State, City Governments Propose Various Tax Programs to Fund Affordable Housing
Local jurisdictions hope to use the taxes to support affordable housing development, but some of the proposed taxes face opposition from business groups
July 17, 2024
Image: Adam / stock.adobe.com
Some cities, such as Los Angeles, are implementing mansion taxes to fund affordable housing.
Amid the ongoing housing crisis, state and city governments are exploring new ways to fund more affordable housing. According to Route Fifty, home prices increased by about 60% over the past decade, and one-quarter of renters spend more than half of their income on housing. To alleviate these cost burdens, there are a number of tax programs city and state jurisdictions are looking to explore, ranging from Denver’s proposed sales tax aimed at generating $100 million for housing annually to real estate transfer taxes—also known as "mansion taxes"—in places such as Los Angeles and Boston. However, not all groups are in favor of these programs.
The mansion tax is not popular with business groups, specifically realtors. In Boston, they lobbied hard against it. The same is true in L.A., where the amount raised this year is far below the projected $672 million the city said the mansion tax would reap annually. Local real estate agents say that’s because the initiative has put a damper on luxury home sales, prompting wealthy prospective buyers to look elsewhere.
