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Villaraigosa calls Proposition 13 a corporate tax giveaway

August 16, 2011 12:00:00 AM PDT
If you touch the third rail of an electric train track, you'll either be seriously hurt or electrocuted. That's why Proposition 13 is called the third rail of California politics. Los Angeles Mayor Antonio Villaraigosa grabbed that rail and called for a major overhaul. He calls Prop. 13 a corporate tax giveaway.

Villaraigosa went to the Sacramento Press Club to make a politically risky pitch to take commercial-property protections out of Proposition 13.

Prop. 13 rolled back and froze assessments for both residential and commercial property. Only when a property is sold is it reassessed.

Critics have called it a windfall for corporations where property doesn't turn over frequently.

"Prop. 13 has had the unintended effect of favoring commercial property owners at the expense of homeowners," said Villaraigosa. "Let's apply, as an idea, some of Prop. 13's protections to homeowners and homeowners alone, and let's strengthen those protections."

Villaraigosa says he's doing this because the state is dismantling its education system and without changes it would put the state a million college graduates short of what it needs to tread water economically in 14 years. He says there's been a 40-percent decline in school funding over the last generation.

"Let's recognize that our corporate tax has become a Swiss cheese of loopholes and exemptions," said Villaraigosa.

The mayor still has to convince the legislature and all the citizens who backed Proposition 13 in 1978

While his proposal does not affect protections for homeowners, it could increase taxes for corporations and businesses that sell property.

"Proposition 13 has been a valuable protection against tax increases for small-business owners, businesses and all Californians. By removing those protections for commercial small-business owners, you're actually going to put people at risk and leave people out of jobs," said John Kabateck, California executive director, National Federation of Independent Business

The mayor proposes tax credits for business. He also suggests eliminating the corporation tax and cutting income taxes across the board up to 11 percent. Taxing services is another proposal.

"A service tax can generate as much as $28 billion in new revenue," said Villaraigosa. "And Bob Hertzberg is right on the money: It's crazy that we're taxing donuts and not lawyers in the state of California."

And finally, he says, allow a simple majority rather than the two-thirds required now for tax increases.

"Let's end the tyranny of the minority in California and give the governor and the legislature the ability to pass a revenue increase by majority vote," said Villaraigosa.

John Coupal, he head of the Howard Jarvis Taxpayers Association, admits the mayor's proposal contains much to like, such as the cut in income taxes and the elimination of the corporate tax. But he still considers it an assault on Proposition 13.

Coupal doubts the plan will ever pass since it has to either go to the voters through an initiative or be passed on a rare two-thirds vote in the state legislature.


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