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Income taxes, property values, and migration

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  • Glazer, Amihai
  • Kanniainen, Vesa
  • Poutvaara, Panu

Abstract

We consider the effects of income redistribution when people can migrate from one country to another, and when land within each country is heterogeneous. Taxes related to income can then affect property values, and can induce migration, which further affects property values. We show that under these conditions a utilitarian government should never equalize after-tax incomes. If migration is impossible, it may even transfer income from the poor to the rich, reducing the rents earned by absentee landlords. The redistributive tax on the rich may be higher or lower when the rich can migrate than when they cannot. A Rawlsian government in the absence of mobility will equalize after-tax incomes. Under mobility, Rawlsian governments cut their taxes if and only if the relative pre-tax income of the poor is sufficiently low.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Public Economics.

Volume (Year): 92 (2008)
Issue (Month): 3-4 (April)
Pages: 915-923

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Handle: RePEc:eee:pubeco:v:92:y:2008:i:3-4:p:915-923

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Web page: http://www.elsevier.com/locate/inca/505578

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  1. Heikki Kauppi & Markus Haavio, 2003. "Housing Markets and Labor Mobility," Computing in Economics and Finance 2003 164, Society for Computational Economics.
  2. Wildasin, D.E., 1992. "Income Restribution and Migration," Papers 92-003, Indiana - Center for Econometric Model Research.
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Cited by:
  1. Määttänen, Niku & Terviö, Marko, 2010. "Income Distribution and Housing Prices: An Assignment Model Approach," CEPR Discussion Papers 7945, C.E.P.R. Discussion Papers.
  2. Marko Köthenbürger, 2012. "Competition for Migrants in a Federation: Tax or Transfer Competition?," CESifo Working Paper Series 3709, CESifo Group Munich.
  3. Bach, Stefan & Corneo, Giacomo & Steiner, Viktor, 2011. "Optimal top marginal tax rates under income splitting for couples," CEPR Discussion Papers 8435, C.E.P.R. Discussion Papers.
  4. Woohyung Lee & Byeongho Choe, 2012. "Agglomeration effect and tax competition in the metropolitan area," The Annals of Regional Science, Springer, vol. 49(3), pages 789-803, December.

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