The combination of these factors will force the owner to reduce rents back to the market rate of $1,200 a month. And so it will go for any landowner currently receiving a market rate rent who attempts to pass on the increase in land value taxes to tenants.
It is likely that a substantial majority of homeowners in California will also experience a reduction in the amount of state and local taxes they pay under the reform proposal. This will particularly be true of home-owning households in which one or more members of the household are working full-time because of the elimination of their state income tax liability due to (1) the $150,000 per person exemption from state income tax and (2) the nonrefundable tax credit for LVT paid in California which will eliminate state PIT liability for many higher income homeowners with expensive homes on very valuable land even though they earn upwards of $500,000 a year.
When most working homeowners compare the total of their present property taxes, state income taxes and sales taxes paid for goods and services with the land value taxes which they will owe under the proposed tax reform, they will discover that their tax burden will drop under the tax reform initiative. This point will be a primary focus of the campaign in favor of this reform proposal.
Many individuals who have financial interests closely tied to non-rent collecting businesses will also quickly perceive the benefits that such businesses will derive from this reform proposal. With corporate taxes abolished, new improvements exempted from taxation, sales taxes on new equipment abolished and customers freed from payment of sales taxes on purchases, the benefit to productive enterprises and to those engaged in commerce will be obvious.
The task of those who advocate this particular tax reform will be to spread the good news so that voters in California will understand that upwards of 80% of the population will pay lower taxes under the reform. The political math favoring the California tax reform proposition flows from the basic fact that only a small part of California's population like Mr. Terry -- collects rent from other Californians for use of our state's most valuable lands.
In fact, much of California's most valuable land is owned by corporations or other business entities whose owners reside, for the most part, outside of California! This tilts the electoral math even more strongly in favor of the reform proposal. However, these rent-collecting interests will finance a major advertising campaign designed to mislead voters and to create fear about the potential consequences of adopting the tax reform ballot proposition.
--Frank D. Walker
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