Transcription
Property tax rates in California are among the lowest in the country because of Proposition 13 that passed in 1978. But in recent years, there's been some changes in the interpretation of this law. Our guest today is Susan Shel. She'll explain what these changes are.
When you put a parcel tax on property, that's paid just by the property owners. Sometimes the property owners are outnumbered by people who are not property owners and they're not going to pay the tax, but they vote on it. And you can have these people over here voting to tax those people over there. Those taxes are going to pass every single time. And what's the outcome? The people who are getting all these taxes put on them are going to leave. They're going to leave that local jurisdiction and go someplace else. They may leave the state.
She'll also tell us about her ballot initiative to restore Prop 13 to what it was in 1978. I'm Si Kurami. Welcome to California Insider.
>> Susan, it's great to have you back on. Welcome back.
>> Thank you, C. It is great to be with you.
>> Susan. Prop 13 is a very popular proposition in California. A lot of Californians have been supporting it. There has been some recent changes to this proposition and you guys are trying to run an initiative to restore what Prop 13 was. Can you tell us what's happening?
>> Absolutely. There were court decisions that have eroded some of the protections in Proposition 13. Proposition 13 passed in 1978. It's well known for capping how much property taxes can go up while you own your property. It also cut the tax rate statewide to 1%. It had been a statewide average of 2.67%. And as you probably know, it used to be the case that the market value was your taxable value. So your taxable value was what your house is worth every year times 2.67% statewide average. People were being taxed right out of their property. And as a result, there was this huge surplus building in Sacramento while everybody was being hurt. So Proposition 13 went on the ballot. And Howard Jarvis, who was the driving force behind it, knew that if he capped property tax growth, the governments would come at people for different taxes a different way under a different name. So in Prop 13, there are other protections that make it harder to raise other taxes. And one of them is it takes a two-thirds vote of the local electorate to raise a local special tax that's dedicated to a particular purpose. That's how it's been defined. So, a two-thirds vote is tough to get. And Howard Jarvis said, "We want it to be tough. We don't want people's taxes to go up so easily all the time because people were really getting hurt." So, this is what's under attack right now. This two-thirds vote for special taxes.
In 2017, there was a court decision that said if a citizens group puts an initiative together and raises taxes with an initiative and they get this on the ballot by getting signatures on petitions to raise taxes. Who does that? But okay, let's say a citizens group wants to raise taxes. It doesn't have to meet the two-thirds. Maybe the constitution doesn't apply. Maybe that's what the Supreme Court said. The language was ambiguous. But as soon as they did that, cities tested it and the appellate courts have upheld that standard that a citizens initiative tax increase doesn't have to meet the two-thirds vote.
>> Well, this is right out of the air. And
>> can you explain what does this mean? Like a citizen group
>> putting an initiative on because it doesn't make sense make sense much.
>> Well, imagine that a special interest group wants to raise taxes to direct the money to themselves. So, we've seen that. We saw that in Los Angeles last fall that the groups that get the homeless services contracts, millions and millions and tens of millions and hundreds of millions of dollars in contracts to provide homelessness services, they wanted to raise the tax to fund those contracts. So, they wrote the tax increase and they paid to collect the signatures to put it on the ballot and they didn't have to get a two-thirds vote and it passed. So the sales tax in Los Angeles County went up a quarter percent temporary tax became a half percent permanent tax with all the money directed to the people who funded the initiative. So that's one example of how a sales tax was increased by this loophole because if it had to reach the two-thirds threshold it would have failed.
>> But that money coming into the county it comes to the county. Right.
>> Right. That money is it directed by the county supervisors or is it does it have to go to that cause?
>> It's directed by the law and the law is what was in the initiative that the groups wrote.
>> So the law is written that the money will go to this cause but it doesn't mean it will go to them directly.
>> But it does because they're the ones who were getting the contracts.
