1978, established a statewide property tax rate of 1% of assessed value with annual increases of no more than 2%. Property is reassessed at the time of a sale.

    Proposition 15 would create a “split roll” for commercial and industrial properties with a cumulative value of more than $3 million. Instead of being taxed on their most recent sale price, they would be taxed on their market value.

    That mirrors the pre-Proposition 13 system that created a crisis in California. With real estate prices rising and property taxes assessed on paper gains, many homeowners had to sell their homes.

    Proposition 13, whatever its faults, largely solved that problem.

    Supporters of Proposition 15 say the $3 million floor exempts all but the richest property owners. However, like homeowners four decades ago, there’s no guarantee that they have cash on hand to pay tax bills based on unrealized gains.

    And nothing in Proposition 15 stops commercial landlords from passing the cost to tenants, including small business owners. Indeed, many business leases include charges for property taxes.

    Proposition 15 would increase property tax revenue by about 20% annually, a huge windfall for schools and local governments. Many of them are struggling, but rising pension costs associated with generous increases in retirement benefits are — and will continue to be — a primary contributor to their fiscal problems.

    Unions have stubbornly fought efforts to control those costs, even opposing restrictions on abusive practices like pension spiking. Their solution is raising taxes. Voters should say no until the unions, and public employers, get serious about real pension reform.

    Proposition 19 is another Proposition 13 rewrite on the November ballot, and voters should reject it, too.

    Homeowners over 55 are allowed to sell a home and buy another in the same county without getting hit with a larger property tax bill as long as the new home is less expensive than the old one. The idea is to free up larger homes without penalizing people who want to downsize. A handful of counties have reciprocal agreements, allowing people to move to other areas without a penalty.

    Proposition 19 would allow people to buy more expensive homes anywhere in the state, while capping their property taxes. Moreover, they could repeat the maneuver three times. That might provide lots of business for real estate agents, but it would undercut school districts and local governments, the beneficiaries of property taxes.

    To offset some of the lost revenue, Proposition 19 would slap a new tax on people who inherit a home or small business from their parents or grandparents.

    Currently, property can be transferred between generations without reassessment. Proposition 19 would allow such a transfer only for residences and only if the recipient moved into the home. Anyone else would get a tax bill, and many would have to sell a family home.

    California’s tax system is overdue for an overhaul, but these measures make piecemeal changes that are as likely to create new problems as solve old ones. The Press Democrat recommends no votes on Propositions 15 and 19.

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  2. TopTop #2
    Barry's Avatar
    Founder & Moderator

    Re: Proposition 15: Property taxes

    Close to Home: Prop 15 fills need for schools, public services
    September 24, 2020

    Proposition 13 provided benefits to homeowners and all businesses by restricting property taxes to 1% of market value and restricting any tax increases to 2% of the previous year’s taxes. Proposition 15 on the Nov. 3 ballot leaves this in place for all residential and agricultural properties. It continues all Proposition 13 protections for housing, both homeownership and rental. It would increase the tax obligation for commercial and industrial properties, with values over $3 million, by reassessing them to current market values, but it maintains the 1% of value cap on property taxes for all properties, including large industrial and commercial properties.

    Proposition 15 would provide up to $12 billion per year to schools and local governments. This would benefit public services, infrastructure, housing and schools. California’s struggling school system was near the top in the nation at one time. Now it ranks No. 21, spending $12,143 per student annually. New York, at No. 1, spends $23,091. Public services and education need new resources. Proposition 15 would shift responsibility to big businesses, but they would still benefit from the 1% of value cap, something not provided by most other states.

    A Press Democrat editorial opposed Proposition 15 in part because some of this new funding could be used to maintain unsustainable levels of public employee pensions. The original intention for pensions was that they would be paid from investment earnings, but that has been insufficient. So governments need to pay the shortfall, and this has become a significant burden. Governments are obligated to maintain the same benefit terms provided in employment agreements, and the courts have upheld this practice, known as the “California Rule.”

    Pensions are based on an employee’s highest salary. Many retired public employees also receive Social Security benefits, and they cease making their pension fund copayments. As a result, many retirees, some of whom can retire in their 50s, have incomes greater than their highest salaries. It’s not fair, and The Press Democrat is right to criticize this practice. The right way to deal with it would be to put the question on the ballot and let the people decide if the California Rule should be eliminated.

    However, our schools and public services are in desperate shape, and the need for increased funding to schools and services is essential. Proposition 15 deserves our support.

    John Lowry, a former executive director of Burbank Housing Corp., is a resident of Sebastopol.
    Last edited by Barry; 10-08-2020 at 10:45 PM.

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  3. TopTop #3
    Barry's Avatar
    Founder & Moderator

    Re: Proposition 15: Property taxes

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