January 20, 2022

A slew of new tax measures coming in 2022

View Original Notice ? A slew of new tax measures coming in 2022

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Ever since 1978, when Proposition 13 limited the growth of California property tax bills and made it harder for politicians to raise other taxes, the ballot has been the battlefield for fights over tax increases.

Prop. 13 capped the statewide property tax rate at 1%, limited annual increases in assessed value to a maximum of 2% until there was a change of ownership, required a two-thirds vote of the Legislature to pass state taxes and mandated that local taxes must be approved by voters.

Just last year, California voters rejected an attempt to create a split-roll property tax system that would’ve lifted Prop. 13 limitations for certain types of commercial properties. This was particularly notable given that the split roll had the support of not only public employee unions that stood to benefit, but also Gov. Gavin Newsom.

In 2022, four initiatives filed with the attorney general’s office have the potential to reshape state tax law again.

Initiative 21-0026, the “Taxpayer Protection and Government Accountability Act,” would require voter approval for any statewide tax increase. It also aims to close tax-hiking loopholes opened by the courts, including one that has allowed some local tax increases to pass with a simple majority even when voters were told in the ballot materials that a two-thirds vote was needed.

Initiative 21-0015, the “Repeal the Death Tax Act,” would reverse a tax increase in last fall’s Proposition 19. That measure raised property taxes on families by requiring reassessment to market value, with limited exceptions, when property is transferred from parents to children. This initiative would restore the parent-child exclusion from reassessment that was originally added to the state constitution by Proposition 58 in 1986.

Two other measures lean toward tax increases.

Initiative 21-0040, the “Affordable Housing and Financial Accountability Act,” would amend the state constitution to authorize local jurisdictions to issue bonds to build, renovate, maintain or subsidize affordable housing for targeted groups, with the cost paid by raising the property tax rate above Prop. 13’s limit of 1%.

Another initiative seeking to exceed the 1% tax-rate limit is the “Tax Cut and Housing Affordability Act,” initiative 21-0032. It would put a surcharge of up to 1.2% on high-value property starting at $4 million and use the money to increase the homeowner’s exemption and fund two credits for renters. It also attempts to cement Sacramento’s power to override local zoning by blocking initiative 21-0016 from taking effect if that measure passes with fewer votes. Initiative 21-0016 is the “Local Land Use” initiative that repeals controversial housing density bills and protects local control of zoning.

Each of these initiatives needs 997,139 valid signatures to get on the November 2022 ballot.

Be sure you know what you’re signing.

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