Solicitors are being posted outside the Gelson’s Grocery Store, Bob’s Market and possibly other neighborhood store locations to solicit signatures for a petition to place a new Santa Monica property “transfer tax” (i.e., sales tax) onto this November ballot.
The proposal would add a whopping 5% tax onto the existing 0.6% tax that is currently applied to real estate properties that sell for over $8 million. This tax would apply to the sale of most rental and commercial properties in Santa Monica, many of which are owned by individuals (“mom and pop” owners). The tax is applied to the sales value, regardless of whether or not the seller is making a profit on the sale or having to sell at a loss.
These solicitors have been paid by Santa Monica Mayor Sue Himmelrich and her lawyer husband who are out buying signatures the easy way, by just signing a check in order to get their tax proposal on the ballot. Just another sad example of the power of the wealthy to influence our lives.
As proposed, the new tax is poorly structured and terribly unfair. Consider a property that sells for one dollar less than $8 million versus one that sells for one dollar over $8 million. In the first case, the seller would pay a sales tax of $48,000. In the second, the unfortunate seller would pay $448,000, just for selling at a marginally higher price. Are Himmelrich and husband aware of the blatant unfairness of the proposed structure or are they just bad at math?
The solicitors I spoke to tried to pass off this big tax increase as a tax that would affect only high-priced properties. But we all should be aware that new taxes in fact, affect us all. Sellers of these “high-priced” properties will need to increase their sales prices in order to cover the additional tax cost (thereby adding to even higher property prices in our city). The buyers, in turn, will need to increase rents and/or prices of services (e.g., restaurants, retail shops), in order to cover the higher cost of the property purchased. Who then will really pay for these tax cost hikes in the end? We poor renters and consumers will pay (that’s who), making this city even more unaffordable to live in.
And once we open this gate to higher “transfer” taxes on the sales of our properties, will we ever be able to shut it again? If this one is approved, you can bet that there will be future proposals to increase transfer taxes on the sales of our homes and condos
The solicitors are pitching the petition to us on the basis of raising new funding to build more “affordable” housing and more housing for the homeless in Santa Monica, as well as for the Santa Monica school fund (without specifying the uses of the new funds). All seemingly noble causes that are sure to elicit the sympathies of our resident voters and thus guarantee a lock on approval. We residents seem to fall for these “do-good” reasons for increasing our taxes in every election cycle.
Yet, we should know by now that the billions in tax revenues that have been raised for the homeless and “affordable” housing have not solved these problems. If anything, they have only gotten worse. Throwing more money at these problems will not solve them. They have deeper roots that require different approaches. On the contrary, the case can be made that subsidies to the homeless and others that cannot afford basic necessities in fact only serve to make these classes of people more dependent on government while diminishing their drive to improve their situations on their own, such as through discipline, education and employment.
And as far as more funding for our Santa Monica schools … please, when will this recurring plea ever end? We have diminishing school enrollments and now are relying on students from nearby cities to fill our classrooms. It’s not clear that we Santa Monica taxpayers were told that we would be paying taxes for the education of students from other cities. And the school district has been on a mad building spree these past couple of years, trying to use up past tax funding that we approved. The monumental structures being built at our Santa Monica schools should be the envy of every school district in the country, even if we don’t have the students any more to fill them.
This initiative by Mayor Himmelrich and husband to increase property “transfer” taxes may sound noble but it is a bad idea in so many ways. It will do no good to us residents of Santa Monica. Please do not sign it. And if it should make it to the November ballot, please vote against it.
Faustino Garza, Santa Monica