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The effect of risk on the effect of a land tax: A simulation

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  • Coulson, N. Edward
  • Li, Herman

Abstract

The inelastic supply of land suggests that taxation of land might be neutral. Feldstein (1977) suggests otherwise, in that taxation reduces risk, and this may raise demand among risk-averse lenders. We simulate the effect of this demand increase and find that the impact in the aggregate is neutral, because many households are risk-loving in housing assets. The effects on individuals are less negligible.

Suggested Citation

  • Coulson, N. Edward & Li, Herman, 2010. "The effect of risk on the effect of a land tax: A simulation," Regional Science and Urban Economics, Elsevier, vol. 40(6), pages 530-537, November.
  • Handle: RePEc:eee:regeco:v:40:y:2010:i:6:p:530-537
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    References listed on IDEAS

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    Keywords

    Land tax Tax neutrality;

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