Kabateck Strategies

Proposition 13 and Small Business Under Attack– Again

If proponents have their way, a surcharge will be placed on properties leased by millions of “mom and pop” small businesses across the Golden State very soon. Petitions are being circulated now to put a measure on the November ballot that would inflict such pain on them and all California voters. Ironically deemed the “Lifting Children and Families out of Poverty Act”, the measure is being proposed by a group of politically well-connected non-profits who are willing to undo Proposition 13.

The measure allows the legislature to increase the property surcharge up to 1% on all properties valued at $3,000,000 plus. Under this measure these property owners could see their property taxes double. The complex forty-seven page measure supposedly sunsets after twenty years and would raise $7.7 billion for:

  • expanding existing home health visits
  • expanding childcare and preschool programs
  • job training and hiring incentive programs
  • increasing payments to those in CALWORKS
  • implement a more extensive earned income tax credit

This is $7.7 billion in new taxes on the heels of a package of bills the legislature passed just last year to help low-income Californians. All to fund programs that have not been proven successful. When is enough (ever) enough?

What no one is talking about are the unintended consequences of what will be realized if this initiative passes. This measure will be a disaster for small businesses, the majority of which lease storefronts, offices, parking, warehouses and other properties valued easily at more than the $3,000,000 threshold this measure places on total property.

The owners of those offices and storefronts will be forced to pass along this surcharge to their small business renters – most lease agreements require it. Those small businesses will, in turn, be forced to eliminate or lay off the very people this measure aims to help.

Yet again we will see the law of unintended consequences – the “little guy or gal” becoming the casualty instead of the beneficiary of ill-conceived policy – and an exacerbated California exodus to Texas, Nevada, Arizona and other business-friendly states if this measure passes. What can you do to stop this attack on California business? First, spread the word– talk to your colleagues, vendors, chambers of commerce and others and alert them to the anti-business provisions in this flawed initiative.

Next read the measure. The more you understand the devil in the details, the easier it will be for you to motivate, friends, neighbors, clients and customers.

The assault on Main Street needs to stop, and we can’t let politicians or clever campaigners lead us to believe that a higher business cost won’t ultimately trickle down to the struggling small employer, their employees and ultimately, the consumer. Yep – you and me. Don’t allow those on a crusade for higher, taxes, fees and more government make our small businesses suffer and put more people out of work. Make it known that this ballot measure is bad news for every California community.