California does have the resources to create a better future – they just aren’t distributed in a way that meets our shared goals. In large measure, it is because a series of loopholes in Proposition 13 allow corporations and wealthy commercial property owners to pay less and less in taxes.
Starting Thursday, a coalition of civil rights, religious and labor groups will be working toward a solution to close the loopholes by assessing commercial and industrial properties at their current market value.
A majority of California’s business property is already assessed at or close to market value. But a minority of properties – the big corporations and wealthy investors who have not been reassessed in 30 to 40 years – will finally pay their fair share.
In 1978, when Proposition 13 was passed, it was billed as a protection for homeowners. That was, and is, a very good thing.
But it also contained loopholes that enable commercial property owners – companies such as Chevron and some very wealthy individuals – to avoid reassessment on their land.
For example, Chevron’s Richmond refinery was last assessed almost 40 years ago, and it is paying taxes on the 1978 value of that land – not what it’s worth today. Statewide, the underassessment of Chevron’s land alone shortchanges our communities by $100 million annually.
That’s not fair – and it gets worse every year. In 1978, wealthy commercial property owners were paying 45 percent of property taxes and residential homeowners were paying 55 percent.
Today, residential homeowners and renters are shouldering 72 percent of the burden and corporations and commercial property owners only 28 percent. This underlines a trend we’re seeing across the country – the tax code is enabling the very rich to pay less and forcing everyone else to pay more.
It’s time for that to change. Many have said that even mentioning Proposition 13 – the so-called “third rail” of California politics – makes reform a nonstarter. But it’s incumbent on responsible leaders to step up and correct a compounding injustice that makes the richest richer while shortchanging everyone else.
According to data recently released by USC’s Program for Environmental and Regional Equity, once this change is phased in, it would mean as much as $9 billion of additional annual revenue that could be used to rebuild our state and improve opportunities for Californians who want to move forward.
And it would level the playing field so that new businesses aren’t forced to pay a vastly higher rate than their older competitors who locked in rates nearly 40 years ago.
We’re also proposing tough accountability measures and requiring complete transparency so the public can see and track how these additional funds would be spent.
It’s time to begin rebuilding California so that we can offer our children the same shot at success that so many of us had. And it’s time to make our tax code fair – because a strong California depends on all of us contributing equally.
Anthony Thigpenn is president of California Calls and spokesman for Make It Fair, a coalition of civil rights, religious and labor groups seeking commercial property tax reform.