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>> And so that's that's the way this works. There was one also last year from the firefighters union in Los Angeles County to try to raise $200 million a year roughly for more hiring and more equipment for the county fire department. Now, LA County has a $50 billion annual budget. If they can't find $200 million for the county fire department, something's really wrong. But that's what happened here. The firefighters union backed an initiative tax increase. This one was a parcel tax. So, it was a charge on property and it passed not with a two-thirds vote, but it was considered enough because it was a quote citizens initiative. And we're seeing this over and over. Sometimes we're seeing the governments actually work with the groups. Right now in San Francisco in the Bay Area, there are I think five counties that are going to raise try to raise the transit the sales tax for transit. So, Senate Bill 63 was introduced to allow them to exceed the cap on local sales taxes because you're only supposed to be able to collect 2% above the state rate. And the state rate is 7 and a quarter%. So, no one in California should really be paying more than 9 and a quarter% sales tax. But in many places it's over 10. How did that happen? Special legislation to allow these extra taxes to exceed the cap. So SB63 was one of these for these Bay Area counties. It clearly is coming from the government. They had to pass legislation in order to enact it. But the tax increase that this legislation authorized is going to be a citizens initiative. And that's what we're seeing is government groups, government, individual elected officials working with groups to evade the two-thirds requirement.
>> So, why are they doing it this way? Is it a lot harder to get the 2/3?
>> Well, it is. It's It's harder to convince people if you need to get 66.7%, which is roughly what it is for 2/3. If you need to get to that number, that's harder than getting to 50% plus one vote. But it's really important. And one of the reasons is that not all these taxes are paid by everybody. When you put a parcel tax on property, that's paid just by the property owners. Sometimes the property owners are outnumbered by people who are not property owners and they're not going to pay the tax, but they vote on it. And you can have these people over here voting to tax those people over there. Those taxes are going to pass every single time. And what's the outcome? The people who are getting all these taxes put on them are going to leave. They're going to leave that local jurisdiction and go someplace else. They may leave the state. And then you have people who are in many cases wealthy and paying a lot of taxes leaving the state of California. Eventually, that is a hit on the state budget because California's income tax is tilted to get the most out of the wealthiest. If the wealthy say, "That's it, I'm out," then that's a big hit on the state treasury. And then what
>> was the mansion tax in LA similar to this?
>> The mansion tax was also a this was another tax for homelessness or homelessness prevention. And this was an upland we call it the Upland tax because the case that created this loophole is California Cannabis Coalition versus City of Upland in 2017. That's the one with the ambiguous language. And so this was another Upland tax. It was a citizens initiative to put a a real estate transfer tax is like a sales tax on property. When you sell the property, you will owe a percentage of the sale price to the city in taxes. And that's regardless of whether it's a profit or it's a loss, whether it's in foreclosure. If you if you sell a piece of property that's in the price range that this mansion tax affects, and it's not just mansions, it's apartment buildings, it's all kinds of commercial developments, then you will be taxed above $5 million. It adjusts for inflation, but roughly $5 million, it's 4% of your sale price. And over $10 million, it's 5.5%. That's a lot. That's enough to prevent some of these developments from being built in the first place because it's such a huge tax that lenders have to look at. When you're going to sell this property, what can you get for it? Well, whatever you get for it, take off 5.5% for the Measure ULA tax. Transfer taxes were actually prohibited completely in Proposition 13. There's an older tax, the documentary transfer tax, which was 0.11%. Which the counties can collect for the cost of transferring property. Okay. Prop 13 left that in place and said no other transfer taxes. So where did they come from? Another court loophole. In the 1990s, there were several decisions that said, well, if it's a charter city, a charter city is a local community that has its own local constitution. Some are general law cities and some have charters. Los Angeles has a charter. If it's a charter city, then they can enact a transfer tax if it's for a general purpose. And where'd that come from? Right out of the air. So that's been the case since the 1990s. And many cities have enacted these transfer taxes mostly on high-value property. But they are prohibited technically, legally, literally by Proposition 13. So, our initiative puts back that language. Transfer taxes are prohibited and the existing transfer taxes are repealed, but not immediately. Two years. There's a two-year off-ramp for the cities to adjust their budgets and come to the taxpayers, come to the voters with a constitutional tax increase proposal that people will approve.
>> So, in a sense, what you mentioned, something like a mansion tax, it doesn't really impact everybody in LA. It impacts people that have high-value property. People are most likely to to just say yes because it's not taxing them, it's taxing somebody else, right?
>> And something like this is passing with 50% of it should easily it could easily pass with a 50% vote. But according to Prop 13, it should have gotten 67 something.
