Sneaking Around Proposition 13
They're back!...
[by Jon Coupal] 12/13/05

A loosely knit band of Silicon Valley's wealthiest is back with a new scheme to increase the burden on property tax payers.

This group is mostly the same billionaire boy's club members that spent $60 million in 2000 on a successful campaign to make it easier to increase property taxes for school bonds, while vigorously defending tax breaks for their own industry. Since then, local districts have successfully passed more than $39 billion in local school bonds, but for these hi-tech industry elites, it's not enough. Now they have filed a new tax hiking initiative that would hit every property owner in the state, although you would never know it from its benign-sounding title.

The Classroom Learning and Accountability Act (CLAA), submitted to the attorney general for official title and summary -- the first step in qualifying for the ballot -- sounds like something everyone would want to support. After all who opposes classroom learning and accountability?

Noticeably absent in the title is any mention that the measure would place a new tax, known as a parcel tax, on every piece of property in the state, regardless of owners' ability to pay. The newlywed buyers of a tract home, a retired couple in a bungalow and a multi-millionaire in a mansion would all be paying the same amount.

Because the CLAA would be approved as a constitutional amendment, it would dismantle the taxpayer protections contained in Proposition 13, which caps property taxes at one percent of assessed values. Although parcel taxes are allowed at the local level under Proposition 13, they now require a two-thirds vote. By going to a statewide election, promoters hope to impose the new statewide tax on property owners with a simple majority vote. Since they have the ability to spend millions on deceptive advertising, this threat to property tax payers is real.

In 2000, their entire campaign to pass Proposition 39, lowering the vote threshold to pass local school bonds, focused on accountability. For example, sponsors promised annual audits of school bond spending, audits that were already required by existing law. Noticeably absent in the campaign to pass Proposition 39, of course, was any acknowledgement that doing away with the two-thirds vote to approve these local bonds would have a devastating impact on ordinary homeowners.

That the CLAA was submitted without fanfare is probably no accident. By keeping it under wraps for as long as possible, backers can limit criticism, then launch a massive PR effort when they get the green light from the attorney general to circulate the measure for the ballot.

However, there may be another reason the financial backers have, up to now, kept a low profile. Rumors abound that the political consultants upon whom they have relied in the past have told them that they would have an uphill fight, notwithstanding the sympathetic title of the proposal. Not only does the proposal reflect bad policy -- more tax revenue is generated in California than ever before in the history of California, so a threshold question is why do we even need another tax -- but the proposal has innumerable political weaknesses as well.

First, California voters have demonstrated that, when it comes to property taxes, they even oppose proposals which would tax businesses higher. By its nature, a statewide property tax that hits every parcel the same flat amount would be characterized -- accurately -- as a declaration of war by the rich against the middle class. A possible television ad against the tax would only have to show the homes of one of the billionaire backers of the proposal compared to a modest home with a tag line that simply notes that their taxes would be the same flat amount. It doesn't take a rocket scientist to figure out that parcel taxes are highly regressive.

Second, unlike any other property tax (including those imposed in the wake of Proposition 39) this tax would be a direct levy by the state. Now, all property taxes are local -- with local control. This proposal would, for the first time, constitute an automatic tax on a community even if the proposal lost by 90% of the vote in that community. That, plus the permanent nature of the tax, would be key arguments in any ballot campaign.

It is unclear whether the backers of this proposal have totally thought through the policy and political ramifications of proceeding. If they do decide, however, to qualify the measure and conduct a campaign, we can surely expect the same level of deception we saw with Proposition 39. With a title like "Classroom Learning and Accountability Act" there is no reason to suppose that this new campaign to suck more from property owners will be any less disingenuous. So when that guy with the clip board approaches you in front of the supermarket or post office and asks you to sign in support of "classroom accountability," be sure to ask if it will raise taxes. The honest answer would be "Yes." CRO

copyright 2005 Howard Jarvis Taxpayers association

§