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How Luxury Real-Estate Can Have Redeeming Social Value for the Rest of Us
Some 17 local governments, the Washington, D.C.-based Institute on Taxation and Economic Policy (ITEP) details in a just-released report, are now levying a “mansion tax” on the sale of high-end residential properties.
Mar 25, 2024
Back in 1928, the bold and brassy mobster Al Capone spent $40,000—about $851,000 in today’s dollars—on “a stately Spanish Colonial-style villa” that sat on an isle right off Miami’s coast.
Local historic preservationists would end up cherishing that villa for years after Capone’s 1947 passing. They apparently didn’t cherish it enough. The property’s current corporate owner demolished Capone’s villa last summer and now has the empty lot on sale for $23.9 million.
Meanwhile, in nearby Miami Beach, deep pockets are buzzing about a $125-million “two duplex penthouse” that’s going to be topping a brand-new 15-story luxury tower. The co-developer on the project expects no problems selling off his tower’s 30 opulent abodes. And why should he? Luxury dwellings are selling quite nicely in America’s most fashionable rich people-friendly neighborhoods.
Proposals to either enact or expand mansion taxes have so far passed into law a remarkable 86% of the times they’ve appeared on local ballots.
Greater Miami—in 2023’s last quarter alone—saw its typical luxury-home sale price jump nearly 9% over the year before. In the heart of California’s Silicon Valley, last-quarter prices for luxury dwellings in 2023 rose 9.5% over 2022. The sellers of those dwellings pocketed a median $4,559,500 after having their homes on the market for just 15 days.
In New York City, luxury realtors are flashing even broader smiles. One Manhattan property sold for $75 million in 2023’s last quarter, with another topping $65 million and still another grabbing close to $50 million. Out west, Colorado’s Aspen registered two last-quarter sales in the nation’s top 10, one at $60 million and another at a mere $40 mil.
What do deep pockets spend their time doing once they’ve closed on one of these super deals? They start concentrating, The Wall Street Journal reports, on their closets. Today’s rich are hiring “closet designers” and then throwing “closet reveal” parties to share their favorite new storage spots with friends and family. One elite closet designer, Design Galleria CEO Matthew Quinn, has collected over $1 million “for a two-story closet” that features “both an elevator and a spray-tan booth.”
An outrageous display of out-of-control conspicuous consumption? Sure. But the proud owner of that manse with the two-story closet also figures to get that million-plus back—and then some—when that luxury abode goes back on the market. The demand for housing fit for billionaires is simply exploding. Four decades ago, the United States hosted just 13 billionaires. Now we have some 735.
Fabulous mansions, in other words, figure to be fetching top dollar deep into the foreseeable future. Could these sales possibly have any redeeming social value for the rest of us? A growing corps of progressive local lawmakers believe they most certainly could.
Some 17 local governments, the Washington, D.C.-based Institute on Taxation and Economic Policy (ITEP) details in a just-released report, are now levying a “mansion tax” on the sale of high-end residential properties. Most all of these levies have gone into effect since 2018.
The mansion sale levies enacted so far, ITEP researchers calculate, are currently raising “nearly $3 billion” in annual revenue. Big cities are collecting the bulk of that revenue. In New York, home to the original modern mansion tax, luxury home sales over $25 million face a special 4.58% tax. San Francisco’s top tax rate on over $25-million transactions sits at 6%.
Other cities are taxing mansion sales at more modest levels. The city in the heart of Silicon Valley, San Jose, subjects mansion sales over $10 million to a 1.5% tax.
Still other cities are looking overseas to nations like Denmark for their mansion tax inspiration. Local lawmakers in the District of Columbia, for instance, are considering a higher “new marginal tax bracket on homes worth more than $2 million.” Across most of the United States today, by contrast, “flat-rate” property taxes currently rule. The predictable result: Low- and middle-income homeowners pay a higher share of their income in property taxes than America’s most affluent.
Moves to change that reality, the new Institute on Taxation and Economic Policy Local Mansion Taxes report suggests, would be enormously popular. Proposals to either enact or expand mansion taxes have so far passed into law a remarkable 86% of the times they’ve appeared on local ballots.
