One way is to create or build upon taxes or fees levied when ownership of real property is transferred between parties, such as when a home is bought or sold. States and localities can tax mansions in a variety of ways. In addition, houses can’t be easily moved across borders to avoid taxation, unlike other types of wealth such as stocks, bonds, or bank accounts. In contrast, the value of an ownership interest in a closely held business can be very difficult to estimate accurately. Home values are easier to measure than other forms of wealth: recent sales of similar properties in the same locality can often be identified, and housing ownership is usually publicly available information. States will also need to take other steps to better tax wealth so that the very wealthy do not receive special privileges, but mansion taxes are a good place to start. States can use the added revenue from graduated property taxes on high-value property to increase opportunities in lower-income communities of color (as well as other areas with relatively few opportunities), helping people of color to overcome these barriers to the betterment of the country as a whole. Further, numerous studies have documented that racial discrimination and bias continue to limit housing and job opportunities for people of color. Despite the considerable progress in overcoming these barriers, people of color own much less housing wealth than they otherwise would. Historically, an extensive array of public policies held back people of color, including government practices that segregated them in low-value neighborhoods, combined with widespread racism in private interactions and in business transactions such as obtaining mortgages. In addition to reducing inequality generally and making state and local tax systems fairer, mansion taxes can help states overcome racial inequities rooted in past racist policies and sustained by ongoing discrimination and bias. Some states and localities have begun to consider adopting this approach for their property taxes by setting a higher rate for high-value properties. Most state income taxes, in contrast, have a graduated rate structure, under which the rate rises as income rises. Property taxes typically are levied as a flat percentage of a property’s assessed value, regardless of how high the value is. Mansion Taxes Are One Way to Improve State Taxation of Wealth Further, much of the value of assets that extremely wealthy people hold, such as stocks and bonds, real estate, and personal possessions like boats, jewelry, and artwork, is shielded from federal, state, and local taxes.īy shifting some of the responsibility for funding critical public services and investments from low- and moderate-income taxpayers to those best able to pay, states could not only make their tax systems fairer but also generate additional revenue. Nearly all state and local tax systems worsen these inequities by asking less (as a share of income) of the very highest-income families than of the poorest families - often much less. This top-heavy structure reduces opportunity for millions of families, particularly families of color, who face great barriers to building wealth due to the legacy of historical racism and the ongoing damage from racial bias and discrimination. The top 1 percent of households own roughly 40 percent of the nation’s wealth, while the bottom 90 percent own just 21 percent. State and Local Tax Systems Worsen Wealth Inequities Mansion taxes would also make state and local tax systems - which now are tilted in favor of the wealthy - fairer. One way states can build more broadly shared prosperity is by adopting a tax on high-value housing, often called a mansion tax, to help fund schools, health care, roads, and other services and infrastructure critical to residents’ long-term future. Further, since wealthy people are overwhelmingly white, this extreme wealth concentration reinforces barriers that make it harder for people of color to make gains. As a result, millions of American families have less wealth, and therefore fewer opportunities, than they otherwise would.
A historically large share of the nation’s wealth is concentrated in the hands of a few.
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