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An Optimal Linear Income Tax with a Subsidy on Housing

Author

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  • Irene Perrote

    (Universidad de Castilla- La Mancha and Instituto de Estudios Fiscales)

Abstract

This paper generalizes the standard model of the optimal linear income tax to include a subsidy on housing. Unlike previous literature, the author starts from a dynamic equilibrium model and examine the steady state equilibrium. She then analyses first order conditions for her linear tax structure. Given the higher complexity of this model, some new efficiency effects appear, coming from both the marginal tax rate and the subsidy on housing.

Suggested Citation

  • Irene Perrote, 2006. "An Optimal Linear Income Tax with a Subsidy on Housing," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 56(09-10), pages 435-446, September.
    • Handle: RePEc:fau:fauart:v:56:y:2006:i:9-10:p:435-446
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    File URL: http://journal.fsv.cuni.cz/storage/1068_s_435_446.pdf
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    References listed on IDEAS

    as
    1. Hamilton, Bob & Whalley, John, 1985. "Tax treatment of housing in a dynamic sequenced general equilibrium model," Journal of Public Economics, Elsevier, vol. 27(2), pages 157-175, July.
    2. Turnovsky, Stephen J. & Okuyama, Toshiyuki, 1994. "Taxes, housing, and capital accumulation in a two-sector growing economy," Journal of Public Economics, Elsevier, vol. 53(2), pages 245-267, February.
    3. Skinner, Jonathan, 1996. "The dynamic efficiency cost of not taxing housing," Journal of Public Economics, Elsevier, vol. 59(3), pages 397-417, March.
    4. Berkovec, James & Fullerton, Don, 1992. "A General Equilibrium Model of Housing, Taxes, and Portfolio Choice," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 390-429, April.
    5. Slemrod, Joel, 1994. "Fixing the leak in Okun's bucket optimal tax progressivity when avoidance can be controlled," Journal of Public Economics, Elsevier, vol. 55(1), pages 41-51, September.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Igor Kotlán, 2008. "Gnoseologické přístupy k daňové reformě v ČR [Gnoseology approach to the tax reform in the Czech Republic]," Politická ekonomie, Prague University of Economics and Business, vol. 2008(4), pages 505-519.

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    More about this item

    Keywords

    housing; personal income; optimal taxation;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets

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