Monday, April 19, 2010

Urban Housing Model And Taxation Exercise

The purpose of this post is to demonstrate the effectiveness that progressive; as opposed to regressive or flat; property taxes would have on the bane of capitalist societies; namely, the artificial hyper-inflation of real estate.

I would like to try my urban housing market model on an extreme micro - scale based on income in the U.S.

I could do it with 100 students of the same age, in a class room :

Step 1 ---Distribute to all paper money and asset statements based on their assigned vocation and it's average income, like the US, there will be vast disparity.

Step 2---Recreate a monopoly exercise that is as close to reality as possible. It would be a challenge, but certainly possible.

Step 3---Have the average number of housing transactions done according to the purchasing power of each, bidding as high as they want, buying as much property as possible , but not exceeding 50% of income.

Step 4---Assume the greed position , where the wealthiest will buy the most houses and bid the highest

Step 5---Run the exercise 2 times; once with progressive property taxes, and once with flat..

The property tax rate that keeps the average housing bid the lowest and yields the most money for the County Treasury... is the better!

Any high school student with google could do this....

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