Cape Cod considers a mansion tax, Baltimore considers raising taxes on vacant lots, and a retail chain will not consider opening stores in California. From the wild and wooly world of real estate, here are our Hits and Misses for the week of Aug. 18-22.
Miss: Soaking the Rich. Massachusetts’ Cape Cod housing market is weighing a 2% real-estate transfer fee on luxury homes above $2 million that will be used to finance affordable housing. Fortune Magazine reports the proponents of this mansion tax, which is now before the Barnstable County Assembly of Delegates, insist it could generate up to $56 million a year for affordable and year-round housing. Once again, the financially successful are being penalized for being financially successful – at least the supporters of the mansion tax aren’t berating their wealthy neighbors into paying their “fair share” of taxes. But the real challenge will be deciding where to build the new affordable housing – after all, this is an area where the upper-income liberal residents are gung-ho for diversity, equity and inclusion, as long as it takes place in someone else’s neighborhood.
Hit: The Right Tax. We are not in the habit of endorsing tax hikes, but we like Baltimore Odette Ramos’ idea to boost property taxes on the vacant lots that disfigure too much of the city. Baltimore’s vacant lots are taxed $2.248 per $100 of assessed value, the same rate as parcels with structures, but Ramos wants to quadruple the property tax on vacant lots. If the taxes on a property aren’t paid, the city can put a lien on them, which would launch the process that enables the city to foreclose on the properties. Ramos said. “Ultimately, the reason for a vacant property tax is to incentivize the owner to do something with the lot.” Hey, it’s worth a shot.
Miss: Here We Go Again. At a time when the Democratic Party is hungry for new younger leadership and fresh ideas to connect with unhappy voters, it is difficult to imagine why anyone would welcome former Ohio Sen. Sherrod Brown’s announcement that he will be trying to get back into the Senate in next year’s election. The 72-year-old Brown, who served in the Senate for 18 years and was once chairman of the Senate Banking Committee, was defeated last year by Republican Bernie Moreno by nearly five percentage points. Seriously, when will elderly career politicians like Brown pass that proverbial torch to the next generation of leadership? Brown didn’t get the hint last year, and new polls show him trailing the Republican incumbent, Sen. Jon Husted.
Hit: The Right Verdict. President Trump celebrated a ruling by a New York State court that voided the $527 million penalty levied against him in a spurious civil case involving alleged valuation fraud with his properties. While the lower court decision that Trump and his company engaged in valuation fraud was not thrown out for now, it is highly likely that it will be overturned in the next courtroom battle. The rejection of the monster fine against Trump was a major rebuke to New York Attorney General Letitia James, who prosecuted the case, and Judge Arthur Engoron, who ruled against the president despite having clearly identified conflicts of interest.
Miss: Not in the Job Description. Bill Pulte has received a surplus amount of attention this week, but the Federal Housing Finance Agency director gets a thumbs down for trying to force Federal Reserve Governor Lisa D. Cook to resign over alleged mortgage fraud. Pulte keeps forgetting that his job is not to reconfigure the leadership of the central bank – this follows weeks of Pulte calling Fed Chairman Jerome Powell a “moron” and other childish names while demanding he quit – and he also forgets that American justice is predicated on the presumption of innocence. And speaking of the Fed…
Hit: Come September. Today’s speech by Fed Chairman Jerome Powell that gave the vaguest hint of a potential rate cut in September sent the financial markets soaring. But while Powell opaquely stated that “the balance of risks appears to be shifting,” he made no firm pledge to cut rates. Not that Powell can unilaterally make policy, of course, but don’t tell that to the Executive Branch. Whether any rate cut occurs will be seen next month, but for now we can thank for Powell sprinkling enough optimistic crumbs that enabled Wall Street to end the week with a bang.
Hit: Staying Out of California. The formerly bankrupt retailer Bed Bath & Beyond is making a comeback with a strategy to open new brick-and-mortar stores around the country, with the conspicuous exception of California. Marcus Lemonis, executive chairman of the brand’s parent company Beyond Inc., issued a statement that said, “California has created one of the most overregulated, expensive, and risky environments for businesses in America. It’s a system that makes it harder to employ people, harder to keep doors open, and harder to deliver value to customers.” Gov. Gavin Newsom’s office responded to Lemonis with a sarcastic post on X that said, “After their bankruptcy and closure of every store, like most Americans, we thought Bed, Bath & Beyond no longer existed. We wish them well in their efforts to become relevant again as they try to open a 2nd store.” With that kind of an attitude, it is no wonder businesses want nothing to do with California.
Phil Hall is editor of Weekly Real Estate News. He can be reached at [email protected]
Photo: Imagedepotpro / Getty Images
I left CA after 35 years because of Gavin Newsom. His arrogance and utter disregard for what is best for the citizens of CA is astounding. He will lie, cheat and steal to further his and only his agenda. Not a good person!
Well this is obviously right wing content. I live on Cape Cod, and spent years on Nantucket. The Land Bank transfer tax has worked well on Nantucket, a community desperate to retain year round locals. The very wealthy need working class folks to run the service industry on which they are dependent, so opposing this proposal is NOT in their own best interest.
I would probably raise the sale price base limit for the tax to apply, as the 2 million dollar sale in my town of Falmouth is really not high luxury housing these days.