California s Proposition 15 Is No Fix | City Journal
Next week, Californians will vote on a ballot initiative, Proposition 15, that would lift longstanding limitations on commercial property taxes. It s hard to imagine a worse time to raise property taxes. Office and retail vacancy rates are skyrocketing, and it s an understatement to say that Californians are already highly taxed. California s top state income tax rate of 13.3 percent is the nation s highest, according to the Tax Foundation. It ranks fifth in per capita state and local tax collections, and sixth in overall state and local tax burden. The state that Woody Guthrie, in his famous Dust Bowl Ballads, called a Garden of Eden, a paradise to live in or to see, is no longer a magnet for newcomers but instead a goad driving residents to Texas, Idaho, and other states.
Yet while the initiative is ill-advised, problems remain with the measure that it is designed to undo Proposition 13, the statewide property-tax limit passed in 1978. Though Prop. 13 has served as a last line of defense against an even greater tax burden, it has also distorted California s housing market by encouraging long-time owners to stay in houses larger than they need and making it more difficult for potential newcomers to buy or rent in a state that has enjoyed one of the nation s strongest economies.
Still, repealing Prop. 13, either for commercial or residential property, would be a mistake. What s needed instead is a thoroughgoing reform of the state s tax regime one that might raise property taxes on some, but only if income or other taxes were lowered.