Prop 13 facing fire from critics

SACRAMENTO, Calif.

But some critics believe commercial building and land owners are taking advantage of a loophole that lets their property taxes be re-assessed only when a new owner acquires more than 50% stake, leaving schools and local governments struggling to pay for basic needs.

They say closing that loophole would generate $9 billion dollars a year.

"What we do is blind our eyes from looking at this hole right in the middle of our tax system," Lenny Goldberg of the California Tax Reform Association said.

A new report by the California Tax Reform Association gives the example of Silicon Valley and how some long-time companies barely pay $1000 an acre, while newer companies pay $58,000 an acre.

"How could the richest corporations in the world be paying virtually nothing on some of the most valuable property in the world?" Goldberg said.

Pro-business groups say it would be unfair to change the commercial end of Prop 13.

They point to another report by the Davenport Institute at Pepperdine University, which found increasing property taxes on businesses by $6 billion dollars would kill 400,000 jobs in the first five years.

"Why would you want to put a huge additional tax burden on businesses when they're already struggling? How many businesses have already gone out of business in this state?" David Doerr of the California Taxpayers Association.

Any talk of changing Proposition 13 is almost unheard of it's considered a scared cow in political circles because it's credited with keep seniors in their homes and according to the Howard Jarvis Taxpayers Association, the law has saved Californians more than $500 billion in its 33 years in existence.

One economist says no other state has a Prop 13 and therefore should be repealed.

"I can't think of one reason in the world why Prop 13 should exist. I think it's an awful regressive tax. Yes ..it's the political third rail," Chris Thornberg of Beacon Economics said.

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