But those appearances remain relatively rare. That could change. You could help change it. How best to begin that change effort? How about emailing your favorite local lawmakers a copy of ITEP’s fascinating new deep dive into what could become our mansion tax future.
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Tax the Rich Men North and South of Richmond—and Join a Union Too
We could better tax the rich men near and far from Richmond by getting rid of the special low tax rate on capital gains income and making it the same as taxes on work.
Sep 10, 2023
Oliver Anthony’s smash country hit “Rich Men North of Richmond” has gone through an entire story arc in just a few weeks. When conservatives heard the song’s anger, apparent ire toward northerners, and lyrics punching down at people on welfare, some lauded it as an anthem for our times — helping send it to the top of the Billboard charts, and inspiring Fox News to reference it in the first question at last week’s Republican presidential debate.
But Anthony changed the narrative late last week by saying: “It was funny seeing my song at the presidential debate ’cause it’s like, I wrote that song about those people.” He also tweeted “I. Don’t. Support. Either. Side. Politically. Not the left, not the right. I’m about supporting people and restoring local communities.”
Fair enough. Let’s leave the song, particularly the parts about welfare and obesity, behind. But lines like “I’ve been sellin’ my soul, workin’ all day, overtime hours for bullshit pay” and “your dollar ain’t shit and it’s taxed to no end ’cause of rich men north of Richmond” strike a truthful chord. For those of us at the Institute on Taxation and Economic Policy who examine tax policy through the lens of how much working (and poor) people are taxed compared to rich men north (and south) of Richmond, it’s hard not to take this as a jumping off point to amplify some important facts.
Oliver Anthony - Rich Men North Of Richmondwww.youtube.com
In Virginia, where Anthony is from, middle-class, working-class and poor families all pay a larger share of their income in state and local taxes than households in Virginia’s top 1 percent. That’s because the state relies more on sales taxes, which poor and working families disproportionately shoulder, and less on income taxes that better target the rich. Virginia lawmakers also let multinational corporations stash their earnings in tax havens to avoid state taxes, something local businesses can’t get away with. The tax laws in most other states create the same problems.
There is a better way. While Gov. Glenn Youngkin recently pushed for more high-income and business tax cuts, some Virginians are trying to increase what the wealthiest pay and redirect resources toward families with children. And some states, like Minnesota, already have a system that does more for kids and communities by taxing rich people and corporations.
I’ll admit I’ve been humming lines from Oliver’s song, but what sticks in my head more is the response from labor balladeer Billy Bragg, who’s been refining his political and economic views for decades.
Nationwide, income from wealth gets a special lower tax rate, so someone whose money comes from their big investment portfolio pays less than someone who earns the same amount by working. And don’t get me started on the breaks available to the uber-rich, whose stock portfolios balloon until they pass them on to their children without anyone ever paying anything on the increase. Finally, wealthy corporations often dodge federal taxes — in 2020, we found that 55 of the nation’s most profitable corporations paid zero in federal income taxes.
We could better tax the rich men near and far from Richmond by getting rid of the special low tax rate on capital gains income and making it the same as taxes on work; by cracking down on tax avoidance by multinational corporations; and by turning state tax codes right side up, replacing sales taxes with new income tax brackets for earnings over $150,000, over $250,000, and over $1 million. This would generate the money needed to deliver more for working families — from child care, to health care, to affordable college. And it would raise that money from those who derive the most benefit from capitalism.
I’ll admit I’ve been humming lines from Oliver’s song, but what sticks in my head more is the response from labor balladeer Billy Bragg, who’s been refining his political and economic views for decades. Bragg’s new song, “Rich Men Earning North of a Million,” taps proud musical traditions that give voice to economic hardship, from spirituals to the blues, bluegrass, country, rock and hip-hop.
Billy Bragg - Rich Men Earning North of a Millionwww.youtube.com
I’ve added Bragg’s newest to my playlist. And my hunch is that Anthony wouldn’t like me citing his song any more than he liked the Republicans doing so. But I can’t ignore the anger of someone working for “bullshit” pay who is pissed off at the power that rich men have in our political system and in our tax code. I’ll take the sentiments from both musical voices to honor working class narratives, channel feelings of disempowerment, and push for a more economically just country. Starting with better taxing rich men, wherever they live.
