Sep 3, 2009

In the coming weeks, the Commission on the 21st Century Economy — commonly called the Parsky Commission after Rancho Santa Fe businessman Gerald Parsky who heads it — will be considering a proposal that would overturn key provisions of California's Proposition 13. And, Governor Arnold Schwarzenegger has said he will call a special legislative session in September to review the tax commission's proposals. If the commission and the Legislature approve this proposal, known as a split-roll property tax, they could set us on a course that will burden small business, workers, consumers, seniors and low-income families — and set us all back in our quest to repair the state's economy.

The proposal on the table is called a split-roll tax because it would separate the business property tax roll from the protections currently provided to all property owners under Proposition 13. California voters overwhelmingly passed Prop. 13 in 1978 in order to stop runaway property taxes that were causing Californians to lose their homes and hindering economic growth in the state. Thirty-one years later polls show that voters still strongly support Prop. 13 and do not want to tamper with this critical tax protection measure.

Public opinion has not stopped split-roll proponents from pushing for this tax increase, which calls for taxing business property at a higher rate and/or assessing business property more often. They contend that a split-roll tax will make business pay their “fair share” and help close our state budget gap. What they fail to see, or simply ignore, is that a split-roll tax would have devastating impacts that will ripple through our economy.

As the owner of a small independent business and member of the National Federation of Independent Business, I lease the facilities where I operate my bookstore. These days I am sensitive to anything that increases my operating costs because much of what I sell must be sold at manufacturer's stated retail prices. My margins are already thin. If taxes are raised on the owner of my building, those costs will certainly be passed on to me. This is true for most small businesses that lease their space, and in many cases their leases even include a provision calling for them to help absorb new costs like increased property taxes. Because most small businesses like mine operate on a thin profit margin, and many of us even face closure in this economy, we simply cannot absorb the cost of higher rents. We'll be forced to pass these costs on to consumers, or lay off workers or reduce worker wages and benefits. None of these options are good ones, and none are acceptable as we try to get our economy back on track. A recent study on the split-roll tax in California found its implementation and the higher costs it would place on those who provide jobs, goods and services could result in the loss of 43,000 jobs, reduced wages, increased consumer prices and a decline in the value of financial assets held by public retirement funds. It also found that increased commercial property taxes would burden low-income and minority citizens as they will have to pick up the tab for the new taxes through higher rents and increased costs of consumer goods.

A more recent study by the Center for Government Analysis found that businesses owned by women, Latinos and other minorities would be disproportionately harmed by a split-roll tax.

We cannot afford to tamper with Prop. 13, and in this economic climate it defies common sense to place additional tax burdens on those who provide jobs, services and homes for our citizens. Rather than being a silver bullet for our budget crisis, a split-roll tax would be a shot through the heart of our state economy. I and my small business colleagues hope the tax commission and the state Legislature will reject this damaging proposal once and for all.

Kinner owns Seabreeze Book and Charts in Point Loma.