Property Tax Alert: California

February 2004

According to a January poll from the Public Policy Institute of California, 60 percent of Californians now think taxing commercial properties at their market value is a good idea. Only 33 percent are opposed. A two-thirds vote in the Legislature is needed to place an initiative on the ballot to amend Proposition 13.

The initiative would hike the tax rate for commercial property taxpayers to 1.55% (from 1%). Until now, taxes on commercial and residential properties have been based on their market value at the time they are sold. As a result, the share of tax revenue from residential properties has steadily increased, while the proportion from commercial properties has steadily declined. Taxing commercial properties at the current market rates would generate an additional $3.2 billion in property taxes each year, according to the Center for State and Local Taxation at UC Davis.

Proposition 13 would significantly increase property tax on businesses. There is an anti-Proposition 13 "split tax rate" measure and is celebrity-sponsored by Rob Reiner and will appear on the (Presidential Election) ballot as the "Improving Classroom Education Act".

Please contact Rash & Associates for more information.