>> Right? Because it was a special tax. It should have been prohibited because it was a transfer tax, but it went through the transfer tax loophole. And then it went through the Upland loophole where it didn't need to get two-thirds because it's a citizens initiative. But the cumulative effect of this, if all the different special interest groups can collect signatures and put their own personal tax increase that they wrote to direct the money to themselves on the ballot and not have to meet the two-thirds threshold, then we have no control at all over taxation in California. You can elect people who are going to be fiscally responsible supposedly, but they can't control this because these groups can just put something on the ballot. There's nothing wrong with the initiative process. That's great. But there's a protection for taxpayers that a local special tax needs a two-thirds vote. And to create this loophole where some of them don't has been very destructive.
>> You mentioned that some of these wealthy people are paying most of the taxes income tax. Can you explain that?
>> Yes. The income tax rates are they go up. It's progressive. They go up with your income. So the top tax rate in California is 13.3%. I think it kicks in around $600,000, but even at a much lower level, we are paying higher state income tax rates than wealthy people in other states are paying. You know, there there's a lot of people paying 9% 9.3% I think it is in middle-income ranges. It's a lot of money and it's on top of course of your federal income tax. California's an expensive state. So the people who are paying that 13.3% plus an additional millionaire's tax that was added by a different piece of legislation or an initiative, the millionaire's tax brings it to 14.3% if you're over a million dollars. That's a lot of money. And if those people are paying it, they do not want it to be raised any further and they're teetering on the edge of leaving the state. And if enough of them leave the state, it leaves a big hole in the budget. So some of these taxes like mansion tax and other ones could impact these people at the same time they're impacting development in LA too.
>> Yes, it it's having a big effect on development because it's not just on mansions, it's on any real estate of that value. And of course, real estate's very expensive in Los Angeles. So there's a lot of real estate that's affected by that. And it it's impacting development because as I said the lenders are looking at this and saying whatever you sell this for knock off five and a half% now it doesn't pencil out and so the interest rate will be higher or some other provision of the loan will be difficult and so it's it's having an impact on development.
>> Susan, some people argue that because of Prop 13, the state doesn't have predictable tax income like other states.
>> Oh, it's very predictable. They just want more. They just want more of everybody's money. But it's very predictable. And if you look at the tax rolls county by county, it's going the revenue is going up every year. The tax roll grows every year. Los Angeles County is at a record. And why? Because under Prop 13, the taxable value does increase. It increases 2% a year with inflation. And of course, it increases when the properties turn over and there's a new owner. Then it's reassessed to market value. And it's reassessed if there's new construction. The part of the new construction is reassessed. The entire property is not, but it adds to the property tax roll. So, it does go up year after year. It's very steady. And in a recession, it's the steadiest of all because many people who have the lower property taxes from long ownership, they don't they don't go down in value below what they're assessed at, even if there's a recession. If everyone was assessed to market value every year, as is the case in other states, then when there's a recession and the prices come down, all of a sudden the revenue goes down with it. But with Prop 13, that doesn't happen. It's much more stable because the people who have held their property for a long time are not going to fall below the level that they're being taxed at. So the revenue continues. It's the steadiest and least volatile source of revenue in California.
>> How does your initiative work?
>> Well, the initiative restores these portions of Prop 13 that the courts have eroded, the transfer tax ban and Prop 13's requirement for a two-thirds vote for local special taxes. It restores those. Now, they're already in the Constitution, but what we're saying is, and we really mean it this time. So, there you go. That's where we
>> And does it backtrack all of these taxes that have been passed?
>> The transfer taxes would be repealed two years after the approval of this measure.
>> What about other taxes that are not transferred?
>> No, the it it only affects the repeal only affects real estate, property-related taxes. So sales taxes would not be repealed. But going forward, all special taxes would require a two-thirds vote, which is what the constitution says anyway. No matter how they get on the ballot, they require a two-thirds vote. We have been discussing a lot of people have been talking about Proposition 19 that passed a few years ago about the death tax. They call it the death tax like it will cost more for the kids who inherit the property. They have to pay market value taxes. Right.
>> Right.
>> Can you explain what's going on with this? A lot of people have reached out to us and told us that this will impact how how much they're charging rent from their on their rentals even when they had really good affordable rentals for the community. Can you tell us what's happening with that?
