Land, Wealth, and Taxation

Roberto Brunetti, Carl Gaigne and Fabien Moizeau
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Roberto Brunetti: Univ Rennes, CNRS, CREM-UMR6211, F-35000 Rennes, France

Economics Working Paper Archive (University of Rennes & University of Caen) from Center for Research in Economics and Management (CREM), University of Rennes, University of Caen and CNRS

Abstract: We examine the role of land in wealth dynamics and taxation policy by focusing on the interplay among agents’ bidding for location, mortgage market imperfections, and inheritance. We develop a model in which altruistic agents leave to their heir a financial bequest and their housing wealth. The borrowing constraint generates a housing return premium and spatial wealth sorting, which translate into persistent inequality. We derive an optimal tax schedule that combines a tax on the land share in the value of inherited housing assets and on lifetime wealth, allowing a more efficient allocation of resources and lower inequality.

Keywords: Mortgage market imperfections; Spatial sorting; Wealth distribution; Wealth Taxation; Efficiency. (search for similar items in EconPapers)
JEL-codes: D31 E21 H21 R14 (search for similar items in EconPapers)
Date: 2023-06
New Economics Papers: this item is included in nep-fdg, nep-pbe, nep-pub and nep-ure
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Working Paper: Land, Wealth, and Taxation (2024)
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