Close $9 Billion Commercial Property Tax Loophole to Fund Schools, Says Statewide Coalition

By Ken Epstein

Hundreds of Bay Area residents attended a town meeting in Oakland recently to find out about the growing, statewide “Make It Fair” coalition that seeks to overturn a commercial property tax loophole that costs the public as much as $9 billion a year in lost revenue that could be used for schools, health clinics, parks and libraries.

The town hall meeting, held Saturday, Sept. 9 at the First Congregational Church of Oakland, was part of the coalition’s organizing efforts to build awareness, ahead of a ballot initiative in 2018 or 2020.

“California has the world’s sixth largest economy, yet many of our schools and services lack the basic funding they need,” according to a Make It Fair coalition flyer.

“ Big corporations and the wealthy are making more money than ever. They can afford to pay their fair share,” the flyer said.

The loophole is written into Proposition 13, passed by voters in 1978, part of what referred to as Ronald Reagan’ “tax revolt,” which assesses property taxes, including those on commercial properties, at their 1975 value and restricts annual cost-of-living increases to a maximum of 2 percent.

Owners of businesses started since the passage of Prop. 13 pay a higher rate. As a result, some of the largest companies, like Chevron, Intel and IBM, pay low property taxes, but startups and newer businesses pay much more.

Speakers at the town hall included State Senators Nancy Skinner and Scott Weiner, Assemblyman Rob Bonta and Alameda County Supervisor Keith Carson.

“It going to take all of us working together to make a make a fix to Prop. 13. We’re going to go to the ballot,” said Senator Skinner, explaining that the there is not the political support in the Legislature to pass the reform.

“It’s a third rail issue,” she said. “It still has this aura of untouchability.”

Challenging the commercial tax loophole will require people to “deal with the 50-year campaign from the radical right to delegitimize government, (convincing many people that) all government programs are a problem, that putting any money into government is a waste of money,” said Senator Weiner.

Calling for “people over profits” and “people over corporations,” Assemblyman Bonta said the Democrats have a supermajority in the Legislature, making the present the perfect time for closing the Prop. 13 loophole.

But he emphasized that coalition will need large-scale grassroots support to pass the constitutional amendment.

“This is not an easy battle – the opposition will be fierce,” Bonta said. “Some will see this as an existential threat.”

Organizations endorsing the campaign include the California Federation of Teachers, California Teachers Association, League of Women Voters of California, California Alliance for Retired Americans, California Nurses Association, SEIU California, Filipino Community Center and the Asian Pacific Environmental Network (APEN).

Speakers the town hall explained that the campaign will have to overcome a deluge of false and misleading publicity, clarifying to voters that the initiative will:

Guarantee existing Prop. 13 protections for residential property and agricultural land;

Close the millionaire, billionaire, and big corporation tax loophole by requiring all commercial and industrial properties to be assessed at fair market value, putting California in line with how the majority of the country assesses property;

Restore over $9 billion a year for services. About half of the new revenues, $3.6 billion, will support schools and community colleges;

Make It Fair requires transparency and accountability for all revenue restored to California from closing the commercial property tax loophole.

For more information go to www.makeitfairca.com/about/