In today's episode of the Propositioned Podcast, KFI's Kris Ankarlo speaks with both sides of Proposition 15, (otherwise known as the Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative), a constitutional amendment that would affect how businesses and industry would be taxed in California.
First off, here's what your vote means:
A "yes" vote supports this constitutional amendment to require commercial and industrial properties, except those zoned as commercial agriculture, to be taxed based on their market value, rather than their purchase price.
A "no" vote opposes this constitutional amendment, thus continuing to tax commercial and industrial properties based on a property's purchase price, with annual increases equal to the rate of inflation or 2 percent, whichever is lower.
Proposition 15 is being pitched as a way to increase funding for schools and local community project by changing the way certain commercial and industrial properties are taxed. Currently, commercial and industrial properties are taxed based on the purchase price. Prop. 15 would change that to a tax on current market value beginning in 2022.
If Prop. 15 is approved, the "split roll" property tax would be created, with commercial and industrial properties taxed differently than residential properties. Exemptions to the new law would are included for commercial agricultural operations and for properties whose business owners have $3 million or less in holdings in California. Those properties will continue to be taxed based on their purchase price.
The legislature is also charged with passing laws to phase-in the new market value-based tax and how often tax reassessments would occur (no less than three years between reassessments).
Kris Ankarlo spoke with both sides of Prop 15 to help us get a better understanding on what passing it would mean for California residents, businesses and industry.
Listen to the latest episode of Propositioned below:
Summary: Increases funding for K-12 public schools, community colleges, and local governments by requiring that commercial and industrial real property be taxed based on current market value. Exempts from this change: residential properties; agricultural properties; and owners of commercial and industrial properties with combined value of $3 million or less. Increased education funding will supplement existing school funding guarantees. Exempts small businesses from personal property tax; for other businesses, exempts $500,000 worth of personal property.
Summary of estimate by Legislative Analyst and Director of Finance of fiscal impact on state and local governments: Net increase in annual property tax revenues of $7.5 billion to $12 billion in most years, depending on the strength of real estate markets. After backfilling state income tax losses related to the measure and paying for county administrative costs, the remaining $6.5 billion to $11.5 billion would be allocated to schools (40 percent) and other local governments (60 percent).
Guests appearing in this episode:
John Kabateck, Executive Director National Federation of Independent Businesses, California
Efrain Escobedo, VP California Community Foundation
Alex Stack, Spokesperson, Yes on 15
Jon Coupal, President Howard Jarvis Taxpayers Association
Edwin Lombard, President, California Black Chamber of Commerce
Veronica Carrizales, Policy Director, California CALLS
Photo: Getty Images