Seven out of ten Californiansbelieve they are overtaxed, and the tax hikes just keep coming.
Not just at the state level, but also at the local level, with a wave of new local real estate taxes.
In 2022, voters were convinced to pass Measure ULA. Billed as a “mansion tax,” the idea was to tax sales of high-end real estate to fund investments in affordable housing.
The tax would be triggered around the $5 million level (currently, 4% of sales worth $5.3 million or more).
Voters passed Measure ULA easily. Given the high cost of housing in LA, it was obviously an attractive idea. But it was doomed to fail.
The iron rule of taxes is that when you tax something, you get less of it. In this case, fewer real estate sales than would have happened without the new tax.
Wealthy homeowners rushed to offload homes before the April 1, 2023 deadline. And after that, sales slowed dramatically.
Odd real estate prices started appearing — like the asking price for the home once owned by Olympic snowboarding legend Shaun White, which isfor sale for $4.99 million. Lots of homes have been priced just below the Measure ULA threshold, likely to avoid the tax.
Worse, the term “mansion” was misleading. The tax applied to all real estate, including — crucially — apartment buildings.
That meant investors were less interested in building new “affordable housing” in the form of apartments. They knew that whenever they sold those buildings, they’d have to pay the “mansion tax.” Or they could pass the cost along sooner — in the form of higher rents.
Source: California Post – Breaking California News, Photos & Videos
