Venice Beach, California, was supposed to have 100 more apartments by now.
The plan was for one- or two-bedroom units in a high-demand area of town. Good for high earners who want that community, a brand-new spot, and enough units to make a dent. A developer named Jason Grant bought the first parcel in 2023, back when Los Angeles rents were climbing through the roof, and the city was starved for housing.
He never got to build those 100 apartments. He walked away last year.
What sits there today is eight derelict apartments, a couple of small businesses, and a vacant palm-reading shop. That’s what the community got. Not 100 new homes. A boarded-up storefront where a fortune teller used to work.
This is the story of how Los Angeles convinced its own voters to destroy the housing they desperately needed — and called it social justice.
The Pitch
In 2022, a coalition of construction unions and anti-homelessness nonprofits sold Los Angeles voters a socialist fairy tale. They called it the “mansion tax.” A small levy on the city’s most expensive properties. Bel-Air estates. Hollywood compounds. Billionaires’ beach houses.
The campaign called itself United to House LA. The promise to everyone else was simple. You’ll never pay this. Only the rich will.
Voters bought it. The measure passed with 58% of the vote. A 4% tax on property sales over $5.3 million. A 5.5% tax on sales over $10.6 million. Revenue earmarked for affordable housing, eviction defense, rental assistance — the whole compassionate package.
Three years in, the receipts are in. And it looks like it was all a lie.
The Receipts
Most of the money — about 56% — never came from mansions at all. It came from commercial real estate. Office buildings. Retail. Industrial. Apartment buildings. Mixed-use developments. The buildings that house and employ actual people. Single-family homes — the “mansions” the whole thing was sold on — brought in 41%.
And building just stopped. Researchers at UCLA and the RAND Corporation found the tax is now killing roughly 1,900 apartments a year that would otherwise get built in Los Angeles — including the low-income units it was supposed to fund.
Sales of multifamily-zoned parcels over the $5.3 million threshold — the deals that come right before new apartment construction — have collapsed by nearly two-thirds.
LaTerra Development used to build 500 to 1,000 apartments a year in Los Angeles. Since the tax passed, they haven’t started a single multifamily project in the city. They’re building in Burbank now. Sacramento. Texas. New Mexico. Anywhere but their hometown.
And then there’s the revenue itself. A study out of Harvard Business School, with economists from UC Irvine and UC San Diego, found the city is barely making money on this. Despite the predictions of the social justice crowd, it turns out people respond to their incentives. The new tax prompted both residential and business property owners to hold onto their real estate. Causing sales of properties worth more than $5 million to fall by about 38%.
And so, every property that doesn’t sell is a property that never gets reassessed, and the lost property taxes wipe out most of what the “mansion” tax collects — about 80% of it. By the researchers’ own math, every dollar the tax raises could cost the region up to $1.38 in future property taxes. There’s a real chance the city is running this whole thing at a loss.
And then there’s the punchline.
The “affordable” apartments the tax is actually funding cost an average of $779,955 each.
No joke. The tax sold as a way to house working renters and drive down housing prices is producing expensive units.
So the tax shuts down market construction. Remember the 100 apartments near Venice Beach, part of the approximately 5,700 apartments that never materialized in the private market? And the program doesn’t even manage to build housing any cheaper than the market would. What it’s managed to do, in a city potentially short hundreds of thousands of units, is get 1,800 units in permitting, not even constructed, after three years.
The oldest trick in social justice politics
In 1913, the federal income tax was sold to the country as a tax on the rich. Top rate of 7%. It applied to fewer than 1 in 100 Americans. Tycoons. The so-called “robber barons,” but not you or I, the unwashed masses of regular folks.
But five years later, the top rate was 77%.
Today, about four in ten households pay no federal income tax at all. The rest watch payroll taxes vanish from every paycheck before they ever see the money.
The Alternative Minimum Tax, passed in 1969, was the same pitch. 155 wealthy Americans had used legal deductions to pay nothing. Congress was embarrassed. So it built the AMT to make sure the rich couldn’t escape.
