Let's go to an extreme, let's say taxes are 100% of the house value per year. 1 million dollar house is 1 million dollar taxes. 10k house is 10k taxes. It's ob

Let's go to an extreme, let's say taxes are 100% of the house value per year. 1 million dollar house is 1 million dollar taxes. 10k house is 10k taxes. It's obvious what would happen, the house price would drop. What would it stabilize at? Roughly the annual rent price for that type of house. Moving back to my original example: T=0, where taxes are .55% and market value is 1M, paying taxes of $5500. T=1, we raise taxes to 1.55%, market auction comes in and offers $800k, where they would pay taxes of $12400. T=2, we raise taxes to 5.55%, market auction comes in and offers $500k, where they would pay taxes of $27750. T=3, we raise taxes to 15.55%, market auction comes in and offer $200k, where they would pay taxes of $31100. STOP. Balance as necessary. Those numbers are not real numbers. The numbers will be different, and they will never be perfect. It's likely that you wouldn't have per-house figures, but city averages setting city-wide taxes. Since so much of our current system's people networth are invested into something, this is not a change that can possibly happen over-night, and would likely take upwards of 50 years to phase in.