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Seven out of ten Californians believe 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.
Take Measure ULA, for example.
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 is for 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.
So Measure ULA was self-defeating. It made housing less available, and less affordable.
Moreover, the amount of revenue the tax brought in was much less than promised. And LA struggled to spend it quickly, or responsibly.
Much of the money has funded organizations that promote affordable housing — not brick-and-mortar housing itself.
Mayor Bass promised to repeal Measure ULA last year, because it has been holding back rebuilding after the Palisades Fire. She failed because she did not get her proposal in on time to the state legislature.
It would appear that she has given up. Now, the voters may have a chance to do what she wouldn’t.
The Howard Jarvis Taxpayers Association (HJTA) zealously guards California’s Proposition 13, which restricts property tax increases.
Now, the HJTA has a new ballot initiative: The Local Taxpayer Protection Act to Save Proposition 13.
It would restrict real estate transfer taxes, and require even citizen-approved taxes to be passed by a two-thirds majority.
The new initiative has been made necessary, according to HJTA, because the California courts have been lax in defending Proposition 13 from a new wave of local property taxes.
The HJTA has been collecting signatures, and rumor has it that they have qualified for the ballot — though it will be weeks before California voters know for sure.
If so, look out: Californians may be ready to push back.