Abstract
This study analyzed the macroeconomic effects of property tax reform using a two-sector general equilibrium model with heterogeneous house-holds. This study found that increasing the property tax rate by 0.1 % points only for households owing homes with a value in the top 20% in the benchmark economy leads to the largest reduction in housing asset inequality compared to the benchmark economy. However, welfare decreased when the property tax rate is raised. In most cases, the welfare loss is lower when the excess tax revenue is distributed equally to all households through transfers, as opposed to using it for government spending.
Original language | English |
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Pages (from-to) | 49-70 |
Number of pages | 22 |
Journal | Journal of Economic Theory and Econometrics |
Volume | 35 |
Issue number | 3 |
State | Published - Sep 2024 |
Bibliographical note
Publisher Copyright:© 2024, Korean Econometric Society. All rights reserved.
Keywords
- heterogeneous households
- inequality
- Property tax
- welfare