Homeless Tax: California Bill Would Raise Taxes On Homeowners To Pay For Homeless Problem


California would raise taxes on some homeowners and use the money to pay for homeless services under a bill proposed Thursday by a state lawmaker.

Assemblyman David Chiu, a Democrat from San Francisco, wants to eliminate the mortgage interest deduction on vacation homes.

His bill would also lower the amount of mortgage interest people could claim for their primary homes on their state taxes. Mortgage interest would be deductible on home loans of up to $750,000 instead of the current cap of $1 million. Homeowners are already capped at $750,000 on their federal taxes, a change adopted by the Republican-controlled Congress in 2017.

Chiu estimates the change will generate an extra $500 million a year in state tax dollars, which he wants to spend on homeless services.

California has the most homeless people of any state. The state’s homeless population grew 17% last year, according to recently released federal data.

California spent more than $1 billion on homeless services last year, and Gov. Gavin Newsom has proposed similar spending again this year. But the money has been part of the state’s surplus, and can only be spent one time. Chiu said this makes it difficult for local governments to plan long-term homeless programs.

If passed, Chiu’s proposal would give the state about $500 million to spend on homelessness every year.