California’s split roll property tax — what you need to know

A measure headed for the 2020 ballot in California would raise property taxes on large business properties by taxing commercial property at its current value, not the value at purchase. Known as the split roll property tax, it would exempt small business and residential property.

Here’s what you need to know:

Who is affected: The initiative would tax commercial properties worth more than $3 million. Property tax rates would remain at 1%. The measure exempts residential and agricultural property, and delays implementation for properties that are mostly rented to small businesses.

Who supports it: In general, Democrats and labor unions, who say it will make large corporations pay their fair share to help fund schools and local services. It’s also been supported by big names like Mark Zuckerberg, Sen. Bernie Sanders, and Sen. Kamala Harris. Supporters are betting that the massive unpopularity of Donald Trump will bring troves of left-leaning and centrist voters to the polls in November.

Who opposes it: In general, groups representing business and property owners, such as the California Retailers Association, the California Business Roundtable, and many Republicans.

“When I talk to my members, small, medium and large, this is the No. 1 issue that scares them,” Rachel Michelin, president of the California Retailers Association, told the Sacramento Bee. “They are terrified about the split roll initiative, they are terrified about what it will do to their bottom line.”

Why now: Proponents are focusing on 2020 because of the state’s continued slide to the political left, the lack of opposition from the governor, and new language which exempts small businesses, which proponents think will make the measure more broadly popular.

What will the state gain: The bottom line could mean an additional $10 billion annually in tax receipts. The money would fund schools, local governments, community colleges, and more.

“Over the last 40 years, California has lost hundreds of billions of dollars in revenue, leading to chronic underfunding of schools, services and local communities,” Carol Moon Goldberg, president of the League of Women Voters of California and one of the new ballot measure’s proponents, told the Los Angeles Times.

Why it might fail: The split roll tax would negate many of the measures of Prop. 13, the 1978 voter initiative that capped property taxes. Prop. 13 is popular, with a 2017 survey of homeowners showing support at 64%, and 57% of Californians saying Prop. 13 is mostly a good thing. A 2018 survey of the proposed split roll put its approval at just 46%.

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