Higher Taxes on the Way?

By Senator Mike Morrell
Thursday, June 19, 2014

Also Published in The FlashReport

It’s no secret that Californians pay more in taxes than those in neighboring states. We’re at the top of the charts when it comes to the state sales tax, our corporate tax rates are the highest in the west, and drivers here pay one of the steepest gas taxes in the country. Yet, despite these facts, some in Sacramento don’t think these taxes are enough.

Their primary target is undoing the taxpayer protections put in place by voters over three decades ago through Proposition 13. Passed in 1978 when inflation and unemployment were on the rise, this initiative ushered in a tax revolution that has kept property taxes stable for millions of Californians from small business owners to seniors on fixed incomes.

At their peak, property taxes were as high as 3 percent of a property’s value, meaning a family in a $400,000 house could have had to pay $12,000 a year in taxes. Now at a predictable 1 percent with modest increases for inflation (thanks to Proposition 13), that same family would save $8,000 per year. This law’s importance to our economy and communities cannot be overstated.

That is why I authored Senate Resolution 41 to commemorate this month’s anniversary of Proposition 13. It was a straightforward measure intended to simply acknowledge the positive impact the initiative has had and continues to have on our state. You would think it would garner widespread support. Unfortunately, legislative Democrats thought differently.

When Senate Resolution 41 came up for a vote in the Senate Governance and Finance Committee, members of the majority party moved swiftly to kill the measure, with the chair calling the impact of Proposition 13 a supposed “distortion,” basically making the case that older Californians should have to pay more in property taxes.  

Her words – and the five “no” votes against the resolution – are representative of the disdain the majority party has for Proposition 13. We only have to consider proposals from the last couple of years to see this pattern.

One example is their goal to change Proposition 13 so that the property taxes business owners pay would be calculated differently than homeowners – known as a “split roll” tax. It is a blatant attempt to hike taxes on our state’s job creators.

Supporters of a split roll tax argue that it would ensure businesses pay their “fair share” to the government. The reality, however, is that passing a split roll tax would impact small business owners who are still struggling to recover from the last recession. It would open the door to unlimited tax increases, discourage expansion and hiring, and force businesses to close.

Furthermore, the Davenport School of Public Policy at Pepperdine University released a study in 2012 that found if a split roll tax system went into effect, California could lose 396,345 jobs over just the first five years. This figure alone should give lawmakers pause.

Clearly, tax increases seem to be on the table for the majority party. They have never shied away from their belief in more government, but their opposition to Senate Resolution 41 only confirms yet again that they will not be satisfied until Proposition 13 is overhauled or repealed.

As for my Republican colleagues and me, we believe the people got it right when they took control and voted in lower and more stable taxes. Their sound judgment only reinforces our commitment to fighting for businesses, job creators, seniors on fixed incomes, first-time homebuyers, and everyone in between by standing up for Proposition 13.