Reducing Property Taxes on Homeowners

Andrew Feltenstein (), Mark Rider, David Sjoquist and John Winters

Public Finance Review, 2017, vol. 45, issue 4, 484-510

Abstract: We consider a proposal that reduces by half the taxes on homesteaded properties and replaces the lost revenue by increasing the base and rate of the state sales tax. We develop a computable general equilibrium (CGE) model and a microsimulation model (MSM) to analyze the economic and welfare effects of such a proposal if adopted in Georgia. The results from the CGE model suggest that the proposed reforms have a substantial negative effect in percentage terms on Georgia’s economy. The MSM suggests that such a policy has no effect on the distribution of consumption by income class but increases the percentage of owner-occupied housing relative to rental housing by 20 percent in the aggregate.

Keywords: property tax; sales tax; computable general equilibrium models; microsimulation models (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:sae:pubfin:v:45:y:2017:i:4:p:484-510

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