Op-Ed: How a Prop. 13 Fairness Campaign Could Win
By Chuck McFadden
Special to Calbuzz
As a political matter, Proposition 13 is sacred. It’s been described by lazy reporters as the “Third Rail of California Politics” so often that you probably want to hurl every time you hear the phrase.
As a policy matter, however, Proposition 13 rests on a fundamental inequity: it provides a gaping, pro-corporate loophole that pushes the statewide burden for property onto single-family and other residential homeowners. As Calbuzz has reported, data from the Board of Equalization and county assessors proves that “in virtually every county in the state, the share of the property tax borne by residential property has increased since the passage of Prop 13 in 1978, while the share of the property tax borne by non-residential property has decreased.”
Forget fairness, though: If you want to start taxing business the same way you tax homeowners, you’ll have every chamber of commerce in the state and taxpayer groups come down on you like Chris Christie on a chocolate éclair. Not that it would count for much, but the Republican Party would oppose any modification as well. Unless you’re heavily into masochism, forget it.
But here’s a news flash, pessimists. A Public Policy Institute of California poll has just found that almost 60 percent of likely voters favor changing the rules to tax business and homes the same way – i.e., a split roll system. Even 43 percent of Republicans like the idea.
Combatting conservative cliches: The problem is many people simply don’t understand that Prop. 13 gives business the ability to legally evade higher property taxes by maintaining a fiction of continuing ownership while homeowners can’t. Ordinary folks get dinged, big time, when a house changes hands, which explains side-by-side houses with huge differences in their taxes. Any disinterested observer knows that’s weird.
A campaign to restore fairness to property taxation would have every mayor, city council member, county supervisor, school superintendent and teachers union on its side, falling asleep with visions of more police officers, more firemen, fewer potholes and junkets to Thailand.
But California’s reputation already ranks as the worst state in the union for business. Wouldn’t changes to the tax system that makes business pay more in property taxes make it worse? Not to worry. No one pays much attention to Rick Perry.
A fairness campaign would face two major hurdles. First, you have to wage an initiative campaign to get a Prop. 13 modification on the ballot; then, a second campaign to get the initiative approved by voters. Prayer won’t work here. Only realpolitik will.
Prop. 13 for the 1%: Here’s how it could work: The biggest issue in national politics now is the absurd level of wealth distribution between the plutocrats and everyone else. That sets the stage to use the strategy that is the gold standard for today’s political campaigns: Resentment.
The campaign overcomes pro-corporate bleating with a message that casts the election as a choice between the little guy and the one percent. A TV ad portrays a repulsive capitalist – Tom “Kristallnacht” Perkins comes to mind – morphed into a top hat and a diamond stickpin. His message: working people have it too good; he’s entitled to the riches that Prop. 13 give him, and talk of reducing homeowners’ taxes by changing the system is dangerous socialism. Another spot focuses on Jamie Dimon’s recent, disgraceful 74 percent raise — $20 million a year — at J. P. Morgan.
The connection between Dimon’s raise and Prop. 13 may be a bit indirect, but Little Guy vs. Big Guy works with voters every time; in this case, that message has the virtue of being true.
Where, however, would the millions needed to overcome the misleading ads of the other side come from? Not from good government groups. They have the facts on their side, but they don’t have the money on their side. And don’t count on presumed good-government advocate Jerry Brown. When last heard from on the subject, he said he “welcomed the discussion.” Whoopee.
The solution is to take advantage of an emerging tradition in California politics: Find a progressive Silicon Valley tycoon. An idealistic billionaire. There must be at least one or two left out there somewhere.
Use the cash to hire a high-powered campaign management firm (The 132-page state constitution specifies that all California campaign management firms must be described in news stories as “high-powered,” with the exception of Meg Whitman’s 2010 handlers. It’s the law; but I digress) to run a class-warfare campaign on behalf of tax fairness.
Bottom line: Building a campaign on emotion rather than bone-dry statistics might make goo-goos and liberal idealists shudder – oh, dear, do the ends justify the means? – But it’s the best shot at correcting something that badly needs correcting in California.
Chuck McFadden covered politics for The Associated Press in Sacramento. His biography of our very own governor, Trailblazer: A Biography of Jerry Brown is out from the University of California Press.
Thanks for pointing out this very crucial issue. Our California Democratic
‘Tammany Hall’ legislature is so inept with the property tax money it currently receives, and has failed Americans in critical areas such as schools, hundreds of millions wasted on statewide computer systems for the courts, inadequate schools, library furloughs, chronic malfeasance running the prisons, practically everything it administers like high speed rail quickly gets poisoned with its usual polished sloth. Keeping it an active topic of discussion is a needed service that you provide.
“Forget fairness, though”
It’s obvious that Chuck McFadden has, that’s if he ever cared about the concept in the first place. Turns out he’s just one more advocate for “liberal” interest groups. I put liberal in quotes to distinguish the political activism in the service of interest groups that usually garners that moniker from liberalism as the principled philosophy that took inspiration from the works of John Rawls.
If the share of taxes paid residential taxpayers as a group is unfair relative to to business as a group because of the operation of the time of purchase assessment provision, the answer is end that provision and replace it with something that is fair. But the interest groups McFadden represents never cared about fairness, they just want more money from taxpayers for themselves. So instead of redistributing the tax burden from residential to business to achieve fairness, they really just seek to increase their take from business.
Furthermore McFadden’s attenuated, or more like non-existent, sense of fairness ignores far more egregious unfairness in Prop 13 assessment provision is not between groups but between individual taxpayers within those groups. Individuals taxpayers and individual business taxpayers have disparities in their tax burdens that dwarf those that exist between the aggregate groups. And it is the treatment of citizens as individuals by their government that supposed to matter most in this country.
Real reform of Prop 13 should be revenue neutral, with fairness as its purpose, not to take more money for McFadden’s friends. The 1986 federal tax reform had revenue neutrality as a principle. Getting rid of the time of purchase assessment provision and assessing property uniformly based up it’s value is the way to go. To make reform revenue neutral, Prop 13’s current assessment provision could be used to determine how much money government can take. That amount, divided by total assessed valuation produces the necessary tax rate. No individual taxpayer’s taxes would go up except to reduce those of taxpayers who are paying more than their share of the tax burden.
Of course none of the powerful political forces in this state, include the news media, care a whit about fairness. If they did the voters would have long ago had an opportunity to choose to reform Prop 13 for fairness.
Chuck,
Warren Buffett has suggested, urged, promoted the idea of a split roll for years. So he’s the billionaire you seek to bankroll your effort. You used to be the “high powered” PR/flack for the California Medical Association, so start cranking out the press releases for the new Prop. 13 campaign for fairness, equity and the American way. Do it pro bono, too. Tell me, when and where can I sign the petition?