• Steve Muehler

Steve Muehler - Plan 3 for California: California Residential Mortgage Tax

In an effort to ensure that “the wealthy are paying their fair share”, we need to implement a “California Mortgage Tax” for all residential mortgage loans on a Single Subject Property that exceeds $750,000 USD, and for all commercial mortgage loans on a Single Subject Property that exceeds $1,500,000 USD. This will be a one-time tax collected at the closing & funding of the mortgage loan, and will be payable at the rate of $0.40 per $100 of the mortgage loan, or the aggregate amounts of mortgage loans secured to the subject property.

For all mortgage loans less than $750,000 secured to a single residential property, this tax will not be collected. For all mortgage loans less than $1,500,000 secured to a single commercial property, this tax will not be collected.

This tax will essentially equate to $4,000 USD for all mortgage loans of $1 Million USD in the State of California. In 2018, there were approximately 715,000 mortgage loans originated in California according to the Home Mortgage Disclosure Act (HMDA). The actual number may actually be nearly double this number because private mortgage loans and some “non-traditional mortgage loans” such as construction loans are not required to report data, but we have to go with what we got.

The median home price is just under $750,000 USD in California, so let’s assume that just 33% of the loans originated in the above are for more than $750,000 USD. This will account for approximately $215 Million USD in annualized tax revenues.

In terms of commercial mortgages, there are currently over 6.4 million mortgages for commercial real estate properties throughout California, with the average commercial mortgage balance being about $5 Million USD.

In California, if only 5% of the above stated commercial mortgages are originated in California each year (320,000 new commercial loans) through a purchase, refinance or construction transaction, with an average loan balance of $5 Million USD, under my tax one time doc stamp tax plan, that is $20,000 USD x 320,000 = $6.5 Billion USD in annualized Tax Revenues.

STATE REVENUES: On a conservative low-side, not even taking into account additional home sales and larger loan amounts due to the affordability factor from Plan One, or the additional business operations in the State from Plan One, I am conservatively giving an annualized State Revenue of $7 Billion USD from the California Mortgage Tax.

The Score so far on State Budget:

Plan One: Eliminate California State Income Tax

· Resulted in $90 Billion Deficit

Plan Two: Decriminalize Prostitution in California

· Resulted in $1 Billion in State Revenues

· Still have a $89 Billion Deficit, but we have no State Income Taxes and we have Decriminalized Prostitution in California.

Plan Three: California Mortgage Tax

· Resulted in $7 Billion in State Revenues

· Still have a $82 Budget Deficit.

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