Property taxes and dynamic inefficiency: A correction of a “correction”

Martin Hellwig

Economics Letters, 2020, vol. 197, issue C

Abstract: According to Homburg’s (2014) comment on Kim and Lee (1997), a property tax cannot cause dynamic inefficiency in overlapping-generations models with land unless the tax ”confiscates” the entire land rent. But then, Homburg claims, land would be intrinsically worthless and the market for land would be closed. The latter claim is invalid because, as a store of value, land can trade at a positive price even though its net return is negative.

Keywords: Property taxes; Dynamic inefficiency; Overaccumulation of capital; Land (search for similar items in EconPapers)
JEL-codes: D9 E62 H21 (search for similar items in EconPapers)
Date: 2020
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Working Paper: Property Taxes and Dynamic Inefficiency: A Correction of a "Correction" (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:197:y:2020:i:c:s0165176520303633

DOI: 10.1016/j.econlet.2020.109603

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