Why has Los Angeles imposed a 'mansion tax'? What’s the fallout?

A new tax in Los Angeles is causing much controversy.The ‘mansion tax’, which took effect on 1 April, had left the rich and famous in the City of Angels scrambling to sell off their multimillion-dollar properties.But what is it? And how does it work? And why has it been imposed?Let’s take a closer look:What is it?As per the website House Digest, the tax’s official name is Measure United to House LA (ULA).The new law imposed on the property seller mandates an additional transfer tax of four per cent be levied on all property sold in Los Angeles between $5 and $10 million.

An additional tax of 5.5 per cent would be imposed on any property being sold for over $10 million.

This, compared to the normal transfer tax is under .5 per cent, as per the website.Why has it been passed?The tax comes as Los Angeles attempts to solve its homeless crisis.As per The Independent, the number of homeless has risen from 28,000 in 2016 to 42,000 in 2022.Measure ULA is just the latest law Los Angeles has passed to raise money.In 2016, Proposition HHH gave authorities power to issue bonds worth $1.2 billion to raise 10,000 housing units.However, by 2022, only 1,000 such units had come up – each unit costing between $600,00 and $700,000.The next year Measure H – a sales tax – was approved to come up with another $3.5 billion.

But more money is needed.

"We have failed in so many respects," activist Theo Henderson told The Guardian last year. “There are families with children living in automobiles. There are elderly and the infirm on the streets … It’s a dark time right now, and unhoused residents are very afraid."What’s the fallout?From singer Britney Spears to actor Jim Carrey, celebrities had been rushing to sell their properties before the 1 April deadline."Inevitably, there's a rush to sell now, to escape the tax,” Fox News’ Stuart Varney said last week.“Star realtor Josh Altman, who was on this program last week, is offering a million-dollar bonus to any agent who can bring in a sale for a $28 million Bel Air mansion by 1 April.”A piece in the Los Angeles Times quoted one seller throwing in a luxury car – Aston Martin Vantage, Aston Martin DBX 707, McLaren GT or Bentley Bentayga EWB – to anyone willing to pony up $16.5 million before the deadline.

“It’s crazy out there right now,” Altman told The New York Post.

“I’ve literally become not only a real estate agent, which I signed up for, but I’m now a yacht salesman, a car broker and a wholesale furniture salesman,” Altman added. “That’s what it’s come down to.”I’m seeing deals get done that should never have gotten done," Altman told The Telegraph.But some remain sceptical.Real estate Scott Tamkin, speaking to The Guardian, provided another perspective.“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,” Tamkin said.“It’s really quite shocking, honestly, the fact that $5m is not a luxury home.”Realtor Juliette Hohnen agreed."If you were dealing with the people who were $50 million or $20 million or $30 million, fine, anyone that can afford a $20 million house is very, very rich," Hohnen told The Hollywood Reporter. "But over $5 million? It’s rich but in Los Angeles it’s not, given how much everything costs.”Tyrone McKillen, a broker with the luxury agency Official, told The Post, “It’s a strange irony to disincentivize home builders in order to combat a homeless crisis that is one of the worst in the nation."With inputs from agenciesRead all the Latest News, Trending News, Cricket News, Bollywood News, India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.