Document Type
Article
Language
eng
Format of Original
34 p.
Publication Date
2014
Publisher
University of Chicago Press
Source Publication
Tax Policy and the Economy
Source ISSN
0892-8649
Original Item ID
doi: 10.1086/675588
Abstract
Tax benefits to owner-occupied housing provide incentives to consume housing, offsetting weaker disincentives of the property tax. These benefits also help counter the penalty federal taxes impose on households who work in productive high-wage areas, but reinforce incentives to consume local amenities. We simulate the effects of these benefits in a parameterized model, and determine the consequences of various tax reforms. Reductions in housing tax benefits generally increase efficiency in consumption, but reduce efficiency in location decisions, unless they are accompanied by tax rate reductions. The most efficient policy would eliminate most tax benefits to housing and index taxes to local wage levels.
Recommended Citation
Albouy, David and Hanson, Andrew, "Are Houses Too Big or In the Wrong Place? Tax Benefits to Housing and Inefficiencies in Location and Consumption" (2014). Economics Faculty Research and Publications. 498.
https://epublications.marquette.edu/econ_fac/498
Comments
Published version. Tax Policy and the Economy, Vol. 28, No. 1 (2014): 63-96. DOI. © 2014 University of Chicago Press. Used with permission.