By 2015, the AMT was hitting 4.5 million taxpayers. Engineers. Two-income families in high-tax states. The upper-middle household with a couple of kids and a mortgage. The 155 were long gone. Your dentist in Akron was paying it now.
Property taxes started as taxes on plantation owners. Now they fall on retirees on fixed incomes who can’t afford to live in the houses where they built their lives and driving up rents for young people trying to get a start.
Every one of them was sold the same way. You won’t pay. They will pay. We promise.
They lied. They always lie. And the people who design these taxes know they’re lying — because the entire architecture of a “tax the rich” measure depends on the assumption that wealth will sit still and let itself be taxed. It never does. Capital moves. Developers walk away. The rich hire accountants and lobbyists to make carveouts. And the bill, every single time, lands on the people who were promised they’d be the beneficiaries.
The Next Lie
The latest version of this fraud has a new name. They call it the “unrealized gains tax.”
The pitch sounds familiar. A few thousand billionaires — Bezos, Musk, Zuckerberg — have built enormous wealth in business assets that don’t get taxed until they’re sold. So the proposal is to tax those gains every year, whether the assets are sold or not. Taxing the appreciation of paper wealth.
And again, the promise is “just the billionaires. You won’t pay”.
Think about what that means for a second. If you own a small business, the IRS would assess what your business is “worth” every year and tax you on the increase. If you own a farm and the land appreciates, you pay. If you own a house and the market rises, you pay — on money you don’t have, on a gain you haven’t realized, on wealth that exists only on paper.
It is a forced sale dressed up as a tax. The government decides what your property is worth, and takes a piece of it every year — forever — on phantom value it gets to define.
And by the time it lands on you — because it always lands on you — the people who sold it will be long gone, just like the United to House LA coalition will be when the working renters of Los Angeles look around in five years and realize their city has fewer apartments and higher rents than it did before the “mansion tax.”
The Real Problem is Confidence in Freedom Itself.
Every one of these “tax the rich, help the rest” schemes fails for the same reason California’s mansion tax failed. They all rest on the same quiet assumption: experts can rig the system, override human behavior, and deliver the outcome they want.
That assumption is the real problem
Ask why we can’t just let people build, and you get the same answer every time: builders will only put up expensive housing. And sure — replacing eight dumpy apartments with a hundred new ones means those hundred units rent high at first. Nobody’s pretending otherwise.
But that’s just not how housing actually works.
Housing is like a Jacob’s ladder with the bottom rungs falling off into disrepair and needing to be replaced at the top again. A family moves into a new, expensive apartment and leaves an older, cheaper unit behind. Someone moves up into that one and leaves their place behind. And on down the line. Building at the top loosens up housing all the way down.
Economist Evan Mast proved exactly how this works. In his 2023 study published in the Journal of Urban Economics, he tracked the moving chains started by 52,000 residents of new market-rate apartment buildings across twelve major American cities. Using detailed address history data, he followed who moved where—step by step, round after round.
The numbers are concrete. For every one hundred new market-rate units built, the resulting migration chains create vacancies for 45 to 70 households in below-median-income neighborhoods. Between 17 and 39 of those vacancies open up in the bottom income quintile. Most of the effect shows up within three to five years.
This isn’t theory or wishful thinking. It is what actually happens when people are allowed to build and move freely.
But when you lose confidence in freedom, you block the top rung. You freeze the entire ladder. The working families the planners claim to protect—the nurses, the cooks, the tradesmen—never get the units that would have opened up for them. The chain never starts.
That is what the permission system does. It replaces the natural process that has delivered more housing to more people for generations with central planning and veto power. It assumes experts know better than builders responding to actual demand and families making their own choices on their own land.
The American Dream Isn’t Dead
They told you housing was unaffordable, and it was the rich man’s fault. Then they passed a tax to “fix” it. Then the apartments stopped getting built. And then, somehow, the same coalition came back with a new tax, a new promise, a new lie.
The way out was never another tax; you can’t tax yourself into prosperity, abundance, or affordability. The way out is property rights and leveraging the productive capacity of the American, set free to pursue his happiness.
The American Dream isn’t dead. It’s being blocked.
And in this case the people blocking it are the same ones who promised they were here to help.
