Assemblymember Tom Ammiano is moving to close a huge tax loophole that costs state and local government millons — and while his last attempt failed, this year he has a much better shot. The measure will probably make it out of the Legislature (hard to argue against something that doesn’t raise taxes at all but just makes sure nobody cheats) and I can’t imagine Jerry Brown deciding to veto it.
The bill, AB 448, would force companies that sell or transfer propetry to report it as an ownership change, which triggers a new assessment under Prop. 13. It’s one of the oldest loopholes in the book: I create a corporation or LLC to hold a piece of property, and when I want to sell, I simply transfer stock in the corporation or membership in the LLC to the buyer — and the property deed isn’t changed.
The California Tax Reform Association tracks this stuff, and you can see some examples here.
Ammiano’s been working with San Francisco Assessor Phil Ting, who told me “it’s a simple issue of fairness. Homeowners face reassessment when they buy property; why shouldn’t corporations?”
The stakes are high. It’s impossible to say how much San Francisco would pick up every year, but over time, it could be many millions of dollars (and about 57 percent of property tax revenue goes to the General Fund, the rest to the state, which returns most of it it the public schools).
Perhaps the Democrats should simply include this projected revenue in their budget; that way, Brown would have an even greater incentive to sign it.