Well, you should be. But were you concerned two and a half years ago when I wrote this?

This Week in Olympia: Another Cash Grab by Non-Profit Housers

Maybe not. Mostly, back then, I got shrugs and “whattyagonnados” from just about everyone I complained to about it. I expressed my concerns and doubts about messing with REET, especially about funneling more cash to housing non-profits.

As it turns out, this years proposal grabs cash for education funding; the claim is that somehow the equalization aspect of the legislation makes it ok. The argument goes that smaller residential transactions — like the sale of a $175,000 house in Yakima — will see the tax on the sale drop, while the sale of a “mansion,” a single family home selling for $5 million will go up.

All that sounds like perfect populism and socialism, right? In fact The Stranger hilariously showed a picture of Leschi and suggested that a person buying a “mansion” there pays the same tax as a person buying a trailer in Yakima. Of course that’s false; they may pay the same percentage but that’s not the same as the total dollar amount.

Here’s the details from the summary of the final passage of the legislation:

Summary: Graduated REET. Beginning January 1, 2020, the real estate excise tax is imposed at the following rates:

• • Ÿ1.1 percent if the selling price is equal to or less than $500,000;
  • Ÿ1.28 percent on the portion of the selling price that is greater than $500,000 but equal to or less than $1,500,000;
  • Ÿ 2.75 percent on the portion of the selling price that is greater than $1,500,000 but equal to or less than $3,000,000; and
  • Ÿ3 percent on the portion of the selling price that is greater than $3,000,000.

Finally, a rate of 1.28 percent is imposed on the sale of undeveloped land, timberland, agricultural land, and water or mineral rights, regardless of selling price.

Much, if not most of the higher tax will be absorbed by sales of bigger properties that are being sold for multifamily housing. Some signed onto all this, I guess, because they bought The Stranger’s logic; that the trailer buyer in Yakima will pay less. Maybe. But a new housing project with a land sale price of $10 million will get hit but a substantially higher tax bill. Who will pay for that higher tax? Renters of course. That adds to the problem of higher housing prices.

Senator John Braun points out the folly of raising rents to pay for education.

In an effort to slow down the bill as it was poised for final passage, Senator Jon Braun, a Republican representing the 20th legislative district made this important point about raising and raiding REET:

We know about twenty five percent of that [money] is going to come from [the sale of] rental properties, and we know Mr President from previous versions of this bill and over the years, that that’s going to add up to about two hundred dollars a year in extra rent. Now that may not sound like a lot to you, Mr President, but for folks in my district an extra two hundred dollars is a lot of money. These are folks that are often living from paycheck to paycheck. We hear about that from from all over, from both sides of the aisle, real people, they’re just barely getting by renting. Rental markets are already very high we have a very, very low inventory compared the population and the demand for rentals, rents are very high and we’re going to add two hundred bucks a year.

Where was the real estate interest, you know, the powerful lobby with deep pockets and lots of lawyers?

We are running out of time and everyone has been moving faster than usual to pitch in given the timeline and ramifications of being passive.

That’s a quote from an email sent by someone in the business asking for support to oppose the legislation in late March of 2019. That was way too late, especially when the equalization feint was bought buy most of the legislature the year before.

This is where I say, “I told you so,” again.

One would have thought people would have woken up the raising and repurposing of the REET years before when it was originally proposed. And it’s stunning that many legislators, even some claiming to be worried about housing costs, fell for the ploy that “everyone wins” when we tax housing like this. We don’t. Yes, education is important. But I thought we had a housing crisis, too.

I often think that we get what we deserve; waiting until the waning days of a legislative session to unveil a battle plan to stop something that is inevitable is irresponsible. The same is true of Mandatory Inclusionary Zoning, arbitrary changes to the Multifamily Tax Exemption (MFTE) program, and eventually, rent control. Meanwhile, Democrats are touting all the great things they’ve done for housing like the totally voluntary HB 1923 which will likely deliver zero supply.

We’ve got to do better, find some principles, and hold ourselves and elected officials accountable. That means opposing rules, regulations, fees, and taxes that push up housing costs at all levels of government when they’re proposed, not when they’re already moving toward final passage.

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