Contributors
Jon Coupal- Columnist

Jon Coupal is an attorney and president of the Howard Jarvis Taxpayers Association -- California's largest taxpayer organization with offices in Los Angeles and Sacramento. [go to website]

Splitting the Roll, Splitting California
Big business kowtows to Sacramento
[Jon Coupal] 8/30/03

The relationship between grassroots taxpayers and the business community has, at times, resembled a roller coaster. Virtually all the business organizations in California (agriculture was a notable exception) opposed Proposition 13 in 1978. Since then, business groups have moved from outright hostility to grassroots taxpayer interests to at least some instances of sympathy. Nonetheless, until just a couple of years ago, the standard modus operandi of corporate California was to "go along to get along." In other words, feeding the alligator of big government.

Open and direct confrontation by the business community to liberal policies can still scarcely be found. And look what happened. While businesses have struggled, state government has grown 36% in three years. At taxpayers' expense, bureaucracies have ballooned like the high-tech companies of the 90s with one major difference: government isn't accountable to stockholders.

What is the reward reaped by California businesses for this complacency (and sometimes complicity) in the extraordinary rise in power of big government interests? An absurd workers comp system, sky-high unemployment insurance premiums, regulatory requirements that make no sense and, of course, higher taxes and fees.

The biggest threat to California businesses -- large and small – is the so-called "split roll." Since 1879, all property in California has been taxed at the same rate. Whether residential, agriculture, manufacturing, apartments or retail, the rule is that they all pay the same rate. When Proposition 13 passed in 1978, it lowered this rate to 1% of value for everybody.

Split roll proposals would treat commercial property differently from residential properties. These proposals would either tax businesses at a higher rate or redefine "change of ownership" in a way that businesses would lose one of Proposition 13's most valuable protections: tax certainty. (Under Proposition 13, taxes can rise no more than 2% per year but the property can be reassessed to full market value when it changes hands. This provides property owners with predictability of future tax liability).

Higher taxes are in no one's best interests. Therefore, grassroots taxpayers should oppose splitting California's property tax rolls. We should recognize that which has been lost on much of the business community: The interests that we have in common are larger -- and more powerful -- than the interests that separate us.

Many homeowners, pointing to anti-taxpayer proposals actively supported by big business, ask why should we help them? After all, didn't the high tech billionaires finance the first major erosion in the two-thirds vote, Proposition 39? The answer is yes, but two wrongs don't make a right and supporting higher taxes on any segment of California society is wrong.

Secondly, let's not assume that the business community in California speaks with a single voice. The billionaire boy's club financed Proposition 39, true. But many major business groups opposed it and small businesses in California recognize the importance of Proposition 13 as much as homeowners. For grassroots taxpayers to support split roll as an act of revenge on big business would result in massive collateral damage to innocent small businesses.

Third, the damage not only would be collateral, but self-inflicted as well. Opponents of split roll have a good point when they say that higher costs to businesses are passed on to consumers, employees and stockholder (retirees). In any event, if the tax-and-spend crowd is successful in driving businesses out of California, that leaves ordinary citizens and homeowners as the last target remaining.

Fourth, many business groups are starting to see the light. They have fed the alligator and now the alligator is chewing on their leg up to the knee. Their epiphany is the realization that giving campaign contributions to those who would destroy them is not a good idea. Likewise, sacrificing some other group or interest for an immediate short term gain may delay the alligator but, sooner or later, all alligators get hungry again.

HJTA is embarking on a campaign to bring the business community into a position of strongly and publicly supporting Proposition 13. Many businesses -- especially the small ones -- are already with us. For others, it might take more time. But the stakes are too big for anyone to sit on the sidelines.

Whatever one thinks of the recall, it provides all citizens and interest groups in California an opportunity for self-reflection. It is our hope that all business groups will rise to the challenge and defend Proposition 13 and the two-thirds vote to raise taxes. If we don't, when the ship of California sinks, we'll all still be on board.