House ownership and taxes
AbstractThe household portfolio is dominated by a small number of assets; primarily housing and mortgages. We compare data on actual portfolios of Norwegian households with estimated optimal portfolios, using traditional financial theory. We find actual portfolios to be close to the portfolio indicated by a mean-variance frontier, based on four assets and estimated under assumptions of short sale constraints. This result is sustained even in a no-tax regime. To induce a substantial change from housing to equity, taxation of the consumption stream from housing is needed. An alternative; taxation of capital gains from housing investment; could actually increase the relative holding of housing.
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Bibliographic InfoPaper provided by Research Department of Statistics Norway in its series Discussion Papers with number 395.
Date of creation: Nov 2004
Date of revision:
Households; portfolio choice; consumption tax; capital gains tax.;
Find related papers by JEL classification:
- G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
- H2 - Public Economics - - Taxation, Subsidies, and Revenue
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-02-13 (All new papers)
- NEP-FIN-2005-02-13 (Finance)
- NEP-PBE-2005-02-13 (Public Economics)
- NEP-PUB-2005-02-17 (Public Finance)
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