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Property Tax Incidence in a Multijurisdictional Neoclassical Model

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  • Karl E. Case

    (Wellesley College)

  • James H. Grant

    (Lewis and Clark College)

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    Abstract

    This article presents a simple long-run multijurisdictional neoclassical model that is used to simulate the incidence of a residential property tax in a semi-open metropolitan area. Housing is produced using capital and land, and households consume housing and a composite good Capital and the composite are in perfectly elastic supply. In the model, a fixed number of households sort themselves across 25 jurisdictions. First, a uniform tax is imposed in all jurisdictions. Next, the tax is raised in one single jurisdiction. The excise effects of raising the tax turn out to be surprisingly large. In the long run, a 25% increase in the tax rate only generates 6.6% more revenue for the taxing jurisdiction. Explicit excess burdens are calculated using the indirect utility approach.

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    Bibliographic Info

    Article provided by in its journal Public Finance Review.

    Volume (Year): 19 (1991)
    Issue (Month): 4 (October)
    Pages: 379-392

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    Handle: RePEc:sae:pubfin:v:19:y:1991:i:4:p:379-392

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    Cited by:
    1. Song, Yan & Zenou, Yves, 2005. "Property Tax and Urban Sprawl. Theory and Implications for U.S. Cities," CEPR Discussion Papers, C.E.P.R. Discussion Papers 5345, C.E.P.R. Discussion Papers.
    2. Karl E. Case & Christopher J. Mayer, 1995. "Housing price dynamics within a metropolitan area," Working Papers, Federal Reserve Bank of Boston 95-3, Federal Reserve Bank of Boston.
    3. Song, Yan & Zenou, Yves, 2008. "How Differences in Property Taxes within Cities Affect Urban Sprawl?," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6842, C.E.P.R. Discussion Papers.
    4. Cho, Seong-Hoon & Kim, Seung Gyu & Roberts, Roland K., 2009. "Measuring the Effects of a Land Value Tax on Land Development," 2009 Annual Meeting, January 31-February 3, 2009, Atlanta, Georgia, Southern Agricultural Economics Association 46760, Southern Agricultural Economics Association.

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