CORPORATE WELFARE IN CALIFORNIA
Corporate welfare is often camouflaged in taxes that seem
neutral on their face but give windfalls to big entrenched corporations at
the expense of average people and small businesses.
Take a look at commercial property taxes in California,
In 1978 California voters passed Proposition 13 – which began
to assess property for tax purposes at its price when it was bought, rather
than its current market price.
This has protected homeowners and renters. But it’s also given a
quiet windfall to entrenched corporate owners of commercial property.
Corporations don’t need this protection. They’re in the real economy. They’re supposed to compete on a
level playing field with new companies whose property taxes are based on
current market prices.
This corporate windfall has caused three big problems.
First, it’s shifted more of the property tax on to California
Back in 1978, corporations paid 44 percent of all property taxes
and homeowners paid 56 percent. Now, after exploiting this loophole for years,
corporations pay only 28 percent of property taxes, while homeowners pick up 72
percent of the tab.
Second, it’s robbed California of billions of dollars to support
schools and local services. If all corporations were paying the property taxes
they should be paying, schools and local services would have $9
billion dollars more in revenues this year.
Third, it penalizes new and expanding businesses that don’t get
this windfall because their commercial property is assessed at the current
market price – but they compete for customers with companies whose property is
assessed at the price they purchased it years ago.
That’s unfair and it’s bad for the economy because California
needs new and expanding businesses.
Today, almost half of all commercial properties in California
pay their fair share of property taxes, but they’re hobbled by those that
This loophole must be closed. All corporations should be
Originally appeared at: http://robertreich.org/post/127112501510