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Revisiting the Excise Tax Effects of the Property Tax

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  • Athiphat Muthitacharoen
  • George R. Zodrow

Abstract

The authors analyze the excise tax effects of a general property tax from the perspective of a small open economy facing a perfectly elastic supply of capital. The model differs from most that have appeared in the literature in the following ways: (1) the property tax is applied in a four-sector model with three taxed sectors—manufacturing, housing, and services, and a tax-exempt agricultural sector. Only manufacturing and agriculture produce tradable goods; (2) the analysis considers an “intermediate run†time frame in which labor is perfectly mobile across production sectors but fixed within the jurisdiction, while land is fixed in each sector; and (3) all production sectors use capital, labor, and land. The authors find that the excise tax effects are borne primarily by labor and land. The results also indicate that the degree of backward tax-shifting declines markedly in a longer run time frame in which labor is perfectly mobile across jurisdictions.

Suggested Citation

  • Athiphat Muthitacharoen & George R. Zodrow, 2012. "Revisiting the Excise Tax Effects of the Property Tax," Public Finance Review, , vol. 40(5), pages 555-583, September.
    • Handle: RePEc:sae:pubfin:v:40:y:2012:i:5:p:555-583
    DOI: 10.1177/1091142112448416
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    References listed on IDEAS

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    3. James Mak, 2013. "Are Hotel Property Taxes Fully Passed on to Hotel Guests?," Working Papers 2013-15, University of Hawaii Economic Research Organization, University of Hawaii at Manoa.
    4. James Mak, 2015. "Research Note: Are Hotel Property Taxes Fully Passed on to Hotel Guests? Implications from Recent Research on Property Tax Incidence," Tourism Economics, , vol. 21(4), pages 899-905, August.

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