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Democrats’ proposed split-roll tax would devastate California economy

Assembly Speaker Fabian Núñez recently unveiled what he called a “fair” and “conservative” plan to tackle the state’s $14.5 billion budget deficit by proposing a new split-roll property tax.

A split-roll would increase the taxes paid by every California business on the property they own to the tune of between $3 billion and $7 billion annually. Businesses would see their property tax rates reassessed by the local tax collector more often or at a higher market price, resulting in an effort to raise property taxes on already-beleaguered California businesses.

Make no mistake: A split-roll would devastate California’s economy.

Many businesses are already struggling to keep their doors open under the weight of absurdly costly mandates, high taxes and a constant threat of junk lawsuits. Adding a $3 billion to $7 billion property tax increase would be the breaking point for some companies — forcing them to move to more business-friendly states, or even other countries, or close their doors entirely, threatening thousands of jobs.

Voters rejected a similar split-roll scheme when they defeated Proposition 167 in 1992. One estimate found that if a split-roll tax had gone into effect back then, more than 75,000 jobs would have been lost. How many more jobs could be lost in California today if Democrats have their way?

Without a doubt, a split-roll will lead to Californians paying higher prices for goods and services as companies are forced to pass along their higher tax bills directly to their customers. Small businesses and retail stores that lease their space will likely see their rents increase as landlords are forced to charge more to pay for their increased tax burden.

Sadly, these are not the only tax increases Democrats have proposed this year. To date, they have proposed more than $24 billion in higher taxes and climbing, including a $6 billion car tax increase, an $8 billion jobs tax for government-run health care, a $500 million tax hike on items bought online and a $5.3 billion tax increase from the repeal of the home mortgage tax deduction.

California businesses already pay their fair share in taxes. Their property taxes are already based at 75 percent of the current full market value, which has skyrocketed of late, resulting in a significantly higher tax burden than homeowners pay. They also pay additional taxes on their personal property, such as computers and office furniture as well as their income.

These new tax proposals threaten not only to wreak havoc on California’s economy, but they represent only the latest installment on what has become a full-fledged liberal assault on business in California. This assault and the anti-business mindset that supports it have had a tremendous chilling effect on business expansion, growth and investment. And this anti-business sentiment is in large measure responsible for the extent of our current economic difficulties. In just the past two years we have seen dramatic policy initiatives that have done immeasurable harm to our state’s business economy. These have a direct correlation to the state’s current budget woes.

First, on Sept. 27, 2006, bowing to the junk science of the left, the governor signed the California Global Warming Solutions Act of 2006, Assembly Bill32 by Núñez, ostensibly to combat the effects of global warming. It forces businesses to reduce harmless gas emissions to 1990 levels by the year 2020. Currently the proposed implementation of this measure is having a devastating effect on California businesses, which see no way to comply with its draconian requirements, and on the state economy.

This was followed by an attempt to force the adoption of a massive government-run health care system. Assembly Democrats claimed the program would have cost $14 billion to run, but some outside estimates put the costs closer to $40 billion. Their plan would be financed by a 4 percent hospital tax on already struggling hospitals, an additional $2-per-pack cigarette tax, and a new tax on employers that would range from 2 percent to 6.5 percent of an employer’s payroll depending on business size, and they would have to pay the tax even if they already provide current health coverage.

It is no wonder why responsible businesses would be fearful of investing in such a hostile, instable and overregulated environment?

The fact is, California does not have a revenue problem; we have a spending problem. Over three of the last four years, the state’s tax revenue grew by a whopping 40 percent, but the liberal majority, over our objections, spent the money on expanding government. The solution now is not burdening businesses with higher taxes, but cutting noncritical spending and making the state finally live within its means like the rest of us have to.

It is irresponsible for Sacramento Democrats to target California’s businesses as if they are responsible for causing the state’s budget problems. Instead of passing the blame, the Legislature should embrace pro-jobs policies that will make California a more attractive place to own and operate a business and will put Californians to work. Doing so will grow our economy, bring in more tax revenue and help turn our state around.


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