Written by Joseph Berck
The latest attempt to repeal Proposition 13 may sound harmless enough on paper. Supporters of the new measure, which has been titled the “California Tax on Commercial and Industrial Properties for Education and Local Government Funding Initiative,” claim that it’s simply about funding education and local communities. And how can you be against more funding for schools? However, the proposition we’ll see on the ballot is really a massive tax hike on California businesses to allow for more uncontrolled and unaccountable government spending.
Democrats know that the people of California do not want more taxes—people are barely making ends meet with the existing tax load. They know that if they openly framed their initiative as another tax hike on the businesses that drive California, the people of California would likely reject it. So instead of talking about how their proposal is an amendment to the California Constitution to increase government revenues, they frame it as a benign increase in funding for schools and local communities.
It’s also worth noting that the measure wasn’t even originally intended to fund schools. The original language directed the revenue toward the general fund of the state to be used on whatever misguided utopian projects Democrats fancy. It was only changed once that version failed to gain the traction needed since tax increases are broadly unpopular—even in California. They went back to the drawing board and came up with the new version, which claims to be about funding schools. Of course, the new version is not really about funding schools either.
Before a penny of the money raised by this new anti-business tax is put towards schools, it’ll first be used to fill the hole in another part of the California budget: state income tax losses. According to the California Secretary of State’s own budget impact report:
“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).”
That means $1 billion will immediately be allocated to the state’s general budget instead of education specifically. Then, 60% would be allocated to “other local governments.” Other local government just means that the local bureaucracies get to find a way to waste the money instead of the state. This leaves only 34.67% to actually fund schools, and a proposition that only puts one-third of the allocated funding into education clearly isn’t about education.
Proponents of the measure should be honest and call it what it is. It’s not a “tax assessment change,” it’s a tax increase. It’s not about funding schools, it’s about raising more money for California’s bloated state bureaucracy by abolishing Prop 13’s protections against excessive property taxes. But they know that if they described it honestly as such, this blatant attack on small business owners would have no hope of passing.
