But Lenny Goldberg is pretty funny, too. Because he’s wasted 40 years attacking Proposition 13, the landmark 1978 property-tax limitation initiative.

The Times just ran a puff piece on him. There’s no hint that, in a state with an incredibly incompetent and wasteful government, what’s needed are not tax increases, but tax cuts.

But it’s funny because even Goldberg admits his success rate has been “pretty miserable.”

The tactic of Goldberg and others in recent years has been to push for a “split roll” tax, in which businesses would pay more than residences. Supposedly that would get homeowners on board. The pitch would be, “Those evil, thieving corporations — who only rip people off and waste the proceeds on mansions an vacations to Tahiti — need to pay more, so you don’t have to.”

But that hasn’t worked so far, nor is it likely to. Opposition forces, such as the Howard Jarvis Taxpayers Association, named after Prop. 13’s main champion in 1978, are well organized. They warn homeowners that, once Prop. 13 is modified to tax business at higher rates, everybody else could be next. That small businesses also would pay the higher taxes, including through boosted rents. And the experience in other states shows a split roll just makes a complex tax code even more complex.

Big wins

According to the Times:

“Goldberg has had some big wins — forcing Amazon.com Inc. to collect tax for online sales, among others — and smaller legislative successes, such as quashing a 2013 bill to overhaul the state’s telephone subsidy for low-income people.”

Some bad reporting there. Amazon out-maneuvered the state on the tax issue. It always was planning on putting huge warehouses here, which meant it would have to pay the state sales tax no matter what. But as the Times itself reported in 2011, Amazon cut a deal delaying its payments for a year.

As to the welfare known as free phones, the ObamaPhone program made state-level subsidies superfluous.

And here’s how the Times described Prop. 13:

“The change dramatically reshaped how state and local governments collected revenue — ‘hammered cities and local governments,’ Goldberg said.”

No mention of the grandmas who lost their homes because their property taxes were going through the roof.

Hammered?

And the belief that cites and other local governments were “hammered” is a massive myth. As Jon Coupal, president of the Jarvis group, has explained:

“Proposition 13 was placed on the ballot through a grass roots effort in 1978. Homeowners were seeing a doubling even tripling of their property taxes in just a few short years. When state government refused to take action to save their homes property owners rose up and qualified an initiative Proposition 13 to limit property taxes and guarantee the right to vote on any new local taxes.

“Anything that spoke of limiting taxes was viewed as a threat by politicians who regarded the ability to spend as the source of their power; public employee unions who considered the limits a threat to future pay increases; and powerful elements in the business community who feared that the Legislature would replace any loss in property tax revenue with tax hikes on businesses.

“This coalition waged a desperate vicious campaign to defeat Proposition 13 that included claims that were at wide variance from the truth. For example voters were told that if Proposition 13 passed police and fire departments would be unable to respond to emergency calls. And the measure would destroy education opponents warned.

“After Proposition 13 passed some of the campaign lies were immediately put to rest. For example public safety services continued to be adequately funded. Other falsehoods like the ones about education gradually morphed and became urban myths that were promoted by those who continued to resent Proposition 13 and the popular uprising it represented.

“So we continue to hear that Proposition 13 has decimated school funding which of course is not true. After adjusting for inflation California spends 30 percent more per pupil than we did prior to the passage of Proposition 13. The tax limiting measure is also blamed for robbing school districts of local control over finances and transferring this power to the state. Again not true. The way we now fund education is the result of a California Supreme Court decision that predates Proposition 13 by seven years. In the case of Serrano v. Priest the Court said that the property tax could not be used as the basis for funding local schools because a property tax based system resulted in communities with more valuable property being able to spend more per pupil than those with less expensive property. Still there are those who perpetuate the myth that as with many of our state’s problems it’s Proposition 13’s fault.”

By Wayne Lusvardi and Charles B. Warren

California legislators from San Francisco are “eager to reform Proposition 13 tax policies.”  But public perception is far apart from reality when it comes to the proposed reforming of Prop. 13.  The reality is that San Francisco is the only large urban county to experience no decline in property taxes since the peak of the real estate bubble in 2007.

Which means property price declines in the other areas would bring little added revenue from any proposed reforms of Prop. 13. Gains might only come should another speculative bubble wildly push up prices. But that also would hazard repeating the boom-bust cycle of disaster of the past decade.

The showcase reform that liberal tax reformers and Democratic legislators have sought for decades — the so-called “tax loophole” for commercial property transfers — is now within the grasp of reform by the Democratic supermajority in the Legislature.

But it now has come to light that this controversial tax loophole could have been reformed administratively without having to elect a supermajority to the legislature or putting such a reform on the ballot for voter approval. Even Prop. 13 reform advocate Lenny Goldberg admits in the San Francisco Examiner that changing the rule on when commercial properties are reassessed for ownership transfers is not “technically Prop. 13 at all.”   Jon Coupal of the Howard Jarvis Taxpayer’s Association agrees that a new law is not needed as much as enforcement of the existing law.

The controversial tax loophole involves strategic transfers of less than 50 percent of the ownership interest in commercial real estate.  Ownership transfers of more than 50 percent trigger a property tax reassessment.

An example would be where a large corporation sells more than 50 percent of its stock to another company but fails to alert county recorders of the change by recording a deed. But large corporations are probably more prone to legal record transfers of controlling ownership than small businesses.

Non-disclosure might lead to more recording of deeds

Probably of more concern is the non-recording of ownership transfers in small commercial properties.  According to a former assessor and an appraiser I spoke with, this practice is typical of how businesses are sold in foreign countries from which many immigrant business owners come. Sale documents between buyers and sellers are done privately and never filed with county recorders.  The problem is as much cultural as it is legal.

However, perhaps nondisclosure of real estate sales prices would lead to more recording of deeds. Many states such as Texas, North Dakota, Alaska, Idaho, Kansas, Louisiana, Mississippi, Montana, New Mexico, Utah, Wyoming and Missouri are non-disclosure states where transaction sale prices are not available to the public.

It would be costly to enforce recorded transactions for all 857,167 small businesses in California (as of 2008) and would smack of a police state.  Appraisers told me that business owners who were non-compliant with recording ownership transfer deeds probably made it less likely that they would apply for a tax appeal in a down market lest they draw the assessor’s attention to their ownership status.

Reforming commercial property transfers no budget panacea

Another misperception is that closing the loophole on commercial property transfers would generate enough revenue to rescue social welfare programs, schools and state universities and the public pension system.  Commercial and industrial properties generated $8.91 billion in property taxes in 2011 (see Table A).

Table A — Property Tax Revenues by Property Type (2011)

Large businesses are only 3 percent of all businesses in California. And changes in ownership reflect only a little more than half of all property assessment changes, as shown in Table B.

Table B — Type of Property Tax Reassessment Increases

Thus, we’re talking at most about large commercial properties generating 1.65 percent of the $8.91 billion in property taxes from all commercial and industrial properties in 2011 (assuming all large properties transferred title in the same year).  Again, the reality doesn’t match the public perception.

Progressive political culture may deter tax compliance

The reality is that reforming controlling ownership property transfers would be unpopular, politically incorrect and practically impossible without a police state.  Shifting California to a nondisclosure state might help.   But the public perception is that nondisclosure is not politically Progressive.

The opportunity that Democrats have awaited for decades of reforming commercial property ownership transfers under Prop. 13 may be nothing but a symbolic victory used to justify a supermajority power grab in the Legislature.

If California is going to resolve its longstanding budgetary and tax problems and keep a market-based democracy intact, the supermajority Democrats are going to have to run the state on more than demonization of big business and draconian tax changes.