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Progressives Say IRS Cuts Should Be 'Off the Table' as GOP Reneges on Debt Ceiling Deal
With House Republicans pledging to limit new spending on a range of programs, Democrats are "no longer obliged to move forward with the IRS cuts" in the handshake deal, said more than a dozen groups.
Jul 14, 2023
More than a dozen economic justice groups on Friday called on the U.S. Senate Appropriations Committee to move forward with fully funding the Internal Revenue Service, arguing that Republican actions have nullified a debt ceiling deal struck by the Biden White House and GOP leaders.
Under the terms of the handshake agreement, the nation's borrowing limit was suspended for two years in exchange for a two-year limit on non-military spending—rescinding Covid-19 relief funds; clawing back more than $20 billion in IRS funding that was a signature element of the Democrats' climate and healthcare law, the Inflation Reduction Act (IRA); and enforcing new work requirements for recipients of nutritional and economic aid.
Soon after the deal was reached, said groups including Groundwork Action, Americans for Tax Fairness, and the Institute on Taxation and Economic Policy (ITEP), House Speaker Kevin McCarthy (R-Calif.) and other powerful Republicans made clear they have no intention of sticking to the funding cuts that were agreed upon.
As Common Dreams reported in June, less than two weeks after the debt ceiling deal had been reached, House Appropriations Committee Chair Kay Granger (R-Texas) said the spending levels in the agreement were "a ceiling, not a floor" for 2024 spending and that Republicans are free to limit new spending in appropriations bills for the coming year.
"To be clear, Republican demands for IRS cuts were never sensible. The cuts will cost the government more than they will save and will make tax filing more complicated for middle-class Americans."
"In doing so, House Republicans are underfunding the very programs the agreed-upon IRS cuts are designed to protect," said the groups in their letter Friday. "Thus, your committee is no longer obliged to move forward with the IRS cuts in its appropriations and should instead fully fund the IRS at the levels President Biden requested in his FY2024 budget."
As the Senate committee prepares to mark up appropriations legislation, said the organizations, it should "include all of the funding for the IRS requested by President Biden in his FY2024 budget, amounting to $14.1 billion in annual discretionary appropriations for the IRS, and to preserve the $79.4 billion in long-term funding included in the Inflation Reduction Act."
"If Republicans have decided that the deal is off, then further IRS cuts should be completely off the table," ITEP federal policy analyst Joe Hughes told Common Dreams on Friday.
IRS funding aimed at cracking down on wealthy Americans who cost the federal government—and working families—tens of billions of dollars annually by evading taxes was a key provision of the IRA last year. After becoming House Speaker in January, McCarthy made clear his intention of cutting the funding.
Funding for the tax agency is "necessary to support a fair tax system, crack down on wealthy tax cheats, guarantee the highest quality of taxpayer services for all Americans, and ensure that the IRS can build an effective system that would empower taxpayers to file their taxes for free," said the groups.
As Common Dreams reported in June, the GOP's proposed cuts to the IRS would cost the federal government in $40 billion in lost revenue.
"To be clear, Republican demands for IRS cuts were never sensible," Hughes said. "The cuts will cost the government more than they will save and will make tax filing more complicated for middle-class Americans. Meanwhile, the top 1% and big multinational corporations will use their armies of accountants to cheat the system out of taxes that they legally owe."
While working to protect the wealthiest Americans from tax enforcement, the Republicans are also intent on scrapping an IRA provision which required the IRS to develop a tax filing system that would be free for all Americans—saving them hundreds of dollars per year in fees they currently pay to private companies like H&R Block and TaxSlayer to file their taxes.
A seven-month congressional investigation found this week that those companies send the private data of clients to tech giants like Meta and Google, constituting a "shocking breach" of privacy, according to Democratic lawmakers.
But the Republican-controlled House Appropriations Committee included a rider in its Financial Services and General Government (FSGG) legislation that would block the IRS from creating a simplified, free system for taxpayers.
"We strongly urge you to fully fund the IRS so that it can enforce tax laws against wealthy tax cheats and deliver 21st century customer services and oppose any efforts to incorporate harmful riders into the appropriations process," the groups told the Senate committee. "We have an opportunity to provide a free and fair option to millions of tax filers in America, making the tax system simpler and more equitable. Let's not miss this opportunity."
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