Submitted by TeacherGuy1980 t3_ygpqg6 in massachusetts
Please let me know if I messed up my thoughts or algebra.
I understand that the first $1M in profit is taxed at $40,000 and 8% is taxed on the selling price minus the purchase price minus the amount already taxed on the first $1M
Let B = purchase price of a home Let S = Selling price of a home Let T = 4% tax on the first million, so $40,000 Let R = 8% tax rate Ley y = the ratio between the new rate imposed by yes 1 on #1 versus the simply taxing the profit on a home at 4%
y(S) = [0.08(S - B - 10⁶) + T]/[0.04(S-B)] for S ≥ $1.5M
Lets say you purchased a $500,000 home in the 1990s and it's now valued at $1.5M. You'd pay $40,000 in taxes on this sale. Yes #1 would have no affect on your taxes.
Lets say you purchased a $500,000 home in the 1990s and it's now valued at $2.5M. You'd pay 1.5X more in taxes.
Lets say you purchased a $500,000 home in the 1990s and it's now valued at $5M. You'd pay 1.78X more in taxes.
If you examine the function y(S) as S approaches infinity it will get close, but never equal a ratio of two or doubling the taxes on selling the home.
Therefore the statement that Yes #1 will double your taxes is mathematically wrong, that is, a lie.