 Optimal tax theory and the taxation of housing in the US and the UKAlan W. Evans Journal of Property Research, 2012, vol. 29, issue 4, 368-378 Abstract: First, we survey recent research in the application of optimal tax theory to housing. This work suggests that the under-taxation of housing for owner occupation distorts investment so that owner occupiers are encouraged to over-invest in housing. Simulations of the US economy suggest that this is true there. But, the theoretical work excludes consideration of land and the simulations exclude consideration of taxes other than income taxes. These exclusions are important for the US and UK economies. In the US, the property tax is relatively high. We argue that excluding the property tax is wrong, so that, when the property tax is taken into account, owner occupied housing is not undertaxed in the US. In the UK, property taxes are relatively low but the cost of land has been increasing in real terms for forty years as a result of a policy of constraining land for development. The price of land for housing is now higher than elsewhere. Effectively, an implicit tax is paid by first time buyers which has reduced housing investment. When land is taken into account over-investment in housing is not encouraged in the UK either. Date: 2012 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:jpropr:v:29:y:2012:i:4:p:368-378 Ordering information: This journal article can be ordered from DOI: 10.1080/09599916.2012.730054 Access Statistics for this article Journal of Property Research is currently edited by Bryan MacGregor More articles in Journal of Property Research from Taylor & Francis Journals |
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