California officials and taxpayer advocates are mounting dual efforts to roll back Measure ULA, or the "mansion tax" that took effect in 2023 as part of statewide efforts to increase housing affordability.
Los Angeles Mayor Karen Bass and the state's largest taxpayer group are each advancing proposals that would ease or eliminate the levy on high-value property sales that critics say has contributed to a downturn in commercial real estate dealmaking.
In the first proposal, Bass has asked the Los Angeles City Council to approve a one-time exemption to Measure ULA for homeowners in the Pacific Palisades whose properties were destroyed by wildfires this year. In a letter to the council, she said the move would “speed up sales of these properties and spur rebuilding,” ultimately generating more revenue when the homes are resold.
The second effort, from the Howard Jarvis Taxpayers Association, proposes a constitutional amendment that would cap transfer taxes statewide at 0.11% — a fraction of Los Angeles’ current top rate — and restore the two-thirds voter approval requirement for citizen-led tax measures. If passed, the amendment would sunset the ULA measure and similar taxes within two years.
Together, the proposals represent the most significant challenges yet to Measure ULA. The law imposes a 4% tax on property sales between $5.3 million and $10.6 million, and 5.5% on sales above that threshold. It was approved by 58% of voters in November 2022 and took effect the following April.
Since then, the measure has generated more than $830 million for affordable housing efforts, according to the city’s online revenue tally dashboard. About $163 million has come from single-family home transactions between $5.3 million and $10.6 million, $350 million from single-family home sales of more than $10.6 million, and the remainder from sales of commercial properties and vacant lots.
Supporters say the tax is a lifeline for affordable housing, with nearly $400 million allocated for tenant protections, homelessness prevention and housing production. But critics argue it has chilled the market and failed to meet revenue expectations.
Mounting legal threats
Bass’ proposal would require council legislation to enact the exemption, which she framed as a targeted response to disaster recovery. “This will create more housing citywide and generate higher Measure ULA tax revenue when these rebuilt or renovated properties are subsequently sold,” she wrote.
Critics of the mayor’s plan say it would undermine the will of voters, who approved the tax by referendum. Supporters of the measure argue that any carve-out could open the door to broader rollbacks.
Meanwhile, the Howard Jarvis amendment would reverse a 2017 California Supreme Court ruling that allowed special taxes to pass with a simple majority. The group plans to submit its amendment to the California attorney general for review before beginning the signature drive to qualify it for the November 2026 ballot.
The group’s president, Jon Coupal, said Measure ULA is a prime example for why limits are needed, warning that “special interests will do everything they can to prevent voters from being fully informed.”
The measure has underperformed its original revenue projections of $900 million annually, raising $632 million in its first two years. Supporters say inflation and interest rates have stifled transactions, while critics say the tax itself is scaring off deals.
Research from UCLA’s Lewis Center found multifamily permitting dropped 18% in the first year after Measure ULA’s implementation, resulting in nearly 2,000 fewer units annually, including 168 affordable units. Another study found that commercial property sales in Los Angeles fell by as much as 50%, while nearby cities without the measure saw steadier activity.
Transaction levels for multifamily properties have also plummeted since the advent of Measure ULA, according to Catherine Yeh, CoStar director of market analytics for Los Angeles.
"After ULA went into effect, the annual volume dropped by about 30%. Investors and developers alike have paused their activity, as the additional tax can be a deal breaker in an already fragile environment," Yeh said.
Legal experts say that if Measure ULA is overturned, refunds for taxes already collected are unlikely. Under California law, revenue raised under a valid voter measure is generally retained unless a court orders repayment.