CBPC: Prop 15 "Could Result in Tax Reductions for More Than 4 in 5 of California’s Small Businesses"
"The majority of small businesses would not be affected by the measure’s reassessment provisions but would benefit from the new personal property tax exemptions”
California Budget & Policy Center (CBPC) report reinforces Beacon Economics study and leading economists' letter showing that Prop. 15 would exempt small businesses, result in tax cuts
According to a recent California Budget & Policy Center (CBPC) report on Prop. 15, “the majority of small businesses would not be affected by the measure’s reassessment provisions but would benefit from the new personal property tax exemptions.” The CBPC report details how Prop. 15’s exemptions and tax cuts for small businesses “could result in tax reductions for more than 4 in 5 of California’s small businesses.” This section of the report can be seen here:
This CBPC report on Prop. 15’s exemptions and benefits for small businesses further reinforces a Beacon Economics study which found that:
“Most claims about Proposition 15’s impacts on small businesses are unfounded ... Prop. 15 will not impact small business renters, including triple net lease tenants”
"The burden of Prop. 15 would fall on the state’s largest corporations and highest-value properties.”
“Commercial rents are driven by location, local market conditions, the nature of a local economy (high-wage areas are associated with higher rents), and building age and size. … For average commercial properties, reassessments do not increase rents. Office buildings have a small relationship between reassessments and rents. Reassessing a 20-year-old office building to current market value could lead to a one-time rent increase of roughly 2%.”
“Properties owned by most small businesses are low-value and therefore shielded by the Prop. 15 exemptions.”
Additionally, a letter signed by a group of leading economists on Prop. 15 found that:
Older companies charge market prices for their products while paying millions of dollars less in taxes each year than do their newer competitors.”
"Bringing large business properties up to the same effective rate as paid by their competitors would largely eliminate the distortions in the system. By eliminating assessment disparities, the cost of Proposition 15 would mainly result in reduced windfall profits at the corporate level.”
“Firms attempting to raise prices above market rates must consider the risk of losing customers to their competitors. Firms do not reduce prices out of the goodness of their hearts; instead, they set prices at what the market will bear.”
Moreover, another analysis of Prop. 15 found that only 10% of the biggest, wealthiest commercial and industrial properties would generate 92% of the revenue.
Prop. 15 is a November ballot measure that will close corporate property tax loopholes to reclaim nearly $12 billion every year for schools and critical local services – all while protecting homeowners and renters, small businesses, and agriculture. Prop. 15 will also cut business personal property taxes for small businesses.