Prop. 15 Will Add to California’s Economic Hardship
Bay Area Council CEO Jim Wunderman co-authored the following OpEd with Greater Sacramento Economic Council CEO Barry Broome to highlight how Proposition 15 will hamper California’s recovery, make the state less competitive and deepen existing economic inequalities, with little accountability and no solutions for the state’s broken tax system.
California holds the unwelcome distinction of having one of the highest poverty rates in the country. We also have some of the highest taxes in the country. In the middle of the worst economic downturn in generations, now is not the time for a massive tax increase that will only create more financial hardship for California businesses, workers and families already struggling to survive. Particularly for small businesses and people living in economically disadvantaged communities. But that’s exactly what Proposition 15 would do. It must be defeated.
Prop. 15 proposes to raise taxes by up to $11.5 billion statewide on a wide range of commercial, agricultural and industrial properties. Much of the burden for paying those taxes will ultimately fall to millions of small local businesses and family farms in the form of higher rents and leases and to millions of consumers in the form of higher prices on everything from food and childcare to clothing and gasoline. And these increases will have a disproportionately bigger impact on lower-income Californians, many of whom have lost their jobs due to the pandemic shutdown and may never see those jobs return. It’s important to remember that small businesses account for 99 percent of all businesses in California and employ 50 percent of all workers. They would be hit hardest by Prop. 15. In fact, a recent survey by the Small Business Majority found that 80 percent of small businesses are struggling with their lease payments and 35 percent don’t expect to survive longer than three months.
There’s little question that California’s tax system is badly broken, and that the return we get from our tax dollars in the form of better schools, better infrastructure and better public services is not commensurate with what we put in. What we need is comprehensive tax reform that fairly and equitably distributes the tax burden, reduces the dangerous volatility of our current tax system and provides more accountability for how our taxes get spent. Proposition 15 does none of this.
Few can argue that we deserve to get much more from our tax dollars than we’re currently getting, including for education. Raising taxes will not fix that problem. What it will do is continue to put California at a serious competitive disadvantage with other states that have much lower taxes. Already, we’re seeing businesses, entrepreneurs and investors fleeing the state in alarming numbers as new tax increase proposals like Prop. 15 proliferate on the ballot and in the legislature. We hear daily from leaders of our member companies their rising alarm that new taxes combined with California’s notoriously difficult business climate will stifle our recovery and undo decades of hard work and investment to build the world’s fifth largest economy. Many of our member companies are large employers, but they and their employees rely heavily on the state’s ecosystem of small businesses for a wide range of products and services.
California’s best days are still ahead, but we need to create a tax and regulatory framework that allows people from all socioeconomic backgrounds the opportunity to find a job, and earn a living wage for an honest day’s work. Rather than raise taxes, we should be focusing on how to safely reopen our economy and businesses as fast as possible, restore the millions of jobs we’ve lost and empower an economic engine that until recently had made California the economic envy of the world and helped produce a $21 billion state budget surplus.
The state was built on the promise of providing economic opportunity for all, but Prop 15 moves us further away from keeping this promise. California needs to build a comprehensive tax and economic strategy that addresses the difficult challenges we face and creates a progressive tax structure that will not fall disproportionately on workers and small businesses. For California’s future, we strongly urge you to vote no on Proposition 15.