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House Bill 1628 (HB 1628), currently stuck in committee in the House of Representatives, is being thrown around as another way for the legislature to increase taxes this year. Despite significant push back from Washington residents, relators and other industry groups, HB 1628 would raise taxes on the sale on homes.
House Bill 1628 (HB 1628) creates a new real estate tax category of 4% on property valued at over $5 million.
Proponents of HB 1628 argue that a property owner that sells property that is valued at over $5 million can afford to pay the additional tax rate. The majority of properties, however, that are sold valued over $5 million, are multi-unit housing, apartments, duplexes, retail and commercial properties which provide homes, products and services for every Washington resident.
Simple demand and supply economics show that by redistributing taxes (and in the case of House Bill 1628, increasing taxes) will not decrease prices.
The legislature needs to pass legislation that promotes the availability of new housing rather than subsidizing the housing that is already built. Simple changes to the Growth Management Act (GMA), by modifying the arbitrary growth boundaries and population density goals set by the Puget Sound Regional Council (PSRC) will increase available land and the ability for more affordable housing to be built.
House Bill 1628 will not solve housing affordability in either the ownership, rental or commercial real estate markets. It will, in the long term, only continue to increase the cost of housing, products and services.
For WPC’s recommendations on how to increase housing affordability and availability, without increasing fees and taxes, click here.