Los Angeles implemented a new tax on luxurious real estate to finance affordable housing and combat homelessness

Los Angeles implemented a so-called “mansion tax”. At a rate of 4% for real estate purchases between 5 and 10 million dollars and 5.5 percent for properties over ten million dollars. All in all, the tax is expected to bring in about 670 million dollars of revenue. The money is mend to finance affordable housing and thus preventing people from becoming homless.  
The tax, officially known as “Measure ULA” was agreed upon by the state legislator after a referendum in November 2022 as close to 60% of voters cast their ballot in favour of the proposed law. Los Angeles being the city with the highest number of homeless people in the country, it’s little wonder that such a tax comes to fruition. California in general is also known as the second most expensive state when it comes to real estate, only being topped by Hawaii. 
Under the new tax, a millionaire selling a house worth 5 million dollars would have to pay 200 thousand dollars to the government. To put the necessity of action in the city of LA into perspective, the recent crises have made the number of homeless people skyrocket to around 42,000 people in February 2022. In 2016 the number was closer to 28,000 people without a home according to an article published in the New York Times.
Other estimates by the “US department of housing and urban development” put the number of homeless people in the LA at a staggering 65.111 people.
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“Mass Panic”: Real Estate Owners get creative in trying to avoid the new Taxes
Despite the relatively low sum of tax money in comparison to the enormous profits made in the real estate market, millionaires and celebrities sought for evermore creative and desperate ways to avoid contributing to improving societal living standards. According to “The Guardian“, one desperate super rich homeowner of a 16.5-million-dollar mansion was going as far as to gift a supercar to whoever buys his house, just to get out of paying around 900 thousand dollars in tax.
Others are taking different approaches to avoid paying taxes. A legal challenge has been put before court, claiming the tax violates the Californian constitution. The outcome of the challenge is, as of now, still open, and it will very likely take a while until any result comes of it. 
The Tax would only affect 4 Percent of the Real Estate Transactions in LA
According to the luxury real estate platform “redfin” the median selling price for property in California is just short of a million dollars. It is hovering around 900 thousand dollars. The tax therefore would only affect about 4% of real estate transactions in the city.
Interesting claims come from real estate agents working for the super-rich. The tax is set too low, as 5 million dollars for a home does not qualify as a mansion. “Five million dollars is certainly not luxury. It’s a nice house, in a nice area. It’s not what most people would consider a luxury house in a prime area”, says real estate agent Scott Tamkin.
Critics launch massive PR campaign to sway Public Opinion
But he is not the only real estate agent trying to tell the average person that a five-million-dollar home (about 4000 square foot in Beverly Hills according to Josh Altman, real estate agent and reality TV star) is not a luxury. A massive PR campaign seems to have been launched to sway public opinion against the tax with multiple large US news outlets writing pieces against the proposed tax, despite the scientific, political, public support for the law.
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The new Tax will bring in about 627 Million Dollars
It’s estimated that the tax will bring in about 627 million dollars, according to an article published by the Guardian. This still enormous sum is almost 400 million dollars short of the sum initially expected being a billion dollars, but still more than triples the amount of revenue collected from the before active transfer tax, which is raking in about 200 million dollars per year.
Multiple universities and analysts, above all the University of California (UCLA) have recently come forward to counteract the multi-millionaires PR offensive to roll back the tax. They are saying that the money collected and the impact on the housing market will really help improve the homelessness crisis in Los Angeles.  Läs mer…

