A- taxes are a thing and therefore a cost that has to be factored in

I will spend less on Taxes + Mortgage for a house sold at-cost than on Mortgage alone on a house sold at a 4x markup.

B- Even if we fix the tax system it would still be a necessity.

The issue isn't the tax system, its the incentives of public officials. When you can generate personal income off the professional tax base, via privatization, you are incentivized to behave as a corrupt bureaucrat. This leads to both higher housing prices (because you want more money with which to be corrupt) and more hostility towards those taxes (because you're seeing the money go into the pockets of corrupt officials, rather than into the maintenance of community property).

arguing for utopia or bust is only going to let things get worse

I don't think identifying moral hazard in a system is utopian. If anything, I think it is vital to reversing negative trends. If you can't recognize why municipal officials would resist public housing and subsidize artificially high real estate costs, you're never going to see the path towards getting those corrupt officials out and reversing the trends.

If "the foxes have always guarded the hen house and asking for anything else is utopian" is your response... Idk, buddy. What do you think happens next?