>> Sure. Well, it used to be the case from 1986 forward to 2021, it was the case that parents and children could transfer their principal residence of any value from parent to child or child to parent without reassessment. It was excluded from reassessment. And in addition to that, $1 million of other property, assessed value of other property, which could be an apartment building, which could be a rental home, which could be a duplex, which could be a small business. $1 million of assessed value of other property was similarly excluded from reassessment when transferred from parents to children or children to parents. Those all went away. Prop 19 took all of that away. And now when the property is transferred from parents to children or children to parents, it's reassessed to market value with just one exception. The principal residence of the parent can become the principal residence of the child within one year and they have to stay permanently because if they leave and it's not their primary residence, then it's going to be reassessed. But you get a $1 million exclusion for the increase in value. So this gets a little complicated, but let me try and explain it. Let's say a parent passes away and the child inherits the home and the home has an assessed value of $500,000, but it's worth a million and a half at today's prices. If the child moves into the home within one year and fills out all the correct paperwork, the homeowner's exemption and the other transfer paperwork, then that child will not see an increase in property taxes because it's worth a million and a half. It's assessed at half a million. You get the extra million because you moved into it. So, everybody's even and there's no tax increase. If it's worth more than a million and a half, that extra value is assessed at 1% and that's added to the $500,000 existing assessment. So, this is how the exclusion works. Now, it only applies to the parent's principal residence. It only applies if the child moves in within one year and makes it their own principal residence. Otherwise, it's reassessed to market value. And income property, a small apartment building, a duplex, a business, a restaurant, reassessed to market value as of the date of transfer. It's a huge tax increase. And it's a huge tax increase on ordinary people who have invested in real estate through the years. Maybe somebody has one rental house. Well, they're going to lose it when it's transferred to the next person. If there's a tenant in there, the rent's going to have to go up to cover this new property tax bill because maybe that home has been in the family for 30 years and the real estate values in Los Angeles or anywhere in California have gone up so dramatically that now it's going to be reassessed to market value. The new tax bill is 1% of the market value. And that's your new Prop 13. That can only go up 2% a year from there. Every property in California is under Prop 13, but it's going to start at that much higher tax bill and then go up 2% a year.
>> Is there any data on how much this will cost? So, essentially on the rental properties because rents are already at have gone up significantly.
>> Yes.
>> Is this going to trigger another layer of rentals going up?
>> It absolutely will. And I think it's going to result in the loss of a lot of affordable housing because nobody can make that pencil out. You know, once those property taxes, once that bill goes up and the rent has to cover it, the rent has to go up. And if the rent can't go up, rent control or any other reason, then the building is going to be sold and it's probably going to be demolished and turned into something else. And that's terrible because there are tons of older apartment buildings. That was a great business for people to be in, for immigrants, for anybody, for grandmothers. It was rental property was a great business. It was a great way to have extra income. But now there's been such an attempt to beat up on landlords with different legislation at the city and state level. And then there you have all of these situations now with the inheritance raising the taxes. I don't think these businesses are sustainable with those expenses and that will mean there will be fewer people going into the rental housing business and that will mean there will be less housing.
>> And this was a way for people to have generational wealth, right? To build multi-generational wealth, right?
>> Yes. And in some communities where they don't have generations and generations and generations of property ownership, this has been really the first opportunity for people to inherit a home or, you know, maybe they're the second generation inheriting a home or other property and now they're getting these huge tax bills. Somebody builds a football stadium in your neighborhood and all of a sudden your house is worth six times what it was worth and your kids inherit it and they have to come up with that money every year as a condition of keeping the property because property taxes if you don't pay them, the county's going to sell your house for you. So it's very, very harsh.
>> And is there anything you guys are doing about this? Is this going to change?
