Sep 8, 2009

ByClifford Luengo
Guest commentary 09/05/2009

THEY'RE BAAACK. Like those irksome movie poltergeists who would not move on, the folks who seek to overturn key provisions of Proposition 13 are back, and they insist that California's massive budget problems would be solved if only property owners would pay higher taxes; scary, but true.

In the coming weeks, the state tax commission, the Commission on the 21st Century Economy, is considering recommending increased business property taxes — known as split roll — as part of state tax "reform." The governor has stated he will call a special legislative session starting this month to review the tax commission's recommendations. Now, more than ever, it is vital to look at the ramifications of a split roll tax on California.

A "split roll" tax would separate the commercial property tax roll from the protections provided to all property owners under Prop. 13. Under a split roll tax, commercial property would be taxed at a higher rate, assessed more often, or both. Split roll proponents claim "big business" can simply absorb higher property taxes and the great windfall will help solve our budget ills.

As a member of the National Federation of Independent Business and a small-business owner, I count every dollar that comes in and goes out in an effort to carefully trim costs where possible. Small-business owners create the vast majority all of new jobs in California so painting them with the indiscriminate "big business" brush ignores the reality that many small businesses are barely holding it together.

Raising taxes on commercial property would have devastating effects on all Californians including small business, workers, renters, seniors and consumers. Small business owners, most of whom lease their facilities, and people who rent their homes would see their rents rise. Consumers will also pay the price as restaurants, grocery stores, dry cleaners and other neighborhood merchants and service providers are forced to pass on the price of higher property tax rates.

A study conducted last fall by former state legislative analyst William Hamm demonstrates that increasing taxes on commercial property owners would have far reaching impacts for our devastated economy. The study, "The Economic Effects of California Adopting a Split Roll Property Tax," found that increasing commercial property taxes by even 1 percent could lead to the loss of 43,000 jobs and reduced wages as businesses are forced to divert resources to higher property taxes.

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

The last thing we need is to pass a split roll tax that will set us back in our efforts to repair the economy, create and keep jobs, and help consumers traverse our current economic nightmare.

Luengo is the CEO of RB Construction in Fremont. He is an Alamo resident.