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EDITORIAL: Nevada, California and property tax ‘adjustments’

What happens in California usually doesn’t stay in California — and that can be bad news for Nevada, particularly when the political proclivities of state legislative leaders sync with the collectivism that dominates Sacramento. Consider California’s Proposition 15.

In recent decades, Golden State politicians have recognized few limits on their taxing powers, preferring to slap levies on anything that moves. In 1978, however, California voters applied their own set of handcuffs on their elected leaders, approving Proposition 13, which greatly limits the growth of property taxes in the state. The political class has been howling ever since.

Repealing that restriction on residential properties would be political suicide for Democrats, even in the deep-blue state. But the government unions that wield outsized influence in California have settled on an alternative. They are pushing Proposition 15, which would create a split-roll system by changing the assessment mechanism for commercial property. In other words, supporters of the measure are looking to massively increase property taxes on businesses.

According to the Tax Foundation, the measure would force companies to cough up an aggregate $8 billion to $12.5 billion a year. The tax hike would only further exacerbate the state’s anti-business climate — particularly as the economy struggles to recover from the pandemic — but that clearly hasn’t been a concern of most California policymakers for years. There are some exemptions for smaller businesses and properties, but the measure, if approved, would increase costs for thousands of California firms, big and small. Those higher costs would, of course, end up being extracted from consumers — including the least fortunate.

Proponents of Prop 15 argue the increased revenue will help fund public schools and community colleges. But as The Wall Street Journal points out, most of the money will be directed to shoring up hemorrhaging government pension programs. “Rising retirement costs are limiting wage increases at the bargaining table,” the paper explains, “and Prop. 15 is the union answer to keep the cash flowing.”

All this might be helpful to Nevada, prompting an increased business exodus from California. But the opposite will be true if state and local politicians in the Silver State continue to take cues from our western neighbor. Nevada also has property tax caps for residential and commercial property, but there has been much discussion in the past few years about “adjusting” those limitations, particularly for commercial real estate. That could be disastrous, especially given the new economic realities imposed by the coronavirus.

The approval of Proposition 15 would only hasten California’s march off the economic cliff. There’s no reason for Nevada’s elected officials to follow down the same path.

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