The Economic Effects of Replacing the Property Tax with a Sales or Income Tax:A Computable General Equilibrium Approach
AbstractWith the most recent wave of property tax restructuring in the U.S., policy makers have considered the possibility of replacing the property tax. In this analysis we use data for Indiana and a short-run computable general equilibrium model to examine the effects of replacing the property tax with a sales or income tax. We find that replacing the property tax with a sales or income tax has a relatively small effect on aggregate economic variables. Aggregate output in the state decreases by 2 to 3 percent. Larger effects are apparent when analyzing household groups and industry sectors. Replacing the property tax with a sales or income tax decreases household income by over three percent with the income tax being most regressive. Replacing the property tax has a negative effect on sales revenue for most industry sectors with retail sales and several other sectors experiencing large (over five percent) decreases.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Ball State University, Department of Economics in its series Working Papers with number 201008.
Length: 40 pages
Date of creation: Jun 2010
Date of revision: Jun 2010
property tax; sales tax; income tax; computable general equilibrium models;
Find related papers by JEL classification:
- H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
- C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
This paper has been announced in the following NEP Reports:
- NEP-ACC-2010-06-11 (Accounting & Auditing)
- NEP-ALL-2010-06-11 (All new papers)
- NEP-PBE-2010-06-11 (Public Economics)
- NEP-URE-2010-06-11 (Urban & Real Estate Economics)
You can help add them by filling out this form.
reading list or among the top items on IDEAS.Access and download statisticsgeneral information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tung Liu).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.