Newsom attempts to limit Prop 13 property tax rules

Moving into a controversial battle over California’s historic property tax law, Proposition 13, the government’s legacy, Gav Gwynn Newsom on Friday backed a November ballot that subjected commercial property owners to billions of dollars in additional taxes each year Will give.

Newsom announced its support for Proposition 15 in an email to supporters, calling the proposal “a reasonable, phased and long overdue reform for state tax policy”.

“This is in line with California’s progressive fiscal values, it will exempt small businesses and residential property owners, it will fund essential services such as public schools and public safety, and most importantly, it will be decided by a vote of the people , “The governor said in a written statement issued by his political advisors.

When approved by voters in November, Proposition 15 would result in separate tax rules for commercial and residential property. Since the passage of Proposition 13 in 1978, the value of all property has been based on when it was last purchased. That initiative capped property tax rates at 1% of the assessed value with an annual increase of more than 2%. California people who own their property for a long period of time pay significantly less in taxes than those who have purchased similar property recently.

Proposition 15 would require commercial and industrial assets, except those areas as commercial agriculture, to be taxed based on current market value. This would not change the lower tax provisions of Proposition 13 for homeowners. The new ballot exempts some commercial property owners who hold $ 3 million or less.

Some topics have been more intensely debated by public policy experts and interest groups as to whether California commercial property owners are entitled to less tax protection, similar to homeownership. An estimate by the Office of the Independent Legislative Analyst found that Proposition 15 would generate more than $ 12.5 billion in tax revenue once it took full effect in 2025.

The ballot measure requires that 60% of the revenue go to local governments and 40% to K-12 schools and community colleges. For schools, this amount will be on top of what has already been provided by taxes collected at the local and state levels.

Although large corporations will see an increase in their tax liabilities, opponents of Proposition 15 have instead sought to focus on those who say they have a tax increase impact on small businesses, with property taxes as a condition of their leases Includes payment of.

The major business-backed opposition campaign said Friday that Newsom’s support of Proposition 15 would “increase costs for small and minority-owned businesses that have been closed for the past six months.”

“Now is not the time to support the largest property tax in California history and make our cost of living crisis worse,” the campaign said in a written statement.

A blockbuster fight on Proposition 15 is likely, with organized labor and businesses pitting against each other.

State campaign finance records show that supporters and opponents have jointly raised $ 60 million – most of which are coming from groups in support of the ballot. A few public elections have been issued, although the majority of people surveyed by the California Nonpartisan Public Policy Institute supported the idea of ​​higher taxes paid by commercial property owners.

There was an effort to put Proposition 15 on the statewide ballot on 3 November, when Newsom became governor in 2019. Just days after assuming office, he said he would try to strike a deal between labor and business – one that would examine many issues related to the state’s tax structure.

Newsome said that my wish is to use it as a practice to bring the parties together so that we can compromise on a more comprehensive tax package.

But that effort was rarely mentioned again and no agreement was reached. Newsom has, however, used its support of Proposition 15 to send a signal to those who have sought a variety of other tax hikes – including raising income tax on the state’s wealthiest residents in the Legislature this summer Attempts are included.

“In a global, mobile economy, now is not the time to raise the kind of state tax on income that we saw proposed at the end of this legislative session and I will not sign such proposals into law,” he said.

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