Commentary
She emphasized the need for the city’s affluent residents to support the initiative through personal, private sector, and philanthropic funds to acquire properties, reduce capital costs, and expedite housing efforts. This initiative, named LA4LA, aims to create a new system to combat homelessness through a partnership between the public and private sectors. Mayor Bass stated, “LA4LA can be a Sea Change for Los Angeles—an unprecedented partnership to confront this emergency and save lives.”
Despite the catchy title of LA4LA, it represents yet another government program. Given the failure of existing programs, convincing wealthy individuals to support it may prove challenging.
Mayor Bass highlighted the importance of appealing to the generosity of the private sector. However, the track record of the state and local government in addressing homelessness through tax increases raises doubts about the effectiveness of these efforts.
The escalating tax rates in California, now at 14.4%, coupled with potential federal tax hikes proposed by President Biden, place a heavy burden on the wealthy. The promise of tax relief for those earning less than $400,000 may not provide much solace, considering the high cost of living in California.
Some individuals have clearly reached their limit in supporting the state’s finances.
Sky News quoted Todd Litman, an estate planning attorney, who mentioned that he is seeing an increasing number of clients looking to leave the state due to high tax rates. These clients have substantial savings in their IRAs and are concerned about the high state income tax they will have to pay upon retirement. As a result, they are choosing to relocate to avoid the hefty tax burden.
Additionally, Proposition ULA, the Mansion Tax implemented in Los Angeles in November 2022, has also led to discontent among wealthy homeowners. The tax, which imposes a special sales tax on homes selling above $5 million, was intended to generate revenue for homeless programs. However, it has fallen short of expectations and has deterred high-end home sales in the area.
It is evident that high taxes are driving wealthy individuals out of the state, which is counterproductive to the goal of boosting revenue. To address this issue, tax rates should be lowered to attract affluent residents back to the state, particularly in Los Angeles.
Fortunately, the Taxpayer Protection Act (TPA) is set to go on the ballot this November, giving state voters the opportunity to repeal confiscatory local taxes like the Mansion Tax. The TPA would also require a two-thirds vote for tax increases, providing greater oversight and accountability.
Despite opposition from Governor Gavin Newsom and former Governor Jerry Brown, the TPA has not been removed from the ballot. If successful, it could invalidate taxes like the Mansion Tax that were passed with less than a two-thirds majority.
Ultimately, it is crucial to address the issue of high taxes driving residents out of the state to ensure economic growth and stability. By implementing policies that attract wealthy individuals back to California, the state can create a more favorable environment for all residents.
Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
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