Los Angeles may change its “estate tax.” That’s why it matters to the rest of California

To save the city of Los Angeles’ controversial “estate tax” — and stave off the threat of statewide fiscal disaster — Angelenos must rewrite the law.

This was said by City Council Member Nithiya Raman, who presented a movement on Friday to put the estate tax change on the ballot in June 2026. The council is scheduled to vote on the measure on Tuesday.

The tax, known as Measure ULA, has slapped high-value real estate sales with hefty transfer taxes — 4 percent on sales between $5 million and $10 million and 5.5 percent on anything higher — since it was passed by nearly 60 percent of local voters in 2022. All that revenue, $1 billion and countingis reserved for affordable housing construction and maintenance and assistance for low-income tenants.

The measure has fierce defenders, including tenants’ rights groups and public sector unions.

Condo developers hate it just as fiercely. Despite its moniker as the “mansion tax,” the policy does not distinguish between single-family complexes in Beverly Hills and large new apartment buildings built for renters.

In the years immediately following the ULA’s enactment, sales of multifamily properties fell sharply compared to those in other cities in the county.

More recently, the fate of the Los Angeles estate tax has become a state problem. The Howard Jarvis Taxpayers Association, a group that advocates for lower taxes in California, is collecting signatures to put a measure on the California ballot in November 2026 that would, in part, sharply limit the ability of more than two dozen cities to impose increased transfer taxes like Los Angeles’.

If passed, it would deal a multibillion-dollar blow to municipal budgets in some of California’s largest cities. But even if it makes it to the ballot and ultimately fails, opponents of the measure such as public sector unions and other allies of California Democrats will likely feel compelled to spend millions on election violations. The number of Democratic lawmakers in the state capital is growing anxious to avoid both outcomes. They hope tinkering with Measure ULA will defuse the nationwide anti-tax crusade.

Hence Friday’s offer from Raman.

The proposal calls for a local ballot measure that would make a series of adjustments to the original tax. The most important will exempt apartments, condos, commercial and mixed-use projects from ULA transfer tax for the first 15 years – removing what many developers see as a barrier to construction.

The proposal would also change some of the rules on how money raised under the measure can be spent.

At a council meeting Friday, Raman described the proposed measure as an attempt to “protect” the heart of the estate tax.

“Multifamily and mixed-use construction has slowed in the city of Los Angeles, lenders are pulling out of the market entirely, and there are numerous efforts to repeal the ULA entirely — to take it away from us completely,” she said, directing her message to the crowd of protesters who showed up to protest any proposed changes to the tax. “There may be different ways of thinking about how to protect this going forward, but I stand here with you in deep agreement with the comments you’re making.”

Opponents didn’t seem convinced.

“The ULA measure is working,” said Joe Donlin, director of United to House LA, a coalition of labor unions, affordable housing developers and private development skeptics that launched the original ballot measure, according to a press release. “It is irresponsible to propose changes without even analyzing how much they would cost. Why give the ‘People’s Billion’ to billionaires who already have so much?”

The council voted to bypass the typical committee process and put the proposal to a full and final vote at Tuesday’s meeting, which begins at 10 a.m.