CTA has joined the newly formed Coalition for Tax Fairness in circulating an initiative that would rebalance the property tax burden, which currently falls more heavily on homeowners, and ensure that businesses pay their fair share.
The coalition, which includes law enforcement and education groups, wants to bring fairness to the tax code and provide critical resources for local infrastructure needs.
The California Tax Fairness Act of 2005 would produce more than $1 billion in new education funding.
"Property taxes are the most stable source of school funding," says CTA President Barbara E. Kerr. "This measure closes a corporate tax loophole and forces big corporations to pay their fair share of taxes."
"Over the last three decades, California homeowners have shouldered a heavier load of property taxes than businesses, and that's just not fair," says Pat McNamara, president of the Riverside Sheriffs Association, which is sponsoring the initiative. "Businesses are reaping all the benefits without paying their fair share."
When owners sell their property to others, property taxes are assessed to reflect the higher value and the costs of providing services to the property and the owner. This mechanism, however, does not work for property owned by major businesses since such property turns over through the sale of the company's stock — not by direct sale of the property — leaving the property tax rate unchanged. As a result, many of California's biggest corporations are able to sidestep Proposition 13 while owners of single-family homes are left to foot an increasingly larger bill for California's infrastructure needs.
The constitutional amendment initiative would create what's called a "split roll" that requires all nonresidential, nonagricultural commercial real property to be reassessed every year at its full market value.
A legislative analysis projects the initiative would raise an additional $2.8 billion for the state's general fund.
Fifty percent of the revenues would go directly to school districts in the county where the taxes are collected, with at least 10 percent of the funds going toward purchasing classroom materials. The resources would be counted as Proposition 98 funds and would supplement the existing minimum funding guarantee. "This money is badly needed to reduce class sizes and provide up-to-date instructional materials," says Kerr.
Twenty percent of the receipts would go toward property tax relief programs for senior citizens.
Of the remaining 30 percent, half would go for transportation projects and the rest to local public safety in the county where the taxes are collected.
The signature-gathering effort is currently being funded by CTA and the California Correctional Peace Officers Association.
