Revisiting the Excise Tax Effects of the Property Tax

Athiphat Muthitacharoen and George Zodrow ()

Public Finance Review, 2012, vol. 40, issue 5, 555-583

Abstract: The authors analyze the excise tax effects of a general property tax from the perspective of a small open economy facing a perfectly elastic supply of capital. The model differs from most that have appeared in the literature in the following ways: (1) the property tax is applied in a four-sector model with three taxed sectors—manufacturing, housing, and services, and a tax-exempt agricultural sector. Only manufacturing and agriculture produce tradable goods; (2) the analysis considers an “intermediate run†time frame in which labor is perfectly mobile across production sectors but fixed within the jurisdiction, while land is fixed in each sector; and (3) all production sectors use capital, labor, and land. The authors find that the excise tax effects are borne primarily by labor and land. The results also indicate that the degree of backward tax-shifting declines markedly in a longer run time frame in which labor is perfectly mobile across jurisdictions.

Keywords: property tax incidence; excise tax effects; capital tax view; new view; small open economy (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:40:y:2012:i:5:p:555-583

DOI: 10.1177/1091142112448416

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