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The Efficiency Costs of Local Property Tax

Section II briefly reviews the literature on the efficiency effects of the property tax. Section III presents the details of our model of local use of the property tax. Simulation results for the efficiency costs of local property taxation are presented in section IV for a variety of model scenarios. These results are then compared to existing estimates of the efficiency cost of various tax alternatives in Section V. Section VI summarizes the results and suggests some directions for future research.

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Paper provided by International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University in its series International Center for Public Policy Working Paper Series, at AYSPS, GSU with number paper0815.

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Length: 39 pages
Date of creation: 01 Dec 2008
Date of revision:
Handle: RePEc:ays:ispwps:paper0815
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  1. Richard Arnott & Petia Petrova, 2002. "The Property Tax as a Tax on Value: Deadweight Loss," IDEP Working Papers 0203, Institut d'economie publique (IDEP), Marseille, France, revised Apr 2002.
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  3. Mieszkowski, Peter, 1972. "The property tax: An excise tax or a profits tax?," Journal of Public Economics, Elsevier, vol. 1(1), pages 73-96, April.
  4. George R. Zodrow, 2007. "Should Capital Income be Subject to Consumption-Based Taxation?," Working Papers 0715, Oxford University Centre for Business Taxation.
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  6. Poterba, James M., 1998. "The rate of return to corporate capital and factor shares: new estimates using revised national income accounts and capital stock data," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 48(1), pages 211-246, June.
  7. Carroll, Robert & Yinger, John, 1994. "Is the Property Tax a Benefit Tax? The Case of Rental Housing," National Tax Journal, National Tax Association, vol. 47(2), pages 295-316, June.
  8. Charles L. Ballard & John B. Shoven & John Whalley, 1982. "The Welfare Cost of Distortions in the United States Tax System: A General Equilibrium Approach," NBER Working Papers 1043, National Bureau of Economic Research, Inc.
  9. Wassmer, Robert W., 1993. "Property Taxation, Property Base, and Property Value: An Empirical Test of the 'New View'," National Tax Journal, National Tax Association, vol. 46(2), pages 135-59, June.
  10. McDonald, John F., 1981. "Capital-land substitution in urban housing: A survey of empirical estimates," Journal of Urban Economics, Elsevier, vol. 9(2), pages 190-211, March.
  11. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
  12. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
  13. Ross, Stephen & Yinger, John, 1999. "Sorting and voting: A review of the literature on urban public finance," Handbook of Regional and Urban Economics, in: P. C. Cheshire & E. S. Mills (ed.), Handbook of Regional and Urban Economics, edition 1, volume 3, chapter 47, pages 2001-2060 Elsevier.
  14. Assaf Razin & Efraim Sadka, 1989. "International Tax Competition and Gains from Tax Harmonization," NBER Working Papers 3152, National Bureau of Economic Research, Inc.
  15. George R. Zodrow, 2008. "The Property Tax Incidence Debate and the Mix of State and Local Finance of Local Public Expenditures," Working Papers 0801, Oxford University Centre for Business Taxation.
  16. Benjamin Russo, 2005. "An Efficiency Analysis of Proposed State and Local Sales Tax Reforms," Southern Economic Journal, Southern Economic Association, vol. 72(2), pages 443–462, October.
  17. Diewert, W. E., 1978. "Optimal tax perturbations," Journal of Public Economics, Elsevier, vol. 10(2), pages 139-177, October.
  18. Wilson, John D., 1986. "A theory of interregional tax competition," Journal of Urban Economics, Elsevier, vol. 19(3), pages 296-315, May.
  19. Gordon, Roger H, 1986. "Taxation of Investment and Savings in a World Economy," American Economic Review, American Economic Association, vol. 76(5), pages 1086-1102, December.
  20. Hawkins, Richard R., 2002. "Popular Substitution Effects: Excess Burden Estimates For General Sales Taxes," National Tax Journal, National Tax Association, vol. 55(4), pages 755-70, December.
  21. Mieszkowski, Peter & Zodrow, George R, 1989. "Taxation and the Tiebout Model: The Differential Effects of Head Taxes, Taxes on Land Rents, and Property Taxes," Journal of Economic Literature, American Economic Association, vol. 27(3), pages 1098-1146, September.
  22. Antràs Pol, 2004. "Is the U.S. Aggregate Production Function Cobb-Douglas? New Estimates of the Elasticity of Substitution," The B.E. Journal of Macroeconomics, De Gruyter, vol. 4(1), pages 1-36, April.
  23. WILDASIN, David E., . "Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy," CORE Discussion Papers RP -831, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  24. Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, vol. 88(6), pages 1065-1091, June.
  25. Hamilton, Bruce W, 1976. "Capitalization of Intrajurisdictional Differences in Local Tax Prices," American Economic Review, American Economic Association, vol. 66(5), pages 743-53, December.
  26. Ballard, Charles L & Shoven, John B & Whalley, John, 1985. "General Equilibrium Computations of the Marginal Welfare Costs of Taxes in the United States," American Economic Review, American Economic Association, vol. 75(1), pages 128-38, March.
  27. George Zodrow, 2006. "Capital Mobility and Source-Based Taxation of Capital Income in Small Open Economies," International Tax and Public Finance, Springer, vol. 13(2), pages 269-294, May.
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