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The optimal tax treatment of housing capital in the neoclassical growth model

  • Eerola , Essi

    ()

    (RUESG, University of Helsinki)

  • Määttänen , Niku

    ()

    (The Research Institute of the Finnish Economy and CEBR)

In a dynamic setting, housing is both an asset and a consumption good. But should it be taxed like other forms of consumption or like other forms of saving? We consider the optimal taxation of the imputed rent from owner housing within a version of the neoclassical growth model. We find that the optimal tax rate on the imputed rent is quite sensitive to the constraints imposed on the other available tax rates. In general, it is not optimal to tax the imputed rent at the same rate as the business capital income.

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File URL: http://www.suomenpankki.fi/en/julkaisut/tutkimukset/keskustelualoitteet/Documents/0510netti.pdf
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Paper provided by Bank of Finland in its series Research Discussion Papers with number 10/2005.

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Length: 34 pages
Date of creation: 11 Jul 2005
Date of revision:
Handle: RePEc:hhs:bofrdp:2005_010
Contact details of provider: Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
Web page: http://www.suomenpankki.fi/en/

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