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> Since rental supply is almost completely inelastic in the short run rental prices are wholly determined by demand. Yes, I fully agree with that. I don't see
by neilparikh 6y ago
> Since rental supply is almost completely inelastic in the short run rental prices are wholly determined by demand.
Yes, I fully agree with that. I don't see how that refutes my point though.
If the maximum renters will bear is $X/mo before they decide to move to somewhere cheaper, and landlords are currently charging $X/mo and you impose a tax on renters, they'll either ask for their rent to be reduced, or move away.
If landlords charging less than $X, and the tax is imposed on the renters, they'll stay as long as the total is still less than $X. If the tax is imposed on the landlords, they'll raise rents to $X.
- colinmhayes 6y agoTaxes don't change X. If landlords have to pay more taxes and try to raise prices they won't be able to rent the unit. If renters are forced to pay the tax they'll leave unless rent is lowered. Either way the incidence is completely on the landlord.
- neilparikh 6y agoOh okay, we're in complete agreement then. My point is that the incidence of the council tax and property tax should be the same, whether it falls on the landlord or the tenant. My belief was that it would fall on the landlord in either case, but I simply stated that the incidence would stay the same, to make the weakest claim necessary.