Increased supply, not an excise tax, solution for Santa Fe housing challenge

The City of Santa Fe is about to embark upon yet another misguided public policy mistake. The latest issue is with the City’s ongoing housing shortage. According to news reports, the plan is to levy a 3% excise tax on sales of million-dollar homes to create a new revenue stream for the city’s Affordable Housing Trust Fund.

As the article describes it, a buyer of a $1.5 million home would pay the tax on $500,000, and the $15,000 collected would go into the Affordable Housing Trust Fund to help cover down payment assistance, rental assistance and housing rehabilitation for city residents.

The problem is the plan won’t actually do anything significant to solve the City’s housing challenges for the simple reason that it doesn’t create any new housing. Rather, by taxing high-end housing and shifting those dollars to the low-end buyers, these new dollars will result in price inflation on those lower cost properties.

If Santa Fe policymakers are serious about making housing more affordable then increased supply (not redistributionist taxes) MUST be the largest part of the equation.