The Potential and Utility of Land Value Taxation: A Theoretical Framework and Simulation for China

Yilin Hou, Michael Kumhof and Lei Shao

No 12476, CESifo Working Paper Series from CESifo

Abstract: This paper develops an analytical framework for examining land taxation in the context of contemporary urban economies. We dissect the China case for simulation, comparing two model-based scenarios where revenue losses from consumption taxes are replaced by higher income taxes and land taxes. We calibrate the model to year-2015 data and find that higher income taxes cause large losses in output and income, while higher land taxes lead to substantive gains that increase with land share in net wealth. This paper offers empirical explorations in revitalizing the land tax, with simulation results at a large country level for generalization.

Keywords: land value tax; consumption tax; capital income tax; labor income tax; balanced budget (search for similar items in EconPapers)
JEL-codes: E62 H21 H61 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_12476

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