Here’s yet another reason more homeowners will choose not to sell. What politicians don’t understand is money. Tax more of it and see it dry up. In “Taxachusetts,” reports the editorial board of The Wall Street Journal, politicians want to tax high-end home sales by 2%. They write:
‘Affordable housing” is a noble goal and the mother of endless dim policies. The latest counterproductive effort is a push in Massachusetts to fund home construction by taxing home sales.
Gov. Maura Healey recently gave her blessing to Bay State towns and cities that want to tax home sales. The Affordable Homes Act she announced this month would let municipalities place a 0.5% to 2% tax on the proceeds of sales above $1 million. Instead of going into a general fund, the revenue would be set aside to support housing that the state deems affordable.
The $1 million sale threshold may sound forgiving, but not in today’s Massachusetts. Fifty-three percent of homes on the market in Boston in July were asking more than that amount, according to a study from real-estate company Point2. On a home selling for $1.3 million, the new tax could be the equivalent of a 43% property-tax increase.
That would tighten the state’s already firm pinch on Bay State home residents. The top state tax rate on individual income leapt to 9% from 5% this year, and it’s now the nation’s seventh-highest. The state levies its own real-estate transfer tax of about 0.46% of each sale’s entire value. And the median property tax bill was about $5,000 in 2021, according to Census Bureau data. The state is quickly reclaiming its old “Taxachusetts” nickname.
The transfer tax also includes several carve-outs. In counties where the median sale price is above $1 million, the fee kicks in only above the local median. That means Nantucketers won’t pay on sales of less than about $2.9 million. That may spare some home sellers, but so much for tax “fairness.”
In return for this pain, residents would merely add to the state’s already mammoth housing fund. “We have billions of dollars available to us to spend on housing, and the city of Boston has hundreds of millions of dollars available to them,” said former Gov. Charlie Baker last year when Boston Mayor Michelle Wu pushed the transfer tax idea.
New Gov. Healey has since launched a new Office of Housing and Livable Communities with nearly $1 billion in initial funding. No amount of funding will satisfy Ms. Healey and Democratic mayors, who want to make housing much more of a public enterprise. The new taxes never end in a one-party progressive state.
Action Line: Politicians shouldn’t think of residents like they’re a piggy bank to withdraw from. If you’re looking for a better America, start your search with Your Survival Guy’s 2023 Super States. Then, click here to subscribe to my free monthly Survive & Thrive letter and be among the first to receive Super States updates.
E.J. Smith - Your Survival Guy
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