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The Spatial Distribution of Housing-Related Tax Benefits in the United States


  • Todd Sinai
  • Joseph Gyourko


Using 1990 Census tract-level data, we estimate how tax subsidies to owner-occupied housing are distributed spatially across the United States, calculating their value as the difference in taxes currently paid by home owners and the taxes owners would pay if there were no preference for investing in one's home relative to other assets. The $164 billion national tax subsidy is highly skewed spatially with a few areas receiving large subsidies and most areas receiving small ones. If the program were self-financed on a lump sum basis, less than 20 percent of states and 10 percent of metropolitan areas would have net positive subsidies. These few metropolitan areas are situated almost exclusively along the California coast and in the Northeast from Washington, DC to Boston. At the state level, California stands out because it receives 25 percent of the national aggregate subsidy flow while being home to only 10 percent of the country's owners. At the metropolitan area level, owners in just three large CMSAs receive over 75 percent of all positive net benefits. And within a number of the larger metropolitan areas, the top quarter of owners receives 70 percent or more of the total subsidy flowing to the metro area.

Suggested Citation

  • Todd Sinai & Joseph Gyourko, 2001. "The Spatial Distribution of Housing-Related Tax Benefits in the United States," NBER Working Papers 8165, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:8165
    Note: PE

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    References listed on IDEAS

    1. Martin Feldstein, 1987. "The Effects of Taxation on Capital Accumulation," NBER Books, National Bureau of Economic Research, Inc, number feld87-1, January.
    2. James M. Poterba, 1983. "Tax Subsidies to Owner-occupied Housing: An Asset Market Approach," Working papers 339, Massachusetts Institute of Technology (MIT), Department of Economics.
    3. King, Mervyn A., 1980. "An econometric model of tenure choice and demand for housing as a joint decision," Journal of Public Economics, Elsevier, vol. 14(2), pages 137-159, October.
    4. Patric H. Hendershott & Joel Slemrod, 1982. "Taxes and the User Cost of Capital for Owner-Occupied Housing," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 10(4), pages 375-393.
    5. Bruce, Donald & Holtz-Eakin, Douglas, 1999. "Fundamental Tax Reform and Residential Housing," Journal of Housing Economics, Elsevier, vol. 8(4), pages 249-271, December.
    6. Deng, Yongheng & Quigley, John M. & Van Order, Robert & Mac, Freddie, 1996. "Mortgage default and low downpayment loans: The costs of public subsidy," Regional Science and Urban Economics, Elsevier, vol. 26(3-4), pages 263-285, June.
    7. Edwin S. Mills, 1987. "Dividing up the investment pie: have we overinvested in housing?," Business Review, Federal Reserve Bank of Philadelphia, issue Mar, pages 13-23.
    8. Richard K. Green & Patric H. Hendershott & Dennis R. Capozza, 1996. "Taxes, Mortgage Borrowing and House Prices," Wisconsin-Madison CULER working papers 96-06, University of Wisconsin Center for Urban Land Economic Research.
    9. Mervyn A. King, 1980. "An econometric model of tenure choice and demand for housing as a joint decision," NBER Chapters,in: Econometric Studies in Public Finance, pages 137-159 National Bureau of Economic Research, Inc.
    10. Joseph Tracy & Henry Schneider & Sewin Chan, 1999. "Are stocks overtaking real estate in household portfolios?," Current Issues in Economics and Finance, Federal Reserve Bank of New York, vol. 5(Apr).
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    Cited by:

    1. Persky, Joseph & Kurban, Haydar, 2003. "Do federal spending and tax policies build cities or promote sprawl?," Regional Science and Urban Economics, Elsevier, vol. 33(3), pages 361-378, May.

    More about this item

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy


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