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  Property Taxes and Dynamic Inefficiency: A Correction of a "Correction"

Hellwig, M. F. (2020). Property Taxes and Dynamic Inefficiency: A Correction of a "Correction".

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Item Permalink: http://hdl.handle.net/21.11116/0000-0006-9AAB-C Version Permalink: http://hdl.handle.net/21.11116/0000-0006-9AAC-B
Genre: Paper

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 Creators:
Hellwig, Martin F.1, Author              
Affiliations:
1Max Planck Institute for Research on Collective Goods, Max Planck Society, ou_2173688              

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Free keywords: Property taxes, dynamic inefficiency, overaccumulation of capital, land
 JEL: D9 - Intertemporal Choice
 JEL: E62 - Fiscal Policy
 JEL: H21 - Efficiency; Optimal Taxation
 Abstract: According to Homburg’s (2014) comment on Kim and Lee (1997), an ad-valorem property tax on land cannot cause dynamic ineffciency of equilibrium allocations in an overlapping-generations model unless the tax is "confiscatory", i.e., equal to or greater than land rents. With such a tax, Homburg claims, land would be intrinsically worthless and the market for land would be closed. The latter claims are invalid because, as a store of value, land can be traded at a positive price even if the net rate of return on land is negative.

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 Dates: 2020-06-25
 Publication Status: Published online
 Pages: -
 Publishing info: Bonn : Max Planck Institute for Research on Collecctive Goods, Discussion Paper 2020/15
 Table of Contents: -
 Rev. Type: -
 Identifiers: -
 Degree: -

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