05/14/2014 06:17 pm ET Updated May 14, 2014

Even Businesses Want To End This Tax Loophole


It's a most improbable union -- but California progressives and the state's business community have come together in support of closing a commercial property tax loophole that’s plagued the state’s bottom line for decades.

Assembly Bill 2372, authored by state assemblymembers Tom Ammiano (D-San Francisco) and Raul Bocanegra (D-Pacoima), takes aim at a provision of 1978’s tax-limiting Proposition 13 that lets businesses avoid property tax reassessments when ownership changes hands as long as no single purchaser acquires more than 50 percent of the property. Under the new bill, reassessments must take place as long as 90 percent of the property is sold, regardless of what percentage any individual buys.

“Closing this loophole has been a goal of progressives for years because it has shifted the property tax burden onto the backs of homeowners and other individuals,” Ammiano said in a press release. “We have never tried to target the businesses that are small property owners. This loophole is unfair to them, too. Now, thanks to Mr. Bocanegra, businesses are joining this effort to bring some fairness back to the tax system in a way that will benefit all Californians.”

The bill passed in the Revenue and Taxation Committee on Tuesday after securing support from several key business groups, including the California Chamber of Commerce, the California Business Properties Association and the California Business Roundtable.

Most notably, the bill earned the blessing of the conservative anti-tax group Howard Jarvis Taxpayers Association, which has maintained a stalwart opposition to touching Prop 13 since sponsoring its passage 36 years ago, the Los Angeles Times reported.

"I think that the withdrawal of our opposition, at least for now, suggests that we don't see this as a direct threat to Prop 13," association president Jon Coupal announced.

The Jarvis group’s thumbs-up left at least one of the state’s more conservative lawmakers flabbergasted.

"It must be a cold day in hell. The cow jumped over the moon. And pigs are flying somewhere," Assemblyman Brian Nestande (R-Palm Desert) said at Tuesday’s hearing, the Associated Press reported.

Advocates for reforming the bill often point to its devastating effect on California public schools, which had relied on those property taxes for nearly half their funding and now rank among the worst in the nation in teacher-student ratios and spending per student, according to the California Budget Project.

The bill now moves on to Appropriations Committee.



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