A recent report suggests Connecticut could raise a so-called “mansion tax” to pay for homeless shelters, housing and other social needs.
The report, from the Center for Budget and Policy Priorities and the Institute on Taxation and Economic Policy, estimates Connecticut could generate tens, if not hundreds of millions of dollars by increasing taxes on the sales of homes that sell for $1 million or more.
Some Democrats say they’re considering bringing back proposals to the conveyance tax on home sales.
“If you play the scenario out and the status quo is player out, we will have so many people who cannot survive,” said Sen. Saud Anwar (D-South Windsor).
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Connecticut currently imposes a 0.75% tax on the sale of homes under $800,000. The tax increases 1.5% on the portion of a home’s value over that mark.
When home values exceed $2.5 million, the top tier increases to 2.25%.
The report suggests Connecticut could generate $92 million if it sets the conveyance tax at 4% when a home exceeds $1 million.
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The revenue would change based on any changes Connecticut could make. If the state opted for a flat 4% tax on homes exceeding $1 million – and not imposing the 0.75% rate for the portion under that threshold – revenues could jump to $192 million, according to the report.
Social service providers say that money could help with homeless shelter shortages, a lack of affordable housing, mental healthcare and other needs.
“We see that as a fairly urgent situation telling us that the people of Connecticut need help,” United Way of Connecticut President and CEO Lisa Tepper Bates said.
She said United Way’s 2-1-1 hotline has seen a dramatic increase in calls seeking help with housing, food, and mental health.
Connecticut Association of Realtors President Carl Lantz said raising the tax would also make homebuying less affordable at a time when prices continue to surge.
He also said the $1 million mark isn’t as high as some might think.
“Where some places that have lower purchase prices might feel like a million dollars is a mansion, in some communities, that’s like a two-bedroom condo,” Lantz said.
Gov. Ned Lamont, also a Democrat, opposes the idea. He said he wants a change that would make Connecticut more attractive to people looking to move here.
He also doesn’t think it’s necessary, referencing a projected boost in revenue already expected for the next budget proposal.
“We're going to have an additional billion dollars that we can spend next year compared to this, we’re making real progress and a lot of that’s going to go to the key social needs,” Lamont said.
Republicans say Democrats should decide which priorities go into the budget without raising taxes.
“If finding funding for homelessness, finding money for childcare is a priority, then it will happen,” said Rep. Holly Cheeseman (R-East Lyme).
When asked about the surplus, Tepper Bates simply said lawmakers have to find ways to fund social services adequately.
“This is an investment in our people that we’re talking about and it’s an investment that needs to be made,” she said.
There could be competition for some of that additional funding, including municipalities and public universities that will be looking help once American Rescue Plan Act funding is finished.
