Bill Overview
Title: To amend the Internal Revenue Code of 1986 to impose an excise tax on the acquisition of single-family homes by certain large investors.
Description: This bill imposes a 100% excise tax on the purchase of a single-family home by a specified large investor (i.e., any person, other than a tax-exempt charitable organization or a governmental entity, with assets having a fair market value exceeding $20 million). The tax does not apply if the home is used as the principal residence of the investor or the sale to the investor is pursuant to a governmental program for providing housing to low-income individuals.
Sponsors: Rep. Smith, Adam [D-WA-9]
Target Audience
Population: Global urban and suburban population residing in areas with housing markets affected by large investors
Estimated Size: 94000000
- The focus of the bill is on large investors with assets exceeding $20 million who purchase single-family homes.
- Homebuyers in general, not associated with large investors, will not be directly impacted by the bill.
- Rental markets may be affected as large investors are often involved in buying properties for rental income.
- Prospective buyers of single-family homes may see changes in availability or pricing if large investors reduce purchases due to the tax.
- The real estate market could see a shift in buying patterns, potentially making it easier for individual homebuyers to compete in the market if investor purchases decrease.
- Local communities could experience indirect effects if large investors reduce housing stock purchases, potentially influencing housing affordability.
Reasoning
- The policy primarily targets large investors with over $20 million in assets, who often buy single-family homes for rental or investment purposes.
- Most typical small homebuyers will not be directly impacted, but they may experience indirect benefits, such as increased housing availability and potentially lower prices due to reduced competition from large investors.
- The policy's budget constraints mean that only a limited number of transactions—specifically those involving large investors—will be affected in the first years.
- Over time, as the policy matures, a larger segment of the market could see impacts, affecting the dynamics in urban and suburban housing markets.
- The measure might make it more difficult for large investors to operate unhindered in certain areas, thereby opening opportunities for individual buyers.
- There might be indirect effects on rental markets if large investors scale back, which could impact rental prices and availability.
- Considering these aspects, we aimed for a diverse set of individuals, from potential indirect beneficiaries to those directly affected only marginally. Our interviews span various demographics and geographic contexts.
Simulated Interviews
Software engineer (Austin, TX)
Age: 30 | Gender: female
Wellbeing Before Policy: 7
Duration of Impact: 5.0 years
Commonness: 10/20
Statement of Opinion:
- This policy might make it easier for me to buy my first home, as I'm competing against fewer wealthy investors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 8 | 7 |
| Year 3 | 8 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Real estate investor (San Francisco, CA)
Age: 45 | Gender: male
Wellbeing Before Policy: 9
Duration of Impact: 20.0 years
Commonness: 3/20
Statement of Opinion:
- This tax could complicate my business operations, especially in acquiring new properties.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 9 |
| Year 2 | 7 | 9 |
| Year 3 | 7 | 9 |
| Year 5 | 7 | 9 |
| Year 10 | 8 | 9 |
| Year 20 | 8 | 9 |
Community organizer (Detroit, MI)
Age: 50 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- This policy could help our community by reducing investor-driven competition for single-family homes.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 6 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Financial analyst (New York, NY)
Age: 40 | Gender: male
Wellbeing Before Policy: 8
Duration of Impact: 5.0 years
Commonness: 6/20
Statement of Opinion:
- Limited impact on my lifestyle, but could affect my work analyzing real estate trends.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Graduate student (Columbus, OH)
Age: 28 | Gender: other
Wellbeing Before Policy: 5
Duration of Impact: 10.0 years
Commonness: 7/20
Statement of Opinion:
- I hope this policy might lead to better rental market conditions if large investor activity drops.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 5 | 5 |
| Year 2 | 6 | 5 |
| Year 3 | 6 | 5 |
| Year 5 | 6 | 5 |
| Year 10 | 6 | 5 |
| Year 20 | 6 | 5 |
Public school teacher (Seattle, WA)
Age: 37 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 9/20
Statement of Opinion:
- This new tax might slightly increase my chances of finding a home in my budget.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Retired (Phoenix, AZ)
Age: 58 | Gender: female
Wellbeing Before Policy: 8
Duration of Impact: 0.0 years
Commonness: 12/20
Statement of Opinion:
- This policy doesn't directly affect me, but it might influence property values.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 8 | 8 |
| Year 2 | 8 | 8 |
| Year 3 | 8 | 8 |
| Year 5 | 8 | 8 |
| Year 10 | 8 | 8 |
| Year 20 | 8 | 8 |
Real estate agent (Los Angeles, CA)
Age: 65 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 5/20
Statement of Opinion:
- This could reduce my client base, affecting my commissions, especially from large investors.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 7 |
| Year 2 | 6 | 7 |
| Year 3 | 6 | 7 |
| Year 5 | 7 | 7 |
| Year 10 | 7 | 7 |
| Year 20 | 7 | 7 |
City planner (Chicago, IL)
Age: 55 | Gender: male
Wellbeing Before Policy: 7
Duration of Impact: 10.0 years
Commonness: 8/20
Statement of Opinion:
- I'm interested to see if this policy influences urban housing development patterns.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 7 | 7 |
| Year 2 | 7 | 7 |
| Year 3 | 7 | 7 |
| Year 5 | 8 | 7 |
| Year 10 | 8 | 7 |
| Year 20 | 8 | 7 |
Marketing specialist (Dallas, TX)
Age: 25 | Gender: female
Wellbeing Before Policy: 6
Duration of Impact: 5.0 years
Commonness: 11/20
Statement of Opinion:
- Hopefully, this will make it easier to buy my own place in the future.
Wellbeing Over Time (With vs Without Policy)
| Year | With Policy | Without Policy |
|---|---|---|
| Year 1 | 6 | 6 |
| Year 2 | 7 | 6 |
| Year 3 | 7 | 6 |
| Year 5 | 7 | 6 |
| Year 10 | 7 | 6 |
| Year 20 | 7 | 6 |
Cost Estimates
Year 1: $50000000 (Low: $30000000, High: $100000000)
Year 2: $53000000 (Low: $31500000, High: $105000000)
Year 3: $56000000 (Low: $33000000, High: $110000000)
Year 5: $62000000 (Low: $36500000, High: $122000000)
Year 10: $75000000 (Low: $44000000, High: $150000000)
Year 100: $200000000 (Low: $117000000, High: $400000000)
Key Considerations
- This policy's effectiveness depends heavily on investor behavior and the housing market response.
- Potential legal challenges or loopholes could affect revenue and savings projections.
- Broader economic conditions might influence housing demand and market shifts.