A Berliner builds tiny houses and gives them to homeless people

The association Little Homes e. V. builds tiny mobile houses and gives them to homeless people. To date, it has built nearly 248 of these shelters. In the meantime, 148 former residents have found a real home again. For them, the gift was a turning point. The small houses give them back security, peace and hope. Critics see it only as a temporary solution and worry about minimum standards.  
There is not much space. The 3.5 m² of living space is just enough for a bed, a shelf and a small kitchenette. And yet Uwe S. is happy, because for him, it means security, peace and new hope. For 15 years he was homeless and slept on the streets of Berlin. Then Sven Lüdecke gave him a “Little Home”. He lived in it for two years. In the meantime, Uwe has a flat with electricity and running water again and is standing on his own two feet. The “Little Home” was a turning point.
“Little Homes”: Small houses for homeless people
Sven Lüdecke is the founder of the association “Little Homes e. V.“. Since the end of 2016, he and a team of constantly changing volunteers have been building small houses and giving them to homeless people. Nuremberg, Cologne, Berlin: There are already 248 of these small shelters across Germany. For many, they are a stepping stone back into society: 148 former residents have now found a proper flat. 
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The houses are simply built: Four walls made of pressboard, a lockable door and a small window. They also have a mattress, a camping toilet, a fire extinguisher and a first aid kit. There is no electricity, no running water and no heating – only insulation made of Styrofoam. This protects against extreme cold. The residents usually provide their own water, for example, from public toilets or drinking water points. A “Little Home” costs around 1,000 euros. 
One important detail is that the houses are mobile. They are on wheels. If this were not the case, the association would need a building permit for each Little Home. 
Most of the houses are located on private parking lots, but the association cooperates with cities, districts and municipalities. For example, the Berlin district of Kreuzberg provides 40 parking spaces.
The houses are mobile – they are later on wheels and can be moved to different locations. (Photo: Little Home e.v.)
Criticism: The “Little Homes” do not meet the minimum standard of accommodation
Lüdecke’s project is also met with opposition. Critics suggest that minimum standards of housing are neglected. The tiny living space is inhumane and not a long-term solution. 
Werena Rosenke of the association “Bundesarbeitsgemeinschaft Wohnungslosenhilfe” also takes a critical view of the project. She told Deutschlandfunk that “Little Homes” are not safe. They are often located in remote places. This is dangerous, especially for women. Nevertheless, she thinks it is a good idea to give homeless people some security and get them off the streets for a short time. The goal should be a real flat with a social worker to look after them.
Tiny houses for homeless people: No solution – but a temporary fix
Lüdecke sees it that way, too. He also does not see his project as a solution to the problem of homelessness. That is the task of politicians. The “Little Homes” are only a temporary solution, he says: 
“We are not the solution to the problem of homelessness, but a solution before the solution,” says Sven Lüdecke, Little Homes founder (interview).
There are now regional offshoots of the association in many cities. The simple construction of the Little Homes makes it possible. In the beginning, it was just a matter of building a reasonably safe shelter for homeless people. In the meantime, the association also helps with visits to the authorities, with applications for social benefits or with the search for a job. For this purpose, the association hires social workers or works together with them.
Critics warn that the small houses do not meet minimum shelter standards and could also lead communities to allocate fewer resources to the homeless. (Photo: Little Home e.v.)
Risks: Municipalities neglect their legal duty to help homeless people
In Germany, municipalities are legally obligated to help homeless people. They must provide humane housing for those affected. Rosenke emphasizes that this is a unique selling point that must not be jeopardized under any circumstances. 
As good as the idea of “Little Homes” is, it could lead to municipalities neglecting their duty. After all, people are no longer homeless. 
This concern is not entirely unfounded. You can see this, for example, in the example of the food banks. Food banks give donated food to people with low incomes. The problem is that the state relies too much on the aid and remains inactive itself. The symptoms of poverty are alleviated, but the causes remain. Inflation, poverty in old age and precarious working conditions in the low-wage sector are not being addressed, according to the fears of critics.
Homelessness on the rise in the EU, in Germany and also in Austria
According to a report by the German government, there are about 263,000 homeless people in Germany. According to Amnesty International, there are just under 20,000 in Austria, and more than 700,000 people in the European Union.  
However, the number of unreported cases is likely to be much higher, because many of those affected are not even recorded by the system. They are invisible because they are not registered anywhere, have no social insurance or are staying with friends and acquaintances.
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