The optimal tax treatment of housing capital in the neoclassical growth model
AbstractIn a dynamic setting, housing is both an asset and a consumption good. But should it be taxed like other forms of consumption or like other forms of saving? We consider the optimal taxation of the imputed rent from owner housing within a version of the neoclassical growth model. We find that the optimal tax rate on the imputed rent is quite sensitive to the constraints imposed on the other available tax rates. In general, it is not optimal to tax the imputed rent at the same rate as the business capital income.
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Bibliographic InfoPaper provided by Bank of Finland in its series Research Discussion Papers with number 10/2005.
Length: 34 pages
Date of creation: 11 Jul 2005
Date of revision:
housing; capital taxation; optimal taxation;
Other versions of this item:
- Essi Eerola & Niku Määttänen, 2013. "The Optimal Tax Treatment of Housing Capital in the Neoclassical Growth Model," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 15(6), pages 912-938, December.
- Essi Eerola & Niku Määttänen, 2009. "The optimal tax treatment of housing capital in the neoclassical growth model," Working Papers 3, Government Institute for Economic Research Finland (VATT).
- E21 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Consumption; Saving; Wealth
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
This paper has been announced in the following NEP Reports:
- NEP-ACC-2006-10-21 (Accounting & Auditing)
- NEP-ALL-2006-10-21 (All new papers)
- NEP-DGE-2006-10-21 (Dynamic General Equilibrium)
- NEP-PBE-2006-10-21 (Public Economics)
- NEP-PUB-2006-10-21 (Public Finance)
- NEP-URE-2006-10-21 (Urban & Real Estate Economics)
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