A tax on mansion sales in Los Angeles was intended to raise millions to fight homelessness. It hasn’t quite worked out that way.
Instead, wealthy Angelenos rebelled, putting the brakes on sales of homes priced at $5 million and above — those targeted by the initiative — with the result that the tax has raised far less money than expected since taking effect April 1.
The money is intended for eviction prevention, tenant outreach, emergency assistance, affordable housing acquisition and more. Backers of the tax, which passed via a ballot initiative with 58 percent of the vote last year, say they expect sales to pick up once the real estate market adjusts to the change. But taxpayer rights groups and landlord organizations have filed suit to stop the tax, and until the litigation is resolved, some owners will hold off selling, and city officials will proceed cautiously on spending money they might end up giving back.
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Meantime, debate over the legislation has laid bare the vast gap between the rich and the poorthat’s come to characterize life in Los Angeles, and much of the country, in recent years. The city’s homelessness crisis, with more than 40,000 people living on the street, is related to a shortage of affordable housing so severe that even some with jobs cannot afford to rent property, much less buy it — problems that the so-called “mansion tax” is intended to address.
The homeless population increased by 32 percent from 2018 to 2020, but has grown more slowly in the years since, according to the Los Angeles Homeless Services Authority. Los Angeles has long been a land of extremes, but homelessness may be the ultimate test of whether the liberal dream factory that makes entertainment for the globe can resolve a crisis of humanity in its own backyard.
Opponents argue that a $5 million home can hardly be called a mansion in Los Angeles these days, when the super-rich reside in properties with price tags of $20 million and above.