Massachusetts weighs a mansion tax as the “tax the rich” push heats up
The villain of “Selling Sunset”… is coming to the Dunkin’ state. Massachusetts is weighing a mansion tax of up to 2% on homes sold for over $1M, with the revenue earmarked for affordable-housing projects. Had the tax been in place in 2022, the state could’ve generated $780M. If passed, MA’s tax will join a handful of states and cities dinging pricey property sales as the US deals with a housing-affordability crisis.
Joining the fray: Six states and Washington, DC, already have a mansion tax, along with cities like NYC, LA, and Santa Fe. Chicago voters nixed a similar plan this year.
Luxury freeze: LA’s tax (4% on $5M+ home sales) raised $215M in its first year. But it’s chilled the market. Home sales above $5M fell nearly 70% in the tax’s first year.
Mass stats: The median MA home price jumped 9% to $610K in March. Supporters say the mansion tax is necessary to fight the affordable housing shortage, but critics say it could result in even fewer sales.
Taxation fixation… Americans get taxed on their income, not their net worth (and the wealthy have a lotta net worth). In 2018, US billionaires paid a lower effective tax rate than the bottom half of earners as the corporate tax rate got slashed. But pushes to level the taxing field are growing. A March poll of swing-state voters found that 70% favored raising billionaires’ taxes. Lawmakers are trying to meet the moment: Democratic Sen. Elizabeth Warren pitched a 3% tax on households worth $1B+, and President Biden proposed a 25% tax on Americans with $100M+.
The ultrawealthy get agile… US multimillionaires know how to juke the taxman. In LA, some luxury homeowners found mansion-tax loopholes like splitting properties into parts. Like Jeff Bezos, who saved $600M by moving to Miami after a capital-gains tax passed in Washington state, some wealthy Americans are picking up and moving (sometimes overseas) to avoid higher tax rates.