Abstract

The recent tax reforms proposed by the Administration have occasioned bitter debate over the consequences of tax changes for rents and the value of real property. Many have claimed that these reforms will lead to immediate and sharp reduction in property values and large increases in rental payments. The analysis presented in this article shows that the effect of the proposed tax reforms on rents and property values is likely to be minor; in fact, the values of commercial buildings would be more likely to rise than fall and there should be little or no increase in tenant rents while apartment rents may even be expected to decline.