California's new strategy to fight homelessness: a 'millionaires tax'

The tax proposed by the L.A. County Board of Supervisors could help the city fund an ambitious $2 billion plan to provide housing for 47,000 homeless residents.

Jae C. Hong/AP
Homeless people, mostly women, spend the night in the courtyard of the Midnight Mission in Los Angeles for their safety. The Los Angeles County Board of Supervisors is moving forward with a proposal to tax people with incomes more than $1 million to help fund housing and other services for the city's estimated 47,000 homeless residents.

Faced with an unprecedented 47,000 homeless people in need of shelter and services, Los Angeles is proposing a solution with a more populist bent: imposing a tax on the city's millionaires.

Under a proposal introduced by the Los Angeles County Board of Supervisors, people with an annual income of more than $1 million would be required to pay a 1 percent surcharge on their earnings.

The tax, which must be approved by two-thirds of voters, would raise $243 million a year that could be put toward housing and other services for the city's homeless population, according to local government estimates.

"We have an unprecedented opportunity to create a sustainable and substantial revenue source to fund our efforts to end homelessness," County Supervisor Sheila Kuehl told LA Weekly.

The millionaire's tax comes amid a slew of efforts to tackle the city's homelessness crisis, which Mayor Eric Garcetti declared a "state of emergency" last fall. Earlier this year, the city approved a $1.87 billion plan to provide more housing and services, but it's still searching for the funds to cover the ambitious plan.

L.A. County has set aside $150 million while it has explored a range of other options to help pay for the plan, including a tax on medical marijuana.

But the marijuana tax would only generate only about $17 million a year, city officials estimate, though that number could increase if California voters decide to approve recreational marijuana later this year.

County analysts say nearly $500 million each year would be needed to make significant gains in housing the county's homeless population, which is currently nearly 47,000, the Los Angeles Times reports.

While it might seem like an unusual idea, the millionaires tax is gaining momentum. When Ms. Kuehl and fellow supervisor Mark Ridley-Thomas first proposed the motion, they cited a county-commissioned poll that found "76 per cent of likely voters would strongly support a November 2016 ballot initiative to impose a one-half per cent tax on income above $1 million."

But to get the proposal before voters, the supervisors have also begun lobbying state lawmakers in Sacramento to change the law, as the L.A. board doesn't have the ability to levy income taxes.

"We all share a common goal here," Supervisor Hilda Solis, who had initially raised questions about the proposal and later came to support it, said as the supervisors voted 3 to 2 on May 17, the L.A. Times reports. "We know that we need to find sustainable funding to address the homeless crisis."

Phyllis Marshall, chief legislative representative for the county government, said in a statement this week that 29 state lawmakers had signed an open letter to Gov. Jerry Brown supporting the proposal.

The proposal could have a particular impact in Los Angeles, which Forbes ranked 14th on a list of "The Cities With the Most Billionaires," saying the city's billionaire residents are worth nearly $71 billion. The median individual income in L.A. County, by contrast, is $27,987.

There is also some precedent for the effort. In 2004, California voters approved Proposition 63, a millionaires tax specifically intended to focus on improving mental health care services.

Proposition 63, which is estimated to generate between $700 million and $1 billion each year, could also help another $2 billion statewide proposal to provide more housing for the homeless.

The plan, which has been endorsed by Governor Brown, would build 10,000 to 14,000 units of new housing, funded using state bonds paid back using the proceeds from the millionaires tax.

Befitting the intent of Proposition 63, the state effort would particularly focus on the estimated 30 percent of California's 116,000 homeless people who have mental illness, the L.A. Times reports.

Last month, as the L.A. supervisors voted to move the proposal forward, advocates and service providers applauded the effort.

"We must do everything within our power to end this crisis," said Marsha Temple, head of the nonprofit Integrated Recovery Network. "The cost of doing nothing is too high."

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