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1. Why Make It Fair?

In 1978, Prop. 13 was passed to provide important protections for homeowners and renters, but it also included property tax loopholes for corporations and wealthy commercial property owners. These loopholes allow them to avoid paying billions of dollars in property taxes. That means that we lose vital funding for schools, local services like police and fire, parks and other important priorities.

Make It Fair is a movement to close commercial property tax loopholes and use the revenue to rebuild critical services in local communities while protecting homeowners and renters.

2. What is Make It Fair?

Make It Fair is a coalition of community, faith-based, civil rights, environmental and labor groups all working together to level the playing field for small and large, old and new businesses in California.

3. Do the proposed reforms impact residential property taxes?

Absolutely not. This will not impact homeowners or renters at all—except to make the services we use and the communities we live in stronger.

4. What is Prop. 13?

Prop. 13 was a constitutional amendment passed in 1978 that made significant changes to how and when property is taxed. It changed the law so that properties would only be reassessed if they were sold or had major improvements done. It capped the annual increase in value for non-reassessed properties at 2%. It set a 1% taxation rate on the assessed value of a property, which is one of the lowest rates in the nation. As a coalition, we support its protection for homeowners, renters and owners of agricultural lands—but we do not support big corporations and wealthy commercial property owners, who have been taking advantage of loopholes in the law to avoid paying their fair share of property taxes.

5. Why does Prop. 13 need to be updated?

Many big corporations and wealthy commercial property owners use the law to avoid paying taxes on the actual value of their property. As a result, receive an unfair competitive advantage based solely on when they bought a piece of property. They also use loopholes in the law to avoid reassessment when their property changed hands.

6. How do corporations and wealthy commercial property owners keep their taxes unfairly low?

First, because the taxable value of a property is set at the time of purchase and artificially limited to a 2% increase in value each year, a big corporation could be paying just slightly more in property taxes today than they did in 1978—even if their property has become far more valuable.

Worse, some companies actively work to get around re-assessment even when a piece of property changes hands. Under legislation associated with Prop. 13, if over 50% of ownership is transferred to one new owner, the property is then re-assessed. Some corporations and wealthy commercial property owners will break up the ownership of a piece of property across several sub-corporations so that no one sub-corporation owns more than 50%. So even though the property has been bought and sold, the new owners are paying taxes under the old assessment value.

This is fundamentally unfair—it allows many big corporations and wealthy commercial property owners to pay less than they should, leaving Californians with less funding for important community priorities, like schools and local services, that benefit everyone.

It’s important to note as well that businesses benefit when we invest in making improvements in our cities and towns. They see more consumers, are able to attract employees and are able to sell their property at a higher value. All businesses should fairly contribute to the improvements that allow this all to happen.

7. How much money would be raised?

We estimate that reforming the commercial property tax system would raise up to $9 billion of additional revenue each year.

8. What would the money be used for?

Currently, property taxes go to school districts, cities, counties and special districts that use the funding for K-12 education; local services like parks, libraries, police and fire; roads and other infrastructure, and community colleges. We propose to use increased revenue for the same things our property taxes go to now: increased funding for schools and local services.

9. How can we be sure it will go to benefit our community?

Important transparency and accountability measures will be included to help local residents track exactly how the funding is being spent.

10. Do local communities across California need more revenue?

We are only now just beginning to rebuild services that were devastated by many years of budget cuts. Many families have seen the costs of higher education go through the roof; local schools still lack adequate funding for classrooms needs and extracurricular activities; services ranging from public safety to park maintenance have also taken a toll. California currently ranks 50th in the nation of the number of students per teacher, according to the National Center for Education Statistics.

The problem isn’t that regular Californians are getting too much—it’s that many big corporations and wealthy commercial property owners use loopholes that reduce revenue for services we all rely on. By fairly taxing commercial properties, we can help restore critical funding to public services and help invest in the well-being of our communities across the state.

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