They were told they were voting for a “mansion tax” on millionaires and billionaires.
asserted
they → tell → millionaires
Far less attention was paid to apartment buildings, commercial property and development sites.
asserted
attention → pay → buildings
Start your day with all you need to know
asserted
you → start → all
Morning Report delivers the latest news, videos, photos and more.
Sell an apartment building above the threshold?
asserted
Report → deliver → threshold
Today, ULA adds a 4% tax to qualifying property sales above $5.4 million and a 5.5% tax to sales of $10.9 million or more — on top of the city’s existing transfer tax.
asserted
ULA → add → tax
And those dollar thresholds are set to increase automatically, tied to inflation.
asserted
thresholds → set → inflation
Even worse, once a sale crosses the threshold, the tax applies to the entire sale price — not just the amount above the threshold.
asserted
tax → cross → threshold
Sell a property for just over $5.4 million and the ULA tax alone can top $216,000.
asserted
tax → sell → 216,000
The distinction matters because politicians love talking about who supposedly pays a tax.
asserted
who → matter → tax
What matters in the real world is what transaction government is taxing — and how people change their behavior to avoid it.
asserted
people → matter → it
Tax cigarettes and politicians expect people to smoke less.
asserted
people → tax → cigarettes
Tax carbon and they expect people to emit less carbon.
asserted
people → tax → carbon
Tax high-value real-estate transactions and apparently everyone is supposed to be shocked when people engage in fewer high-value real-estate transactions.
asserted
people → tax → transactions
Researchers Michael Manville of UCLA and Mott Smith of USC estimate that after ULA took effect, the odds of a Los Angeles property selling above the tax threshold fell by as much as 50%.
asserted
property → estimate → %
Their strongest evidence showed transactions involving commercial, industrial and multifamily properties fell an estimated 30% to 50%.
asserted
transactions → show → properties
That’s the real-estate economy.
asserted
That → ’ → ?
Then comes the real absurdity: housing construction.
asserted
absurdity → come → ?
Los Angeles imposed a tax to produce more housing that researchers now estimate is causing the city to produce less.
asserted
city → impose → less
New housing gets built because somebody believes that after buying land, getting permits, paying fees and financing construction, there will be money to be made.
asserted
somebody → build → construction
Land changes hands.
asserted
Land → change → hands
Apartment buildings are bought and sold.
asserted
buildings → buy → ?
Investors can put their money somewhere else.
Make those transactions more expensive and some housing projects simply don’t happen.
asserted
projects → put → money
Slap another 4% or 5.5% on qualifying property transfers and some deals no longer pencil.
asserted
deals → slap → transfers
Fewer sales carry another cost.
asserted
sales → carry → cost
Because California properties are generally reassessed when ownership changes, Manville and Smith estimate ULA initially reduces property-tax revenue to local governments by roughly $25 million annually, with the losses compounding over time.
asserted
losses → reassess → time
A new tax is suppressing the activity that generates an existing tax.
Meanwhile, Los Angeles is spending the proceeds.
asserted
Angeles → suppress → proceeds
As the California Post reports, the city just authorized a record affordable-housing funding round, with hundreds of millions of dollars coming from ULA.
asserted
hundreds → report → ULA
Of the latest funding round, $55.5 million is going toward 3,713 existing affordable-housing units rather than new construction.
asserted
million → go → construction
That includes properties on Skid Row where court records describe allegations of bedbugs, cockroaches, rats, sewage leaks and human waste.
asserted
records → include → bedbugs
That’s a long way from the sales pitch about producing tens of thousands of affordable homes.
asserted
That → ’ → homes
And it raises another question: After doing all this economic damage to raise the money, are Los Angeles politicians even spending it wisely?
asserted
politicians → raise → it
The Post’s reporting gives taxpayers plenty of reason to ask.
asserted
reporting → give → reason
One developer quoted by the Post distilled this entire fiasco into seven words: “You are taxing housing to pay for housing.”
Hard to improve on that.
asserted
You → quote → that
The sales pitch focused on who would write the check.
asserted
who → focus → check
It ignored what the tax would do.
asserted
tax → ignore → what
Transactions decline.
asserted
Transactions → decline → ?
Projects don’t pencil.
asserted
Projects → pencil → ?
Housing that otherwise might have been built never gets built.
uncertain
that → build → ?
Politicians sell taxes by identifying an unpopular taxpayer and promising everyone else something for free.
asserted
Politicians → sell → something
But Los Angeles didn’t tax rich people.
asserted
Angeles → tax → people
…and 4 more, not listed.
The Aporia
