Controlling Inflation at Its Source: A Progressive Rental Taxation Framework to Stabilize Housing Costs in India and Tamil Nadu

India’s, or specifically Tamil Nadu’s, rapidly escalating residential rental market poses a severe affordability crisis, with house rent constituting over 60% of urban household expenditure in major metropolitan areas. Landlords exercise unchecked discretion in annual rent increases, often exceeding inflation and wage growth by significant margins. This paper proposes a Progressive Rental Taxation (PRT) framework that imposes multiplicative tax penalties on landlords who increase rent beyond a permissible threshold anchored to a novel Rent Hike Index (RHI). We formulate the problem as a multi-objective optimization, constructing a Pareto front between government tax revenue maximization, tenant affordability preservation, and rental market stability. A Rental Escalation Regulatory Index (RERI) is introduced to quantify the equilibrium state of the rental market under varying tax regimes. We present mathematical models, simulation scenarios, and concrete policy recommendations for the Government of India to curb exploitative rent hikes through targeted fiscal interventions.