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How do services of owner-occupied housing affect income inequality and redistribution?

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  • Jorge Onrubia

    (Universidad Complutense de Madrid)

  • M. Carmen Rodado

    (Universidad Rey Juan Carlos)

  • Luis Ayala

    ()
    (Universidad Rey Juan Carlos)

Abstract

This paper aims at analyzing the redistributive impact that the inclusion of imputed rental market value of owner-occupied housing would have when quantifying ability to pay, rather than the legal imputation that considers cadastral values. We consider the Spanish Personal Income Tax as reference, due to the differential treatment that provides to this type of income, together with the higher percentages of ownership for primary residence in Spain. The analysis is carried out through a micro-simulation exercise in which different scenarios are proposed. Our results show that the measurement of income including market value incomes resulting from actual or potential use of significantly modifies income inequality and IRPF progressivity and redistribution.

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File URL: http://www.ecineq.org/milano/WP/ECINEQ2009-112.pdf
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Bibliographic Info

Paper provided by ECINEQ, Society for the Study of Economic Inequality in its series Working Papers with number 112.

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Length: 22 pages
Date of creation: 2009
Date of revision:
Handle: RePEc:inq:inqwps:ecineq2009-112

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Keywords: owner-occupied housing services; inequality by income sources; personal income tax; progressivity; redistribution;

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  1. Katz, Arnold J, 1983. "Valuing the Services of Consumer Durables," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 29(4), pages 405-27, December.
  2. Smeeding, Timothy M, et al, 1993. "Poverty, Inequality, and Family Living Standards Impacts across Seven Nations: The Effect of Noncash Subsidies for Health, Education and Housing," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 39(3), pages 229-56, September.
  3. Yates, Judith, 1994. "Imputed Rent and Income Distribution," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 40(1), pages 43-66, March.
  4. Kakwani, Nanok C, 1977. "Measurement of Tax Progressivity: An International Comparison," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 87(345), pages 71-80, March.
  5. Musgrave, Richard A., 1990. "Horizontal Equity, Once More," National Tax Journal, National Tax Association, vol. 43(2), pages 113-22, June.
  6. James Poterba & Todd Sinai, 2008. "Tax Expenditures for Owner-Occupied Housing: Deductions for Property Taxes and Mortgage Interest and the Exclusion of Imputed Rental Income," American Economic Review, American Economic Association, American Economic Association, vol. 98(2), pages 84-89, May.
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Cited by:
  1. Simone Pellegrino & Massimiliano Piacenza & Gilberto Turati, 2011. "Assessing the Distributional Effects of Housing Taxation in Italy: From the Actual Tax Code to Imputed Rent," CESifo Working Paper Series 3368, CESifo Group Munich.
  2. Figari, Francesco & Paulus, Alari & Sutherland, Holly & Tsakloglou, Panos & Verbist, Gerlinde & Zantomio, Francesca, 2012. "Taxing Home Ownership: Distributional Effects of Including Net Imputed Rent in Taxable Income," IZA Discussion Papers 6493, Institute for the Study of Labor (IZA).
  3. Frick, Joachim R. & Grabka, Markus M. & Smeeding, Timothy M. & Tsakloglou, Panos, 2010. "Distributional effects of imputed rents in five European countries," Journal of Housing Economics, Elsevier, Elsevier, vol. 19(3), pages 167-179, September.
  4. Garner, Thesia I. & Short, Kathleen, 2009. "Accounting for owner-occupied dwelling services: Aggregates and distributions," Journal of Housing Economics, Elsevier, Elsevier, vol. 18(3), pages 233-248, September.
  5. Garrido-Yserte, Rubén & Mañas-Alcón, Elena & Gallo-Rivera, Maria Teresa, 2012. "Housing and cost of living: Application to the Spanish regions," Journal of Housing Economics, Elsevier, Elsevier, vol. 21(3), pages 246-255.
  6. Panos Tsakloglou & Francesco Figari & Alari Paulus & Holly Sutherland & Gerlinde Verbist & Francesca Zantomio, 2014. "Taxing home ownership: distributional effects of including net imputed rent in taxable income," EcoMod2014 7474, EcoMod.

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