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The Tax Foundation is the nation’s
leading independent tax policy
research organization. Since 1937,
our research, analysis, and experts
have informed smarter tax policy
at the federal, state, and global
levels. We are a 501(c)(3) nonprofit
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Split Roll Initiative in California
Threatens Property Tax Limitations
on Commercial Real Estate
• California has one of the nation’s least business-friendly tax environments,
ranking 48th on the Tax Foundation’s State Business Tax Climate Index, which
measures tax structure. However, the state’s property tax code is a relative
bright spot, with the state ranking 14th on that component of the Index.
If approved by California voters on Election Day and fully implemented,
Proposition 15—also known as The California Schools and Local Communities
Funding Act of 2020—could see the state drop to 33rd for property taxes on
In 1978, voters passed Proposition 13, which capped property tax rates
at 1 percent (for both residential and commercial property) and limited
assessment growth to 2 percent per year.
• Proposition 15 would introduce a split roll property tax system in California
by changing the assessment regime just for commercial property. If enacted,
the changes are expected to increase the property tax burden on commercial
activity in California by between $8 billion and $12.5 billion annually.
• Proposition 15 is being offered as a measure to raise taxes on businesses but
much of the cost will be picked up by consumers through higher prices on
goods and services.
• Proposition 15 would add complexity and increase non-neutrality in
California’s property taxes, rather than correcting the shortcomings of
Proposition 13, and would make the state considerably less attractive for