>> Well, we have tried to collect signatures to get something on the ballot and we fell short. We didn't get the number we needed. But the legislature, it's very important for people to understand there are two different ways to amend the Constitution in California. One is with signatures on a petition. That's a citizens initiative. But the legislature can pass a constitutional amendment. And they could do that right now. They could do that when they come back in January or whenever they come back. They could pass a constitutional amendment to fix this problem and put back the protection on generational transfers. They could put it back. They took it away. They could put it back. And they could put it on the ballot in June. When you do an initiative with signatures, it can only be on the ballot in November because that's what the law says now. But the legislature could put it on the ballot in June. And it's really important because you're losing communities. You're losing generational wealth. You're losing affordable housing. This was sold to people, by the way, in the middle of the pandemic in 2020. This was sold as a way to help fire victims and help seniors move to a new home. And that's all true and that's all fine. But this was in it. Also, the removal of this protection on inherited property for ordinary people, not for big investors. This is the primary residence and up to a million dollars of assessed value of other property. That's what was protected. This is for regular families. This is not for giant trust fund people. This is regular families that invested in real estate. And I would like to see the legislature pass a constitutional amendment to restore what was Prop 58, which passed in 1986, by the way, unanimously in the legislature and with 75% approval from the voters. And that's how upset people were that inherited property was being essentially taken from them through taxation. So it could happen again that the legislature could fix this and I hope they do.
>> So they could vote to put this on the ballot for vote again.
>> Right.
>> What's the likelihood of that? Do you hear something from the legislature?
>> Well, I've heard that they're getting phone calls from very upset constituents and so at some point that's going to make a difference. There was a deal in the legislature to do this in the first place. They wanted the revenue. Maybe as time goes on and new people are elected, they weren't in on that deal and maybe they'll fix this problem. Or maybe they didn't understand themselves how it was going to affect their constituents. And now that they're hearing from them and they're seeing what's happening, there's a number of things they could do. They could, if nothing else, they could create a longer time period for people to pay these additional taxes. Instead of having it all land on the day of the transfer, you start owing that higher tax bill immediately. Even if you're going to sell a home that you inherited for the length of time it takes you to settle the estate, list the house, close escrow, you owe property taxes of 1% on the market value of that home as of the date you inherited it. And that's a very big chunk for people who are in that situation. That's a big chunk of money for people to come up with. And I think a lot of people are surprised by it. It breaks my heart. Honestly, it does because you hear these stories of parents who worked so hard to leave something to their kids. Many times kids who are disabled and they'll have rental property that provides the income or a place for the child to live, but the rental property was not the parents' principal residence. So the disabled child who's going to live in that house is not able to use the Prop 19 exclusion from reassessment because it's not the principal residence. On the principal residence, fully reassessed to market value and they can't afford to keep it. It doesn't add up. So, there's tons of stories like this of people who are just being hurt by, I think, the unintended consequences of this deal that was made in Sacramento to stick this in with the other parts of Prop 19. I would like to see them fully restore what was in Prop 58, but at the very least, they should look at easing the burden on people who are faced with these tax bills.
Before we get to the rest of this interview, let's take a look at some key headlines from the Epoch Times newspaper this week in the California edition. LA County is considering to have eviction moratoriums for illegal immigrants who have been raided by ICE agents. This is something that they did during the pandemic for everyone. There's a new law that lets California have its own vaccine rules. There's a big battle between the Trump administration and California government. And this is another side of it here. California ties with Louisiana on the highest poverty rate states in the country. Now the poverty rate in California is 17.7% and 7 million people are facing poverty here. This is the data from 2024 at the same time that California's economy became the fourth largest economy in the world. We're also hearing of reports that the middle class is shrinking in California. SB79, which was the housing law that will allow six-story buildings in single-family home zones as long as it was caused by a transit station within a half-mile radius. This law passed the legislature. Now, we're waiting for Governor Newsom to see if he will sign it or not. These are just a few headlines in our California section. We have so many more headlines on California, national and international news, especially China news that nobody covers. Subscribe using the link below. You'll get it for a dollar a week for the first four weeks. And I'm sure you're going to be surprised by the quality of journalism in this newspaper because we talk to everyone from different sides of the story. We try to get it right. Make sure to subscribe today.
>> One of the factors about Prop 13 is there's a big history about this like
>> Yes.
>> And it's a very popular proposition in California. Can you tell us more about this history? And your organization was founded because of this, right?
