> People who don't understand market pricing are against rent taxes because they think landlords can pass them through.
If all rents are taxed, what is the market mechanism to avoid pass though?
It seems as if a more fair approach would be to increase tax rates on income from rents. That way a rentier would not defer maintenance, the costs of which would be deducted from income and not taxed, as opposed to front-loading the tax to the rent transaction and thus encouraging deferred maintenance to preserve income.
The problem — again, in America — is that residential rents are by far the largest component of unreported income. Exemptions mean nothing to petty criminals who are already not effectively taxed.
The market mechanism that precludes tax pass-through is the price is already set as high as the market will bear. If landlords could raise the rent to pass through a new tax then they would have done so already without the tax.
Where do you find that residential rent is highest unreported income? Last figure from IRS I see is 2014-2016 and rent was a quarter the size of non-farm proprietor: https://www.irs.gov/pub/irs-pdf/p1415.pdf#page23
What percentage of total rents are unreported? One would expect that the majority of rents are collected by professional management companies subject to reporting requirements that make underreporting unfeasible. Maybe that is an incorrect baseline?
What makes you think that rents are already as high as the market will bear? After all, rents keep rising, right?
If all rents are taxed, what is the market mechanism to avoid pass though?
It seems as if a more fair approach would be to increase tax rates on income from rents. That way a rentier would not defer maintenance, the costs of which would be deducted from income and not taxed, as opposed to front-loading the tax to the rent transaction and thus encouraging deferred maintenance to preserve income.