Recent proposals to increase revenue for the city of Los Angeles have brought forth two major changes; one to increase parking taxes and one to increase the title transfer tax. It is the second proposition that I wish to address now.
The idea is to double the tax a person pays to transfer the title of a property from $4.50 to $9 for every $1,000 of value. That means that after a sale of a home at the median value of around $500,000, there will be a tax of $4,500 instead of $2,250. That’s significant.
I understand that there is a need to create more revenue in order to balance the budget and one look at my neighborhood here in Westchester shows me how far city services have fallen below what is satisfactory, but is it wise to propose increasing the taxes on transferring titles when our current recession continues to slog along because of historic downturns in the housing market?
Where is common sense here? Many of my neighbors are under water and haven’t been able to sell because of a dead market. Reports on the national delay in jobs recovery have shown that the slowness of our recovery is partially due to the fact that people can’t sell their house and go where jobs are. In other words, our weak housing market is killing the recovery. Here in LA, property taxes have tanked and area schools suffer harshly because of it.
And the moment it appears as though the housing market is picking up steam, our city council member allows the contemplation of a tax that would make it cost more to sell your house? Step aside and allow housing prices to recover. Property values will increase and property tax revenue will rise. Pass a tax to stymie that recovery and you get fewer transactions. The fewer home sales, the less transfer title taxes you collect, and the increase in that tax rate doesn’t increase the taxes collected because people can’t sell their houses as easily.
Talk about penny-wise and pound-foolish.