Progressive Economics Meets Reality: ‘Mansion Tax’ Backers Realize Higher Taxes Stunt Growth

In a plot twist worthy of satire — or a very late Economics 101 class — Democrat-aligned nonprofits, business groups, and even the carpenters’ union have suddenly realized that Los Angeles’ Measure ULA “mansion tax” is hurting housing production and city growth.

The group is now pushing exemptions for new multifamily and commercial projects for 15 years, more flexible spending, and relief for disaster-hit properties — tweaks they once would have denounced as “corporate giveaways.” 

Who could have possibly foreseen that slapping a 4% to 5.5% transfer tax on high-value real estate sales would discourage developers from building, slow down transactions, and leave fewer dollars trickling into the “affordable housing” slush fund? Certainly not the same crowd that cheered Measure ULA’s passage in 2022 as a moral triumph against “billionaire greed.” 

Enter Miguel Santana, president and CEO of the California Community Foundation and a proud 2022 backer of the tax. Now leading the “Affordable LA: Mend It Don’t End It” coalition, Santana has experienced what can only be described as a miraculous conversion. 

He told POLITICO he now feels “a greater sense of responsibility to be honest about the unintended consequences.” Unintended, of course, being the polite term for “we ignored basic supply-and-demand principles and now the numbers are embarrassing.”  

This sudden enlightenment comes as the Howard Jarvis Taxpayers Association gathers signatures for a statewide November ballot measure that would gut Measure ULA and similar local transfer taxes across California. Sacramento legislators are reportedly “antsy,” hoping Los Angeles will “take care of Los Angeles” before the anti-tax wave forces their hand. Considering that the quality of life of Los Angelenos over a decade is reported at historic lows, Los Angeles “leaders” aren’t leading, but taxing their way into economic decline.

For years, the same crowd treated sky-high taxes as a painless revenue machine with zero downside, all while demonizing “greed” in the private sector. Now, staring at slowed real estate deals and stalled housing construction, some former cheerleaders are quietly backpedaling. 

It’s almost as if supply and demand were real all along — and as Milton Friedman famously explained to Phil Donahue decades ago: 

Well, first of all, tell me, is there some society you know that doesn’t run on greed? 

You think Russia doesn’t run on greed? 

You think China doesn’t run on greed? 

What is greed? 

Of course none of us are greedy. It’s only the other fellow who’s greedy. The world runs on individuals pursuing their separate interests. 

Friedman added the perfect zinger: “Is it really nobler to pursue political self-interest than economic self-interest? Where in the world are we going to find these angels who are going to organize society for us?” 

Yet, hardline (some would say “greedy”) progressives still insist any reform is a “giveaway to billionaires,” proving that nothing says “solving the housing crisis” like making it harder to build homes. 

The ULA saga is merely the latest chapter in the comedy of errors that is California taxation policy. 

For years, progressive donors and politicians treated high taxes as an unlimited revenue spigot with no downside. Instead of filing water reservoirs, they reward government employees with exorbitant salaries. Instead of fixing problems, Democrats create a new government agency.  

As California Globe has long documented, repeated attempts to punish wealth through higher taxes and new levies have accelerated the state’s economic exodus, with billionaires and middle-class families alike voting with their feet — and their capital.  

Now, faced with concrete evidence that the mansion tax has chilled real estate activity and housing construction, some of the same voices that once demonized any criticism as “right-wing extremism” are scrambling for temporary tweaks. 

It’s almost as if Art Laffer drew his famous curve on a napkin a few years ago, and California’s ruling class is only now bothering to glance at it.  

This abrupt about-face on Measure ULA reveals a deeper truth Californians have known for years: excessive taxation doesn’t just fail to solve problems — it actively creates them. It stifles investment, reduces housing supply, inflates costs for everyone, and ultimately leaves government with less revenue than a more reasonable policy would generate. 

Former reality TV star and Los Angeles mayoral candidate Spencer Pratt had a revelation on Joe Rogan, exposing the true face of government greed in Los Angeles.

To spotlight the waste, fraud and abuse in California’s one-party government, Pratt pointed directly to agencies like the LADWP, where salaries and wages alone top $2.27 billion annually— a massive share of controllable operating expenses. Public records show more than 100 LADWP employees received total compensation exceeding $500,000 in recent years, with dozens surpassing $600,000 and some topping $700,000 (including overtime and benefits), far outpacing what most working families could dream of.

While nearly 7,000 homes in Pacific Palisades — including his own family properties — were reduced to ashes in the Palisades Fire, fueled by government incompetence and neglected infrastructure, LADWP employees continued feasting on the taxpayer bacon. As California Globe has reported, Janisse Quiñones, hand-picked by Mayor Karen Bass in 2024, pocketed a jaw-dropping $750,000 annual salary — a 75% increase over her predecessor — before resigning in the wake of the death and destruction. Quinoñes held the position for only 22 months.

Meanwhile, the very nonprofit leader now preaching honesty about “unintended consequences,” Miguel Santana, pulls in a handsome $640,000 annual salary package at the California Community Foundation. That foundation, which stewards billions in assets, draws its funding from a constellation of wealthy progressive philanthropists — including historic mega-gifts like Joan Palevsky’s $200+ million bequest, along with major support from the Ahmanson Foundation, James Irvine Foundation, Weingart Foundation, Getty Trust, and other elite donors who park their money in donor-advised funds while championing policies that punish the very wealth creation they rely on.

As more residents load U-Hauls for lower-tax states, this tweak offers a small pause in the Democrat’s damage. For as long as the nonprofit and government bureaucrats managing the state’s decline can comfortably retire with their six-seven figure salaries and pensions, this sudden awakening will be short lived.