In the fall of 2023, voters in the city of Los Angeles approved a “mansion tax” that would impose a new transaction tax on any real estate sale over $5 million. The referendum was very popular, passing with nearly 58% of the vote and calling for the following:
- A 4% tax on properties sold or transferred for more than $5 million and a 5.5% tax on properties sold or transferred for more than $10 million;
- Establishing the House LA Fund within the city treasury to collect additional tax revenue; and
- Allocating revenue to projects that address housing availability at certain income thresholds and homelessness prevention.
Early signs suggested the “Mansion Tax” was an epic failure. LA elites swiftly sold their homes and left the area. The tax completely crushed the area’s high-end market.
The negative effects are continuing. A new report underscores what a spectacular failure the “Mansion Tax” has been, blocking new home construction, wiping out jobs, and failing to reap the money promised in the 2023 ad campaigns.
LA’s “mansion tax,” sold to Angelenos as a way to tax the rich and boost housing, has instead blocked the building of 9,100 homes, wiped out 16,650 full-time construction jobs and cost $452 million in revenue.
A damning new report says the tax, officially known as United to House LA, or ULA — has had a negative impact on the city’s high-end and multi-family real estate markets and collected less than half what it was expected to generate to tackle the city’s housing crisis.
The ULA was expected to raise about $900 million a year, or $2.7 billion over its first three years. Instead, it brought in about $1.2 billion.
…Despite its nickname, LA’s “mansion tax” applies far beyond luxury homes. Apartment buildings, offices, warehouses and vacant land can all trigger the tax if they sell above the thresholds.
About 1,000 of the 9,100-plus new homes lost would have been affordable units — the very thing the tax was supposed to create — according to RAND corporation, a non-partisan, nonprofit research group.
LA’s ‘mansion tax’ backfires spectacularly as thousands of homes and jobs vanish https://t.co/1j1HG7SsCh pic.twitter.com/c7zEHngIGB
— New York Post (@nypost) October 4, 2026
I am sure Legal Insurrection readers will not be surprised to learn that the “Mansion Tax” was championed by socialist mayoral hopeful Councilwoman Nithya Raman.
The RAND Report, “The Effects of the Measure ULA (United to House LA) Transfer Tax on Economic Development and Municipal Finances in Los Angeles”, was released in May 2026 and is quite damning. While the tax has raised about $1.185 billion for affordable housing and tenant support since taking effect in 202, the tax has also reduced high-value property sales, slowed apartment construction, and lowered other tax and fee revenue for the city, schools, county, and state.
Another study’s findings are borne out by evidence that construction permits have plummeted since the 2023 tax was enacted.
…[A]ccording to a working paper from Yingru Pan, a Ph.D. student at UCLA Anderson School of Management, Measure ULA has had the unintended consequence of curbing construction of both budget-friendly and luxury housing across L.A., even as development in the suburbs has expanded.
In her 60-page analysis, titled “Taxing the Top, Building the Bottom? The Impact of Los Angeles’ Mansion Tax on Housing Supply and Affordability,” Pan argues that compared to 2018-2019 levels, before the passing of Measure ULA, overall construction permits in Los Angeles plummeted 40%.
A closer look at the housing data shows that multifamily construction permits fell 27%, while permits for single-family homes dropped 45%.
“Developers likely hesitated to pursue even moderately priced multi-family units due to perceived financial risks, such as cascading tax impacts on project valuations or uncertainty about future policy adjustments,” Pan writes.
According to the RAND report’s estimates, Measure ULA reduced high-value real estate transactions by about 31 percent and reduced permits for large apartment projects by about 30 percent. The authors estimate that these changes led to $452 million in lost public revenue through early 2026, including about $80 million for Los Angeles Unified School District, and that more than 16,000 full-time-equivalent construction jobs were not created. The report also finds that apartment buildings sold under the tax saw slightly faster rent growth afterward, suggesting some of the tax cost may be passed on to tenants through higher rents.
The RAND report authors offered some “fixes”, including a change to the tax so newer commercial and apartment properties are exempt for 15 years, while older commercial and apartment properties would face a lower tax rate. They also recommend keeping the current rate for high-value single-family home sales. They estimate these changes would increase revenue, housing construction, and jobs.
PSA: “Tax the rich” is not an economic plan.
LA’s “mansion tax” deterred an estimated 9,100 homes, cost 16,650 construction jobs and $452M in revenue.
Now Mamdani is selling NYC the same “tax the rich” philosophy.
How many times do we have to learn this lesson? pic.twitter.com/GDtC5cenmb
— Liz Benichou (@basedinmalibu) October 4, 2026
Interestingly, the report also recommends making ULA affordable-housing funding rules more flexible because current requirements may make projects harder to finance and create risks for the Los Angeles Housing Department.
However, under the likely upcoming socialist mayorship Los Angeles is likely to be enjoying shortly, the “Mansion Tax” will continue to be a rigid bureaucratic weapon of fiscal mass destruction.
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