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Tax Increase Will Hurt Local Businesses

Capitol Report

Posted: February 25, 2008 9:14 p.m.
Updated: April 26, 2008 5:02 a.m.
California Assemblyman Cameron Smyth, R-Santa Clarita. California Assemblyman Cameron Smyth, R-Santa Clarita.
California Assemblyman Cameron Smyth, R-Santa Clarita.
A recent proposal at the State Capitol could have a big impact on businesses in Santa Clarita.

Democrats have floated the idea of imposing a new split-roll property tax on businesses to help pay for the state's massive $14.5 billion budget deficit.

What is a split-roll property tax? In plain terms, it removes Proposition 13 protections from all property owned by California businesses. Businesses would be charged more in property taxes on their offices, storefronts and other buildings than homeowners are charged.

There are three ways to do this: charging a higher tax rate; by reassessing the property at a higher price; or by reassessing the property every time the company's ownership changes, including when people sell stocks.

While you may think that a split-roll property tax would have little or no impact on you and your family, think again. A split-roll property tax would devastate California's economy, eliminate Prop. 13 protections for businesses, and likely bring about a severe recession in our state. Businesses in our area would also be affected.

Forced to pay between $3 billion and $7 billion in higher property taxes each year, businesses would have to pass along the increased costs to consumers in the form of higher prices on all goods and services.
Small businesses and retailers who lease their space would likely see their rents increase as landlords raise the rents to cover the increased taxes. Many companies would simply be unable to afford this massive tax increase and would be forced to leave the state or close their doors altogether, threatening jobs for thousands of Californians.

Now is not the time to impose new taxes on businesses. We should be encouraging economic growth in our state and our region, not hurting it.

Unfortunately, a split-roll tax is just the beginning for Democrats. It is only one in a long list of tax increases they have proposed.

Democrats have also proposed raising the car tax on California motorists by $6 billion and increasing the taxes you and your family pay for items purchased online by $500 million. With many Californians struggling to afford their mortgage payments, Democrats also want to take away the state home mortgage interest deduction, which would be a $5.3 billion tax increase.

On top of that, they want to impose a costly new jobs tax to pay for government-run health care, an $8 billion tax hike that would be the largest tax increase on businesses in state history.

Who knows how much California taxpayers could end up paying in higher taxes if Sacramento Democrats have their way?

Taxpayers and businesses are already paying more than their fair share in taxes every year. California is not facing severe budget problems because of a lack of revenue. The problem is that politicians are spending more than we are bringing in each year. Our budget deficit won't be solved by higher taxes, but rather by cutting wasteful spending and getting our budget priorities straight.

Punishing taxpayers with billions in higher taxes is simply irresponsible. The only way to stop wasteful government spending once and for all is to keep the money with those who earned it - taxpayers.
Californians deserve better. I will continue to join my Assembly Republican colleagues in protecting taxpayers by rejecting tax increases and demanding the Legislature reduce spending to get the deficit under control.

Assemblyman Cameron Smyth, of Santa Clarita, represents the 38th Assembly District in the California Legislature. His column reflects his own views, not necessarily those of The Signal.


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