[Source: Orange County Register/John Kabateck] A study by the National Federation of Independent Business (NFIB) found only 22 percent of U.S. small-business owners own the property on which they operate. The majority lease or rent their property.
Furthermore, many small-business owners have what is called a triple net lease, which means in addition to the rent they pay, they also pay for insurance, maintenance, and property taxes.
Unfortunately, efforts are afoot to destroy the one saving grace that small business owners have had for 40 years in one of the most overtaxed and over-regulated states in the nation. Passed by the voters in 1978, Proposition 13 has since provided property tax certainty to homeowners, renters, and businesses.
Under Prop. 13, property taxes for both residential and business properties are calculated at 1 percent of the purchase price. Annual increases in property valuations are capped at 2 percent per year, which helps provide certainty to homeowners and businesses that they will be able to afford their property in the future.
For small-business owners, Prop. 13 is critical in ensuring they can afford to keep their doors open. Without its protections, property owners will have no choice but to pass along higher property taxes to their small-business tenants.
Small businesses make up 99.8 percent of all businesses within California and employ 48.8 percent of the state’s workforce. Our state is home to more than 3.9 million small businesses, which employ seven million people. Small businesses keep communities vibrant, support neighborhoods, and ensure that money is spent close to home.
That’s why it’s so shocking that at a time when the state is running a $22 billion budget surplus that powerful special interests have set their sights on even more taxes by weakening Prop. 13. If they succeed, small businesses will have little choice but to pass along the higher property taxes to consumers by raising prices on nearly everything we buy and use, including prescriptions, groceries, gasoline, health care, and day care.
If that’s not bad enough, higher property taxes could force small-business owners that operate on already tight margins to lay off employees, reduce their hours or benefits, move out of state, or shut their doors. It must be stressed that the assault on Prop 13 is not happening in a vacuum.
Millions of livelihoods are also in jeopardy from the devastation created by the California Supreme Court’s Dynamex decision and Assembly Bill 5’s botched attempt to codify it.
Additionally, legislators want to slap a sales tax on services.
Oh, and remember the boost in gasoline taxes this summer? It’s scheduled to be repeated next year and every year after that. It was sold as a way to repair roads, but Gov. Gavin Newsom’s recent executive order will now direct some of the revenue to other projects.
All of this is why NFIB is joining other hands on a big stick that is drawing a line in the sand with Prop. 13. In the coming months, NFIB will tap into its network of small-business owners in all 58 California counties to remind them of Prop 13’s importance.
It will also make its huge network of small-business owners and activist aware of the under-handed, self-serving attempts being made in the Legislature, the courts, and at the ballot box by those who have opposed Prop. 13 for more than 40 years.
Prop. 13 is a law worth fighting to protect. It’s already difficult enough to survive in a state with a business climate that, at best, seems unfavorably skewed against business. Small business owners and the communities where they live, work, and raise families have benefited tremendously from Prop. 13’s predictability and stability.
John Kabateck is the California state director of the National Federation of Independent Business.
Source: Orange County Register
October 31, 2019
