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Property taxes and dynamic efficiency: A correction

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  • Homburg, Stefan

Abstract

According to Kim and Lee (1997), property taxes as opposed to capital gain taxes and taxes on rent endanger dynamic efficiency. The present paper shows that the choice of the tax base is immaterial. What counts is whether the taxes eliminate the after-tax rent. Empirical evidence suggests that this is not the case.

Suggested Citation

  • Homburg, Stefan, 2014. "Property taxes and dynamic efficiency: A correction," Economics Letters, Elsevier, vol. 123(3), pages 327-328.
    • Handle: RePEc:eee:ecolet:v:123:y:2014:i:3:p:327-328
    DOI: 10.1016/j.econlet.2014.03.013
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    References listed on IDEAS

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    1. Paul A. Samuelson, 1958. "An Exact Consumption-Loan Model of Interest with or without the Social Contrivance of Money," Journal of Political Economy, University of Chicago Press, vol. 66(6), pages 467-467.
    2. Kim, Kyung-Soo & Lee, Jaewoo, 1997. "Reexamination of dynamic efficiency with taxation on land," Economics Letters, Elsevier, vol. 57(2), pages 169-175, December.
    3. Feldstein, Martin S, 1977. "The Surprising Incidence of a Tax on Pure Rent: A New Answer to an Old Question," Journal of Political Economy, University of Chicago Press, vol. 85(2), pages 349-360, April.
    4. Stefan Homburg, 1991. "Interest and Growth in an Economy with Land," Canadian Journal of Economics, Canadian Economics Association, vol. 24(2), pages 450-459, May.
    5. Changyong Rhee, 1991. "Dynamic Inefficiency in an Economy with Land," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(4), pages 791-797.
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    Citations

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    Cited by:

    1. Stefan Homburg, 2014. "Overaccumulation, Public Debt and the Importance of Land," German Economic Review, Verein für Socialpolitik, vol. 15(4), pages 411-435, November.
    2. Julia, Knolle, 2014. "An Empirical Comparison of Interest and Growth Rates," MPRA Paper 59520, University Library of Munich, Germany.
    3. Hellwig, Martin F., 2020. "Property taxes and dynamic inefficiency: A correction of a “correction”," Economics Letters, Elsevier, vol. 197(C).

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    More about this item

    Keywords

    Property tax; Dynamic efficiency; Overaccumulation; Land;
    All these keywords.

    JEL classification:

    • D9 - Microeconomics - - Micro-Based Behavioral Economics
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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