Sacramento Mayor Kevin McCarty is seeking an increase in the property transfer tax—imposed every time a home is sold—to help address the needs of “unsheltered people” in California’s capital. The proposed hike would apply only to homes selling for more than $1 million, and the mayor estimates it would raise between $8 and $9 million.
“We think having a fair adjustment is something that we can put before the voters,” McCarty told reporters.
However, voters and taxpayers might take note that both the city and state have already invested heavily in programs for the unsheltered. Since the 2019-20 fiscal year, California has provided about $37 billion in funding for housing- and homelessness-related initiatives, according to the state’s nonpartisan legislative analyst.
Sacramento resident and California Globe editor Katy Grimes observes that the city has provided tiny homes, renovated hotels, and RV trailers—most of which remain empty. Meanwhile, the streets of California’s capital still grapple with drug addicts who, according to Grimes, “don’t want housing or treatment.” This situation stands in contrast to those who might be considered the state’s true homeless population.
The ongoing challenges highlight that simply increasing taxes or spending more money may not be the ultimate solution. For instance, former proposals for tax reform in California recommended cutting tax brackets to two and replacing the corporation and state sales tax with a 4 percent tax on business activity. However, Speaker Bass failed to bring those recommendations to a vote, leaving a volatile tax system in place with no relief for working families.
Recurring Governor Jerry Brown and current Governor Gavin Newsom have shown little interest in comprehensive tax reform. Instead, California’s ruling class tends to view punitive taxes as the answer to many issues. Calling a tax hike an “adjustment,” as Mayor McCarty does, does not change the fundamental reality.
Ironically, this proposal to raise taxes comes from a city that last year paid its city manager, Howard Chan, a salary of $789,000, according to the Sacramento Bee. That amount is nearly twice the $400,000 salary of the President of the United States and more than three times Governor Newsom’s $242,295 salary.
Clearly, the problem is not a lack of money.
As Christopher Calton notes, solving homelessness requires more than just housing. Transformative solutions are needed—solutions that, as C.S. Lewis might say, have not been tried and found wanting but rather have been found difficult and left untried.
Homeowners, taxpayers, and the unsheltered all deserve better.
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