As an economist advising the governor of the State of Illinois on the idea of financing schools through a new income tax instead of property taxes, I would expect this change to have an impact on the real estate market.
1. Impact on the Real Estate Market:
- This change could potentially lead to a decrease in property values, as the burden of funding schools would shift from property owners to income earners. With lower property taxes, the attractiveness of owning property may decrease, which could lead to a decrease in demand for real estate.
- On the other hand, the new income tax could provide relief to property owners, as they would no longer have to bear the burden of funding schools through property taxes. This could potentially make property ownership more affordable and attractive, leading to an increase in demand for real estate.
2. Impact on Owner-Occupiers and Landlords:
- The impact of this change would likely be more impactful for owner-occupiers, as they directly benefit from the decrease in property taxes. They would have more disposable income, which could be used for other purposes such as home improvements or savings.
- Landlords, on the other hand, may not see a direct impact on their income, as the new income tax would be borne by their tenants. However, if the decrease in property values leads to a decrease in rental demand, landlords may face challenges in finding tenants or maintaining rental income levels.
In conclusion, whether or not to support the governor in making such a decision depends on various factors, including the potential impact on the real estate market, owner-occupiers, and landlords. It is important to carefully weigh the pros and cons and consider the long-term implications before making a decision.