Ruben Gallego Asks Expert About Cutting Capital Gains Tax On Profit From Home Sales

3 days ago

During a Senate Banking Committee hearing last week, Sen. Ruben Gallego (D-AZ) spoke about capital gains tax from home sales.

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Transcript

00:00Thank you so much. Thank you, Mr. Chair. Thank you, Senator Gallego.

00:04Thank you, Mr. Chair. Ms. Willis, Arizona experienced significant population growth

00:07in recent years, which, as you know, brings unique housing challenges. Despite being the

00:11fifth largest city in the U.S., Phoenix receives about 7,400 vouchers, far fewer than Philadelphia,

00:16the sixth largest city, which receives over 22,000 vouchers. This is why I introduced the

00:21Housing Voucher Fairness Act to allocate additional housing choice vouchers in our

00:25fastest-growing cities, which assists families in affordable rental housing.

00:29Can you talk about the unique challenges that fast-growing cities face and solutions

00:33that you have seen actually work?

00:36Thank you for the question, and thank you for the Housing Voucher Fairness Act.

00:44So, we're happy to look into this issue, but I think it raises some significant issues,

00:50because right now, only one out of four eligible households for housing assistance really gets

00:58any help. The others have to essentially fend for themselves, and that's three out of four.

01:02And Congress certainly should be working to ensure that rental assistance is available

01:07universally to all eligible households.

01:12Well, thank you. And one of the things that we discovered, the reason why there is a disparity,

01:17is that the housing voucher allocation is based off the 2000 Census. So, if you're fast-growing

01:24cities like Houston, Dallas, Las Vegas, you're actually going to be disproportionately penalized

01:32for having good policies and growing, versus some of these older cities that are essentially

01:38atrophying, but yet we're being punished. So, even an update just on using the most recent

01:45census would actually be more accurate. And I hope that we'll be working on that legislation,

01:50too, and I hope my colleagues will help join us there.

01:53Sure. And if I can just add to that, too, and I think it is important you mentioned data,

01:59you know, in terms of the data that HUD collects, because we certainly do, again,

02:04going back to wanting to protect those programs and the staff at HUD, because, you know,

02:1276 percent in the office in HUD is being threatened to cut the staff there. And it is

02:20important to have that data to understand the housing issue and how we can correct it.

02:26Right. And one of the things, since we were talking about cuts, you know, we, Arizona's

02:30unique, one of the unique states where we have 22 federally recognized tribes, we have the largest

02:35tribal enrollment in the country, you know, lots of land, but, of course, we have a housing

02:39challenge. So, the firing, obviously, of and closing down of some of our Tribal Bureau of

02:45Indian Affairs offices makes things difficult, especially when we're trying to apply for

02:50housing grants for some of these tribal nations. So, I'm going to introduce as a record a letter

02:55that myself and Senator Kelly wrote about our opposition to the closing of this, of these

02:59offices, which, again, will exasperate a housing crisis that's actually on, people don't understand,

03:04we actually have a tribal, on tribal lands, even a housing crisis even there.

03:08I have another question, Mr. Glasser, and this is something that I've noticed, is that many

03:13Californians are moving to Arizona, and instead of downsizing their homes,

03:20right, they're selling a pretty valuable property for $1.5 million in California, and then they're

03:25just coming to Arizona, and they're buying nearly that amount. What is the, why are they doing that?

03:30Explain the tax implication of why they're doing that. Well, I think, you know, it's the,

03:36the, thank you, thank you, Senator, for that question. I think the, the appeal of Arizona

03:43should be obvious to anyone. Oh, great, I can go on and on. The, and certainly. But the reason

03:50they're selling their house at $1.2 million, and it's a paid off house, and instead of going and

03:56getting, you know, this retired couple, couple, you know, a man and a woman, partner, whatever it

04:02is, instead of going and getting a nice house, a condo, and pocketing the rest of the money,

04:06they're not doing that. They're buying a house almost of equivalent value. What is the reasoning

04:10for that? It's not a trick question. I could answer that. No, no, well, you know, the first

04:13order thing is you go to a place where housing is cheaper, you buy more house, right? We believe,

04:16as economists, that people respond to, respond to prices, and if price, if housing is cheaper,

04:20and, you know, you could easily, you wouldn't be surprised if you say they spent $1.8 million on

04:24the house, because they could get so much more house for their buck in Arizona than in California.

04:28All right, well, the reason also is because if that family sells that house,

04:36and they don't buy a house of equivalent or close to equivalent value, they're going to end up

04:40paying capital gains on that house. So a retired couple, instead of trying to just pay the government

04:47the money, which I actually agree with them, they shouldn't pay that, we should figure out a way to

04:51actually give them a capital gains tax cut, because what actually ends up happening is that then they

04:56would come to Arizona, buy a smaller place, and then they could keep that money, that capital

05:01gains, for their own retirement. Instead, what they're doing is they're buying an equivalent

05:06house to at least keep some value. And so I, one of the things I'd love to think about is, like,

05:10how are we, you know, basically incentivizing these well-to-do retirees into buying houses

05:17that they don't necessarily need to buy, because that's the only thing that actually brings up

05:20some level of economic value and stability. So with that, I apologize, Mr. Chair, because I

05:23complained about going over time, and I yield back my time.

05:28Sounds like an opportunity for us to work together, and the TCJA is really increasing the

Ruben Gallego Asks Expert About Cutting Capital Gains Tax On Profit From Home Sales

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