Pittsburgh tax hike's message: Buyers, look elsewhere
Basic economics dictates that when you tax something, you get less of it — which should make Pittsburgh's proposed hike in its deed-transfer tax a non-starter.
City Councilmen Ricky Burgess and R. Daniel Lavelle proposed this 25 percent hike, from 4 to 5 percent of a property's sale price. They expect it to generate $10 million annually that would repay $100 million that the Urban Redevelopment Authority would borrow to support “affordable housing” efforts.
Mr. Lavelle, a former real estate agent who should know better, thinks making homeownership less affordable for all somehow will enhance impoverished neighborhoods. But a higher deed-transfer tax will only discourage property purchases in the city.
“All this is going to do is drive people who are most interested in trying to stay in the city outside of the city,” says Charlene Haislip, Realtors Association of Metropolitan Pittsburgh president. She adds: “It is going to turn away low- and moderate-income buyers, especially first-time buyers, whose biggest challenge is getting enough money for a down payment.”
What's proposed confirms the impractical folly of taxing one's way to prosperity — or to the fuzzily-defined “affordable housing” so desired by its supporters, including re-election-seeking Mayor Bill Peduto. Besides chasing families out of Pittsburgh, it will further fuel market-distorting, winner-picking government subsidies for favored “affordable housing” developers — at the expense of all buyers of Pittsburgh properties.