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The Effects of Changes in Capital Gains Taxes on Land Sales: Empirical Evidence from Finland

  • Kyösti Pietola
  • Sami Myyrä
  • Eija Pouta

We estimate the landowner response to and fiscal effects of a temporary reduction in capital gains taxes imposed on land sales. The underlying normative decision rules are first derived and solved numerically using stochastic dynamic programming. The landowner preferences and willingness to sell land are then estimated in the reduced form using survey data from Finland. The results suggest that the timing of land sales and land sales quantities respond significantly to tax incentives. Certain temporary tax waiver programs could maintain the current tax revenues with fewer trade distorting effects on the land market.

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File URL: http://le.uwpress.org/cgi/reprint/87/4/582
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Article provided by University of Wisconsin Press in its journal Land Economics.

Volume (Year): 87 (2011)
Issue (Month): 4 ()
Pages: 582-594

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Handle: RePEc:uwp:landec:v:87:y:2011:iv:1:p:582-594
Contact details of provider: Web page: http://le.uwpress.org/

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  1. Myyra, Sami & Pietola, Kyosti, 2006. "Exploring long-term land improvements under land tenure insecurity," 2006 Conference, August 24-25, 2006, Nelson, New Zealand 31954, New Zealand Agricultural and Resource Economics Society.
  2. Myyra, Sami & Pietola, Kyosti, 2005. "Land Improvements Under Land Tenure Insecurity: The Case of Liming in Finland," 94th Seminar, April 9-10, 2005, Ashford, UK 24418, European Association of Agricultural Economists.
  3. Zhonglan Dai & Edward Maydew & Douglas A. Shackelford & Harold H. Zhang, 2006. "Capital Gains Taxes and Asset Prices: Capitalization or Lock-In?," NBER Working Papers 12342, National Bureau of Economic Research, Inc.
  4. Sami Myyrä & Eija Pouta, 2010. "Farmland Owners’ Land Sale Preferences: Can They Be Affected by Taxation Programs?," Land Economics, University of Wisconsin Press, vol. 86(2), pages 245-262.
  5. Jonathan Yoder & Ishrat Hossain & Francis Eppin & Damona Doye, 2005. "Contract Duration and the Division of Labor in Agricultural Land Leases," Working Papers 2005-6, School of Economic Sciences, Washington State University.
  6. Sami Myyrä & Elise Ketoja & Markku Yli-Halla & Kyöisti Pietola, 2005. "Land Improvements under Land Tenure Insecurity: The Case of pH and Phosphate in Finland," Land Economics, University of Wisconsin Press, vol. 81(4).
  7. Gourio, François, 2009. "Is there a majority to support a capital tax cut?," Journal of Economic Dynamics and Control, Elsevier, vol. 33(6), pages 1278-1295, June.
  8. Meredith J. Soule & Abebayehu Tegene & Keith D. Wiebe, 2000. "Land Tenure and the Adoption of Conservation Practices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 82(4), pages 993-1005.
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