Mayor Wu’s renewed push for a transfer fee on high-value real estate transactions highlights a simple but often overlooked economic principle: If the economy is producing too much of something, tax it (“It’s try, try again for Mayor Wu on high-dollar real estate tax,” Business, May 1).
Developers in Boston are producing too much luxury housing, fueling displacement, raising rents, and decimating economic diversity. These are predictable outcomes of current market incentives, demonstrating that the status quo is misaligned with our broader social needs.
A targeted transfer tax would correct these imbalances. Applying a modest fee to high-dollar transactions would do two things at once: slightly dampen demand at the top of the market and generate a dedicated, locally controlled funding stream for the housing Boston lacks.
The city’s affordable housing funds are already under pressure from a slowdown in private development. Relying on that same development to solve the problem has never really been tenable. A complementary tool is needed.
Used well, transfer tax revenue could support the development of affordable and “missing middle,” or multi-unit, medium-density, housing — homes that are currently underproduced but essential to maintaining a diverse, functioning city.
This is not about penalizing success. It is about aligning market incentives with public goals.
Gary Rucinski
Newton