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A fiscal and public spending reform is proposed in the country that consists of the following. The property tax would be significantly increased (progressive rates,

A fiscal and public spending reform is proposed in the country that consists of the following. The property tax would be significantly increased (progressive rates, using the market value of the properties) and all that is collected would be destined to spending on basic public education (primary, secondary). With your knowledge of tax theory, do an analysis of the effects of this proposal. Be very detailed in the assumptions made. Review the following cases. a) Assume that the proceeds can only be used in the municipality (delegation) where it is collected, with homogeneous public spending per student. b) Assume that the proceeds can only be used in the State (including Mexico City) where it is collected, with homogeneous public spending per student. c) What effects would the above have on the private school market? d) With your knowledge of general equilibrium, what would happen to the property values? Justify analysis.

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