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A Simple General Test for Tax Bias

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  • Mason Gaffney

Abstract

. The paper infers the biasing effects of taxes from their differential effects on the present values of rival uses for given tracts of land. After‐tax wage rates, interest rates, and commodity prices are exogenous, hence not affected by taxes, which are therefore all shifted to land rents and values. The effects are differential among rival uses, hence change their ranking in the eyes of the landowner‐manager. Most taxes downgrade the highest use into a lower use, inducing quantum leaps away from higher and better uses into lower and worse uses. The paper uses forestry as an allegory for all land uses. It compares yield taxes, property taxes, income taxes, and site value taxes. It finds that a change from the first three to the site value tax would induce quantum leaps from lower to higher uses of land.

Suggested Citation

  • Mason Gaffney, 2006. "A Simple General Test for Tax Bias," American Journal of Economics and Sociology, Wiley Blackwell, vol. 65(3), pages 733-749, July.
    • Handle: RePEc:bla:ajecsc:v:65:y:2006:i:3:p:733-749
    DOI: 10.1111/j.1536-7150.2006.00471.x
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    References listed on IDEAS

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    1. D. Gale Johnson, 1950. "Resource Allocation under Share Contracts," Journal of Political Economy, University of Chicago Press, vol. 58(2), pages 111-111.
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    Cited by:

    1. Mason Gaffney, 2009. "2. A New Framework for Macroeconomics," American Journal of Economics and Sociology, Wiley Blackwell, vol. 68(4), pages 889-982, October.

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