>> That's right. The Howard Jarvis Taxpayers Association is named for the driving force behind Proposition 13. It wasn't called that at the beginning, but it was founded in 1978 to protect Prop 13 because Howard Jarvis knew that cutting taxes was going to be a target for the government forever. And so he wanted to have an organization that would stand up and fight in the courts, in the legislature, on the ballot as needed to protect Prop 13 so that people wouldn't be taxed out of their homes in California, which is important, and taxed out of their businesses, too. That's important as well. So the history is that Howard Jarvis tried, I think, for 15 years, five separate times to get that on the ballot. And at the beginning, people did not believe him. He was saying, "You don't know what your property taxes are going to be with these values as time goes on with inflation that was happening in the 1970s. You you don't know how bad this is going to be." And they said, "Oh, it's not going to be that bad." And then it was. And people were literally being taxed out of their homes. And he told the story that he was at the tax office, I think it was the tax collector or the tax assessor's office, and a woman was trying to get some relief from this tax bill because every year people were reassessed to market value and the prices were insane. There was a joke, "I always wanted to live in a $100,000 house and now I do." So that's a number from a long time ago, but you could still do it today with a million dollars. "I always wanted to live in a million-dollar house and now I do." Oh, the same house, obviously. So that's what was happening and people were having to pay the taxes on these new values regardless of their ability to pay. So he's in the office with this woman and she's at the counter and they're telling her there's nothing we can do. You have to pay this bill or you're going to lose your house. And she had a heart attack and she died right there in front of him. And he told that story to show the impact of these taxes because in Sacramento it was all good news to them. They didn't care. They had a huge and growing surplus. What one lawmaker called an obscene surplus. And people out in the streets, out in the cities, they were losing their homes. They were losing everything to pay these tax bills. Well, on the fifth try, Proposition 13 got the signatures that it needed to get on the ballot and the legislature panicked and the legislature said, "Well, we have to put something else on the ballot." Even though they had they could have fixed this over 10 years, they could have done it at any point. Now that Prop 13 was actually on the ballot, they panicked. And so they passed a constitutional amendment of their own. This was Proposition 8 in June of 1978. And this would have allowed a split roll. It would have allowed different taxation for homes than businesses and they said this is much less radical and everybody in government was saying the world will come to an end if Prop 13 passes. It was so absurd, the scare tactics that they were using that on the Tonight Show starring Johnny Carson, they did a desk bit satirizing the scare tactics. You can find it in reruns from June 6th, 1978 about all the terrible things that were going to happen if Prop 13 passed. It was a joke, all the scare tactics that they had. So, it passed. It passed with, I believe, 65% of the vote, 64.8 or 65% of the vote. And Prop 8, the more moderate legislative version, was out and out defeated. Didn't pass at all. Now, if they had both passed, the one with more votes would have prevailed, but Prop 8 didn't even pass. People are like, "Get out of here with your half measures to fix this problem. You should have done this years ago." And they went for Prop 13. Prop 13 is very powerful stuff. It's a constitutional amendment. It says that the assessed value of property can only go up a maximum of 2% a year, no matter what the market does, for as long as you own your property. It said that the tax rate is cut to 1%. In some places, it was 3%, maybe higher. It was a statewide average of 2.67%. It was a lot on the market value. 2.67% of the market value of your home every year as a condition of keeping it was horrible for people. And this is happening in other states now as values go up and they're getting crushed. So Prop 13 had these other protections in it which made it harder to raise other taxes. It said that at the state level, a tax increase had to have a two-thirds vote in each house of the legislature. And at the local level, all the taxes had to go on the ballot, special taxes needed a two-thirds vote. Now, that was there was a battle over the definition of special. And as it's come down to us, general taxes, where the money can be used for any purpose, those need a simple majority. But if the money is targeted to a particular purpose, then it needs a two-thirds vote. So that's the way the law is. And then in 2017, the California Supreme Court carved a loophole saying citizens initiative tax increases. This then the Constitution doesn't apply. Prop 13 doesn't apply. Nothing applies. It's wide open. It's the wild west. Go ahead, write your own tax increase. Take it to the voters. A simple majority is enough. And this is going to cost people so much money. It's already costing people so much money. And it's very unfortunate because this is not coming to you from your elected city council or your elected county board of supervisors or any government body. This is coming to you from back rooms, special interests, people who want to raise your taxes. And they're going to write something that directs the money in their favor. And they're going to pay for the campaign to bamboozle the voters into passing a tax increase. And they only need to get 50% plus one. And that we just think that's so wrong and so out of control. It's an unlimited loophole. Anything that's in the Constitution could be erased. I think Prop 13 itself could be erased at the local level because they could write it. They could say, "We're going to reassess all the property in this county because we need the money for five or six really important things." And maybe the voters would go for that if it was sold to them. Maybe they could get to 50% plus one. Okay. So then everybody's going to go to court and say you can't erase Prop 13 with a local initiative. But that was the argument that was made on all the other taxes and the appellate courts let it slide. They said, "Yeah, well the Upland decision, it it means that a citizens initiative doesn't have to meet any of this." So it's a dangerous it's a dangerous time if you're a taxpayer in California. And that's why the Howard Jarvis Taxpayers Association is doing this initiative campaign to close this loophole before it gets completely out of control.
