Los Angeles residents will vote on a ballot measure called the “mansion tax,” which will require a 4% tax on the sale or transfer of properties valued at over $5 million and a 5.5% tax on the sale or transfer of properties valued at $10 million, Ballotpedia reports.
According to a city analysis, if the ballot measure is enacted, it will produce roughly $600 million to $1.1 billion each year. A $5 million property sale will generate $200,000 in taxes.
The measure declares it will set aside at least 92% of the proceeds from the tax to fund affordable housing under the Affordable Housing Program.
If the measure is passed, the Affordable Housing Program would fund the development of multifamily housing, homeownership opportunities and alternative housing opportunities.
Proceeds from the tax measure would also go to the Homeless Prevention Program, which will fund rental and income assistance, tenant harassment assistance, eviction defense and protection programs, and a tenant council.
“While I would support the idea of a dedicated revenue stream for homeless housing and services, I believe we must first demonstrate to the public they can trust the government to utilize these funds effectively and efficiently,” Rep. Rick Caruso said, per the Los Angeles Times.
A study done by UCLA found that the measure would impact about 4% of property sales and transfers in Los Angeles. Almost three-quarters of the generated money will come from taxing properties worth $10 million or more.
New York City recently passed a mansion tax, and Connecticut has one too.