> If we think that "everyone" will have to "overdeclare" in such fashion, then obviously the government is collecting more revenue than it intended and will low

> If we think that "everyone" will have to "overdeclare" in such fashion, then obviously the government is collecting more revenue than it intended and will lower the tax rates to compensate, … If everyone over-declares by the same amount, sure. But not everyone will. It depends on how much attachment one has to a specific item, how much risk there is that someone will attempt to take it, and how painful or inconvenient it would be to lose it. And you're ignoring the point about being vulnerable to motivated individuals willing to pay above-market rates purely to cause trouble.