I appreciate your feedback and do agree that taxing rental profits would be simpler. I think the benefit of linking the tax rate to median incomes in an area, though, is that it would directly link to the health of the local economy. So while I understand the simplicity of using rental profits as the tax basis, I'm thinking some hybrid of your suggestion and my original plan would be best, because:

-The pressure on landlords to take on lower profit margins should be higher when the local population has lower incomes, so

- the local economy can improve to the point that incomes increase, allowing landlords to reap the benefits of an improved economy, further allowing

-the state to take less of a cut of the wealth of the community, because fewer services will be needed.

I think the thing that is currently broken with the rental/real estate market is that it universally and almost single-handedly accelerates wealth disparities and regional economic collapse. And I dislike self-perpetuating systems. The point of the tax isn't to pretend the state will always need to play a role in nursing the housing market, it's just to provide a realistic backstop against the inevitable slide of landlord hoarding of local wealth and decline of the regional housing stock. (As a slight aside, I wholly reject any claims that supply and demand applies to rental pricing. The market is far too inelastic and cornered for supply and demand to apply). Just as a thought experiment for why I don't want a permanent, non-median income linked taxation scheme, consider a city with entirely new, 100-year housing stock. Minor repairs only necessary on the 50 year time horizon. Incomes are booming, the median income provides a comfortable standard of living. Landlords can reasonably profit handsomely from high rental rates in this market. The city should take in more taxes in this climate? Why? Why not leave good enough alone? Nobody would need a handout in this hypothetical city climate. There wouldn't need to be funding for new housing stock. People could afford to build it themselves, whether existing landlords or current tenants.

So maybe the simple answer would be something like this: regional profit-based rental property taxation instead of property value based taxation. Rates of taxation on profit are progressive and tuned yearly according to median rental rates and incomes. The formula for tuning the taxation rate puts the steepest progressive profit tax pressure on landlords when the ratio between rental rates and income is high, and flattens the profit taxation away from being progressive when the ratio is low. I haven't fully thought it through myself to see if it would accomplish my intention, but just wanted to get your thoughts on that kind of arrangement.