The issue here is it’s hitting the tier of people who are just able to get in on a house purchase. Only to have that price raised on them after purchase, through taxes. Especially irksome when it’s known they’ve overpaid just to get a place to land. Will the taxes go down if they sell for less? Probably not.
Mansion Taxes Could Generate Billions Nationally Each Year
States with existing mansion taxes should increase their rates on the highest-value homes. States without these taxes should enact them, with rates that get progressively higher as the value of the house goes higher. If every state enacted progressive transfer taxes on high-value homes, billions of dollars could be generated for state budgets across the country. Taxing the top 10 percent, 5 percent, and 1 percent of home sales in every state could generate a total of $8.7 billion annually.[23] (See Figure 3.)
To give a state-specific example, consider a hypothetical proposal that adds a progressive marginal tax to sales of the top 10, 5, and 1 percent of homes in Virginia (meaning homes sold at or above $900,000, $1.1 million, and $1.9 million, respectively.) Applying a marginal tax rate of 2 percent, 3 percent, and 4 percent to each of those thresholds would generate an estimated $128 million annually. If this funding were earmarked for the state’s Affordable Housing Trust Fund, which has received just $18 million since fiscal year 2018, it could increase investment in that fund tenfold in just a single year.[24] Further, since a real estate transfer tax would create an ongoing revenue source, it could be used to fund housing initiatives like rental and operating subsidies that are difficult to finance with one-time state investments.
By the article’s explanation, the top 10, 5, and 1 percent are not introductory price levels. These are high-value homes, not starter homes.
It’s all in the implementation. I live in a high cost of living state so my house might appear to be in a higher overall percentile. However it’s an 80 year old starter home, so I don’t think it’s reasonable to subject me to a mansion tax.
Too many of these attempts to tax the rich don’t seem to take into account how expensive some places are and hurt those who are not close to wealthy
Whatever it costs, old or new, is what they’re talking about (within the state, as my quote mentioned). It doesn’t take into account whether you think your house should be valued where it is. This isn’t a valid criticism of the article.
Well it should at least be marginal like tax brackets not just +/- . Say tax starts at 500k. Then for a sale at 510k only that last 10k is taxed. So selling for more still nets more no weird spots where it makes sense to sell for less just to avoid tax.
The issue here is it’s hitting the tier of people who are just able to get in on a house purchase. Only to have that price raised on them after purchase, through taxes. Especially irksome when it’s known they’ve overpaid just to get a place to land. Will the taxes go down if they sell for less? Probably not.
More squeeze on the little guy.
By the article’s explanation, the top 10, 5, and 1 percent are not introductory price levels. These are high-value homes, not starter homes.
Take a look at homes around cities that actually have career options. Homes that used to cost 400k are now going for over a million.
And what echelon of sale price do they fall under?
It’s all in the implementation. I live in a high cost of living state so my house might appear to be in a higher overall percentile. However it’s an 80 year old starter home, so I don’t think it’s reasonable to subject me to a mansion tax.
Too many of these attempts to tax the rich don’t seem to take into account how expensive some places are and hurt those who are not close to wealthy
Whatever it costs, old or new, is what they’re talking about (within the state, as my quote mentioned). It doesn’t take into account whether you think your house should be valued where it is. This isn’t a valid criticism of the article.
If there’s a threshold it may convince sellers to stay under it to avoid extra levies, e.g. $500k
Well it should at least be marginal like tax brackets not just +/- . Say tax starts at 500k. Then for a sale at 510k only that last 10k is taxed. So selling for more still nets more no weird spots where it makes sense to sell for less just to avoid tax.