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The Effects of Changes in Capital Gains Taxes on Land Sales: Empirical Evidence from Finland

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  • Kyösti Pietola
  • Sami Myyrä
  • Eija Pouta

Abstract

We estimate the landowner response to and fiscal effects of a temporary reduction in capital gains taxes imposed on land sales. The underlying normative decision rules are first derived and solved numerically using stochastic dynamic programming. The landowner preferences and willingness to sell land are then estimated in the reduced form using survey data from Finland. The results suggest that the timing of land sales and land sales quantities respond significantly to tax incentives. Certain temporary tax waiver programs could maintain the current tax revenues with fewer trade distorting effects on the land market.

Suggested Citation

  • Kyösti Pietola & Sami Myyrä & Eija Pouta, 2011. "The Effects of Changes in Capital Gains Taxes on Land Sales: Empirical Evidence from Finland," Land Economics, University of Wisconsin Press, vol. 87(4), pages 582-594.
    • Handle: RePEc:uwp:landec:v:87:y:2011:iv:1:p:582-594
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    References listed on IDEAS

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    Cited by:

    1. Myyrä, Sami, & Pietola, Kyosti & Heikkilä, Anna-Maija, 2011. "Farm Level Capital: Capital positions, structures, the dynamics of farm level investments, capital accumulation and leverage positions," Factor Markets Working Papers 105, Centre for European Policy Studies.
    2. Garrone, Maria & Emmers, Dorien & Olper, Alessandro & Swinnen, Johan, 2019. "Jobs and agricultural policy: Impact of the common agricultural policy on EU agricultural employment," Food Policy, Elsevier, vol. 87(C), pages 1-1.

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    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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