Using a simulation model crafted to integrate the short-run and long-term impacts of tax reform on the housing market, we find modest impacts from fundamental reform of the Federal income tax. These results suggest that concerns over the impact of tax reform on housing values and household net worth are overstated. To the extent that reform is otherwise desirable, fears of drastic effects on the housing market should not stand as an impediment to reform.
A revised version of this paper appears as "Fundamental Tax Reform and Residential Housing," (with Donald Bruce), Journal of Housing Economics, Vol. 8, No. 4, December 1999, pp. 249-271.