Prop. 15 tax on business property is defeated

Proposition 15, California’s biggest real estate tax proposal in more than four decades, was narrowly defeated in the latest setback for progressives in the highturnout presidential election.

The measure, which would have removed the landmark Proposition 13’ s property tax protections for commercial properties, was rejected by 51.8% of the voters as of Tuesday. More than 8 million Californians voted against the measure. As of Tuesday, fewer than 7.5 million had voted in favor, far less than the more than 10 million in the state who voted for Presidentelect Joe Biden, who ran on a platform that included higher taxes on wealthy Americans and corporations and supported Prop. 15.

Supporters of Prop. 15 similarly characterized the measure as a tax increase that would largely affect large corporations and make them pay their fair share, but voters appeared to be reluctant to raise taxes during an economic meltdown caused by the coronavirus pandemic.

With some 1.48 million mailin and provisional votes left to count, Prop. 15 would need to win more than twothirds of the remaining votes to close its current deficit. But the measure has consistently fallen behind in the vote, and its deficit

has been almost unchanged in the past week of vote counting.

The rejection of the measure, along with the defeat of other progressivebacked propositions like Proposition 16’ s restoration of affirmative action and Proposition 21’ s expansion of rent control, was evidence that California’s economic and social liberalism is tempered by voters who are more moderate and conservative. Republicans also won back at least one House seat held by a Democrat and were poised to flip more.

Prop. 15 would have generated an estimated $ 6.5 billion to $ 11.5 billion annually for local governments and schools, according to the state’s nonpartisan Legislative Analyst’s Office, making it one of the largest tax proposals in state history. Opponents, which were largely business groups and the real estate industry, said the tax increase would be passed down to tenants and consumers, hurting the economy.

It would have required buildings to be reassessed for tax purposes at least once every three years starting in 2022, rather than only when they are sold or after new construction. Annual property tax increases in California are capped at 2% because of 1978’ s Prop. 13. As a result, some buildings that have not been sold in decades pay far less in annual taxes than neighbors that were sold more recently.

The measure was supported by major labor unions, who have sought to undo parts of Prop. 13 for years. Gov. Gavin Newsom also supported the measure.

The defeat of Prop. 15 means that the legacy of Prop. 13, passed amid a tax revolt that helped Ronald Reagan win the presidency two years later, remains intact.