One way to build affordable housing is with a “mansion tax,” a fee on high-end real-estate sales, in the form of a one-time payment at closing. Collect a modest fee on each residential real estate transaction exceeding a specific amount, say $1 million. These fees are currently in use in New York, Los Angeles and San Francisco. In L.A. the money is used for affordable housing and homelessness prevention. The amount could vary by county. Use the funds to subsidize well-built, energy-efficient affordable housing.
New York state’s flat 1% tax on any home purchase of $1 million or more dates to 1989. Seven states, plus Washington, D.C., have some form of mansion tax. Over time, buyers become accustomed to the tax.
Sure, such a fee would affect luxury house sales in the months leading up to implementation but markets typically adjust within 6 months when sales return to pre-fee levels. The wealthy are not going to stop buying real estate. “Shane Phillips of the UCLA Lewis Center for Regional Policy Studies advises governments to implement marginal taxes, where the effective rate increases gradually with every dollar spent, rather than all-or-nothing thresholds.” (The Wall Street Journal, Oct. 23)
Until we truly commit to making homeownership affordable in the state with the largest houses in the country, the media can continue to churn out depressing articles like “Would-be homebuyers can’t afford properties in their home counties.” It’s time to get serious about addressing the housing affordability problem.
Jean M. Lown, St. George
