The aspect of goverment revenue has been on my mind a lot lately too. I believe our governments (local, state, fed) tend to spend what it takes in; it does not tend toward conservation or saving. This is a blanket statement that may have exceptions, but I believe it is the natural tendency.
Moreover, I am doubtful that many financialists within these governments are mindful of housing as it relates to government revenue, specifically what would a housing downturn mean to them?
I can think of two main aspects:
first, the re-evaluation of the house’s tax base one it’s sold. If fewer and fewer homes are sold, there will be that many fewer being re-evaluated.
Second, if property values are declining, there can hardly be a basis for increased property taxes.
So, if our governments are currently spending all of their property tax revenue, what will they do when it is no longer increasing? What will they do when sales tax revenue drops significantly due to lowered consumer spending?
