Here’s a cute device.

In my town they have just published the latest tax assessments. This, of course, causes people to start complaining about the accuracy of these assessments.

So today I read of a delightful gimick used by the Dutch in the 18th century. They would charge a small tax on ship cargos to pay for the lighthouses. This was based on the purchase price of the cargo. Which, of course, created an incentive to lie. The trick was that the goverment had the option of purchasing the cargo based on it’s declared value.

Presumably many disputes over valuation and taxes could use a limited amount of a similar mechinism to limit the cheating. It works both ways: you could create a control feedback loop where the town assessor can be ‘put to the test’ by volunteers that; if they believe the understand the market better than he does offer to sell their homes to prove it.

There are two things, at least, that make this somewhat unworkable. First the house market is very thin; so that the instantanous prices that things are clearing at isn’t a good estimate of the median price of the entire set of houses. I don’t see a reasonably way to eliminate that problem. Second the town assessor has much more knowledge of the market than the median home owner – knowledge imbalances like that make for poor market solutions. To some extent assuring that the home owners have to volunteer would limit that problem.

The shipping example presumably works reasonably well because the cargo’s owner is reasonably well informed about the value of his goods. That means that the tax collector and the owner have similar valuation skills.

There is the germ of an idea hidden in there somewhere.