Dear Arianna,
While you were running for governor you told us that if elected didn't matter if the senate worked with you, because you'd start ballot initiatives to get the changes you wanted and let the people decide. Indeed you told us you'd do this even if you weren't elected. So what happened? I know you've been busy on your book Fanatics and Fools but hopefully you can soon find some time to continue the reforms you had planned for California because goodness knows, Arnie is not doing it for you.
If you pick up the San Francisco Bay Guardian this week you'll read an editorial and two articles Assessing Blame and Assessed out. In them you'll see that corporations are out with their begging caps looking for phenomenal cuts in their property taxes. As you know, property taxes are a cities prime source of revenue and when property taxes are slashed cities have to slash their services, or else go to the State for hand outs. However everyone knows that California is broke and has an appalling credit rating now, the result is drastic cuts in services.
I don't blame corporations, what they are doing in San Francisco is perfectly legal due to Proposition 13 and as we all know corporations do what they have to do to cut costs and make money, after all making money and protecting it is a corporation's reason for existence. So thanks to Prop 13, during boom time corporations get minimal increases in the property taxes year to year regardless of how quickly their capital assets are appreciating. Consequently they are able to lease and exploit their capital investments for phenomenal gains. During bust times they get to ask for massive cuts in their assessed property values and because of Prop 13 they have to be granted. Because of the cycle of economic activity this means that assessed property values never have time to catch up to their true values and businesses on average get a huge benefit from Prop 13.
Furthermore corporations very rarely sell their properties, or are able to transfer ownership of them without a traditional "sale" being recorded. Hence these inequities can go unchecked for decades. In fact some of the oldest corporations in America are over one hundred years old so eventually these corporations will end up paying a fraction of market rates. In less than 30 years in San Francisco this has led to inequities in property taxes that businesses are paying per square foot of 20 fold. How does that make any sense? How is a business with a newly acquired property supposed to compete with one paying one twentieth of the taxes on their property? Besides being a terrible loss of revenue to a city, by discouraging real estate sales it leads to a freezing of the commercial real estate market that surely can't be helping the free market economy. Instead long term incumbent corporate property owners get a free pass to achieve a stranglehold on property in cities and then lease it out at market rates, creaming off the profits in the boom times and not contributing anything like their fair share to the City coffers.
If a businesses is exploiting a property they own then the need to pay their fair share of taxes on that property to the city and those taxes should be in proportion to the benefits that corporation receives from the city and its workforce. They should not creep up in boom times and then jump down in bust times. Its time to repeal or drastically reform Prop 13 for corporations so this huge inequity between corporations and people is removed. I know some efforts are already underway, but I don't think they go far enough and we need to find a way to stop the blather about California driving away businesses with such efforts. That's hogwash, corporations are lining up to serve the 35 million Americans in this State and if corporations don't want to then small businesses will and that wont be such a bad thing.
So please, once your book tour is over, can you get back to your plan to save California and help us put an end to this corporate tax dodging scandal.
Blog Gently
Oakland, California
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