>> Now, is it easy to get these signatures? Because these initiatives, it takes a lot of money and a lot of effort. And you guys are How are you guys funded? How do you do this?
>> Well, we're a grassroots organization. We're member supported. We're supported by $15 a year donations to the Howard Jarvis Taxpayers Association. HJTA.org is the website. And we raise money separately for campaigns because that's the law in California. So, people donate in small amounts and it adds up and that's what we're that's what we're doing. Um, it's it's a new way of doing an initiative in this sense. We are making it downloadable and printable. And this has been done before, but I think we're doing it at a larger scale throughout the whole state of California. Anyone can go to saveprop13.com and download the petition and print it and sign it and mail it and that's it. That's all they have to do. It's a one-page petition. You can print it on letter-sized paper 8 and a half by 11 one sheet and there's room for two signatures on it and all you have to do is print it, sign it, mail it and you save Prop 13. There's complete instructions. It's a PDF that's multi-page. So, there's a cover sheet that has a mailing label. So, you don't even have to look up the address. You just clip out the label and tape it to an envelope. You sign the petition and you send it back. So, this is the one-page petition and you just go to saveprop13.com and you can download it. There's complete instructions in colors show you how to fill it out, where you have to fill it out. And then this is the cover sheet and that's the mailing label. So you just cut that out, put it on the envelope, put the signed petition in it, mail it back to the Howard Jarvis Taxpayers Association.
>> California, we pay a lot less property tax because of Prop 13, but then there is the income tax. Are Californians paying more taxes here versus other parts of the country?
>> Well, there was a study on that. There's an organization called ITP it and I can't remember what it stands for, economic something and it they did a study called Who Pays and this is about state-to-state comparisons of taxes and interestingly what they what they found is that in other states people pay higher taxes at lower income rates. How did they come to this conclusion? They took the amount that landlords pay in property taxes and they apportioned that to the tenants. So what they said is in California, tenants are paying lower property taxes than in other states. So a low-income tenant is paying higher property taxes in states that have high property taxes. So for instance, Texas. But the way they did that is it they should have given the credits of Prop 13. It's not to the legislature. It's to the initiative Prop 13 because that's the reason that people who live in apartments are paying lower property taxes. And it was that calculation that turned it because we have the highest state sales tax in the country at 7 and a quarter%. We have the highest gasoline taxes, not to mention the highest gasoline prices. And we have utility taxes and we have very high income taxes. So altogether Californians have a huge tax burden and California businesses have a huge tax burden and sometimes the government is making decisions that increase it indirectly. So for example during COVID California needed a loan from the federal government to pay unemployment benefits. Everybody did. Everybody paid it back. California chose not to pay it back. So even though they had all of this money from the COVID aid and all the rest of it from the federal government, they chose not to pay back this loan. So what happened? Businesses get hit with a payroll tax to pay back this loan from the federal government for unemployment benefits. So that's a tax increase on hiring essentially because it's a payroll tax and that discourages hiring in California. Well, when you see that our unemployment rate is higher than other states and our poverty rate, when you take into account the cost of living is higher than other states, all of these policies are contributing to that. It's these decisions that they're making at budget time in Sacramento that are causing some of the problems that people are having.
>> Susan Shelley, columnist for the Southern California News Group and VP of Communications with Howard Jarvis Association. It was great to have you on California.
>> Thank you, Came. Great to be with you.
>> Let us know what you think of this interview. You can always email us at cmac@calon.com or comment. We read all of your emails and comments. And remember, we want to get everyone engaged in the discussion with the comments. So, consider others when you're writing these comments. I'm Sam Kurami. This is California Insider and we'll see you next time.