Time to get off the couch and fulfill your civic duty. Vote no on prop 15!

Following our blog on proposition 21 last week it was also important that we inform you on proposition 15 or “The Split Roll Tax”. As it sounds it is a new proposed tax on commercial and industrial properties valued at $3,000,000 or higher.

If proposition 15 is passed, all properties that are worth $3M or higher will pay property taxes based on the current market value. The proponents of the bill contest that landlords are not paying their fair share of property taxes because the taxes are based on old purchase prices. This proposition is seeking to overturn the landmark Proposition 13 which prohibited reassessment unless in cases of (a) change of ownership or (b) new construction.

While I am in favor of cutting tax loopholes for corporations and funding local governments and schools – this is not the way to do it. Due to increased taxes on property owners of all social strata, the new tax will only be pushed to tenants which ultimately increases the price of the goods and services that are sold to our communities.

Additionally, we are concerned that if this is passed, we will see a flight of small businesses leave California. We currently have a client who manufactures guitars from a net leased commercial building in Inglewood. The guitar business is concerned that if this proposition is passed, it will end up having to pay the landlord’s taxes under the terms of their lease. This would add unnecessary fiscal stress to the startup business.

We highly encourage you to take the time to review Proposition 15 and fully understand how it may impact tenants such as small businesses and landlords.