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Optimal Commodity Taxation When Land and Structures Must Be Taxed at the Same Rate

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Author Info
Saku Aura () (Department of Economics, University of Missouri-Columbia)
Thomas Davidoff

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Abstract

We show that the optimal property tax rate rises with the ratio of land rents to structure and land development costs. Californias high ratio of income to property tax revenue and the distribution of Federal housing subsidies thus appear geographically misplaced. Proportional taxation of non-housing commodities is not optimal, even when elasticities with respect to wages are identical. Absent externalities, the desirability of transportation taxes andanti-sprawl growth controls hinge on the relative importance of time versus money in commuting costs.

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Paper provided by Department of Economics, University of Missouri in its series Working Papers with number 0505.

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Length: 32 pgs.
Date of creation: 19 Jul 2005
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Handle: RePEc:umc:wpaper:0505

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Related research
Keywords: Property Taxes; Henry George Theorem;

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Find related papers by JEL classification:
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
R13 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General Equilibrium and Welfare Economic Analysis of Regional Economies

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  1. repec:rus:hseeco:126976 is not listed on IDEAS
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    Other versions:
  3. Harvey S. Rosen, 1985. "Housing Subsidies: Effects on Housing Decisions, Efficiency, and Equity," NBER Working Papers 1161, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  6. Thorsnes, Paul, 1997. "Consistent Estimates of the Elasticity of Substitution between Land and Non-Land Inputs in the Production of Housing," Journal of Urban Economics, Elsevier, vol. 42(1), pages 98-108, July. [Downloadable!] (restricted)
  7. Brueckner, Jan K & Kim, Hyun-A, 2003. "Urban Sprawl and the Property Tax," International Tax and Public Finance, Springer, vol. 10(1), pages 5-23, January. [Downloadable!] (restricted)
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  8. Lawrence H. Goulder & Roberton C. Williams III, 2003. "The Substantial Bias from Ignoring General Equilibrium Effects in Estimating Excess Burden, and a Practical Solution," Journal of Political Economy, University of Chicago Press, vol. 111(4), pages 898-927, August. [Downloadable!] (restricted)
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  10. Robert E. Lucas & Esteban Rossi-Hansberg, 2002. "On the Internal Structure of Cities," Econometrica, Econometric Society, vol. 70(4), pages 1445-1476, July. [Downloadable!] (restricted)
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  12. Rosen, Harvey S., 1985. "Housing subsidies: Effects on housing decisions, efficiency, and equity," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 1, chapter 7, pages 375-420 Elsevier. [Downloadable!] (restricted)
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