Presentation Transcript

1. California tax policy: changing the future…

   Lenny Goldberg California Tax Reform Association www.caltaxreform.org CARA, October 22013
2. Where are we now? Budget pressure relieved Prop. 30: taxing the rich works Economic recovery (of sorts) Realignment: pressure on local governments Health care Jails Redevelopment
3. Local vote requirements Ballot measures to be put on by legislature: 55% vote Transportation Parcel taxes for schools Local government (police, libraries, etc) Revisiting “special” taxes SCA 11 (Hancock): one uniting measure (lesson of 30) Decisions to be made by June: polling, advocacy efforts between now and then
4. Other tax measures stalled Oil Severance Tax (Evans, SB 241) Higher education No fracking without taxing Tobacco tax increase Health care, implement ACA 2/3 for taxes? Business strategy with Democrats
5. Commercial property tax reform: Movement for change? Weakest link in Proposition 13 California Calls, academic research (USC/PERE) group of allies (including Housing Ca), working for change How to sustain longer-term effort—through 2016 at least
6. Commercial property tax:Failure at every level Economics: taxes new investment, fails to tax windfall land rents, anti-competitive—bad for business and the economy Law: loophole-ridden, “change of ownership” fails to capture complexity of commercial property ownership, difficult to enforce and track Land use: promotes speculation and sprawl: bad for environment Fiscal policy: fails to capture revenue from growth, harms infrastructure, shifts burden to residential: inequitable and inefficient
7. Burden shift to residential property: 55 of 58 counties
8. Bad for Business and Growth (!) Burden on New Development and Investment: Inflated cost of land: biggest negative for growth Taxed at full market value, compared to competitors Taxed at full market value of equipment, plus sales tax Hostile regulatory climate: fees, exactions, mitigations Fails to pay for necessary infrastructure
9. Public finance and land use Infrastructure: Short-circuits virtuous cycle of infrastructure paid for by increasing land values (redevelopment) Growth: Fails to capture revenues from growth, discouraging/burdening new development (what IS land value, really?) In-fill halted by land prices inflated by failure to tax. (Oakland examples) Speculation and sprawl: no cost to holding land off market
10. Loopholes and disparities Publicly-traded corporations never “change ownership”: Chevron at 1978 values, Yahoo 50x Intel on same land Easy to avoid change of ownership: Dell, Gallo Land leases: hotels (e.g. Blackstone/Hilton) Trusts and LLCs: landholdings Land vs. buildings: major disparities in land values, less in buildings
11. Simple solutions Periodically Assess non-residential property at market value Re-assess land values first—greatest disparity Eliminate business personal property tax: relief for small business, high-tech Assess oldest properties first: pre-1990 property is roughly 1/3 of the total
12. Results of reform $$$ Billions in Revenue for cities, counties, schools Infrastructure Finance Revitalized (redevelopment for all!) Land values lowered/ land use improved Better regulatory environment: Capture rising land values from growth Business equipment tax relief for small business Simpler Tax System Not “Split Roll” but “Smart Roll” Smart Roll = Smart Growth
13. How do we get there? PPIC polling is favorable: 58-34, Republicans evenly split Building blocks Research Reports: USC/PERE Local exposure—making it real! ACCE, PICO, CaCalls, Unions, advocates Public Education & Organizing Coalition-Building: outreach Communications & Polling Force issue to the table as part of tax reform: 2015 and beyond