Feldstein meets George: Land rent taxation and socially optimal allocation in economies with environmental externality

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. We consider an overlapping generations (OLG) economy with land as a fixed factor of production and an environmental externality on production in which tax revenue from land rent and/or from other schemes such as labor income, capital income, and production taxation can be used for environmental protection through investment in emission mitigation. We show that, for any given target of stationary stock of pollution, the land rent taxation scheme leads to a higher steady state capital accumulation than the other schemes, and hence the steady state consumption of agents when young under this scheme is also higher than under the others. In addition, under an ambitious mitigation target when the efficiency of the mitigation technology is relatively high compared to the dirtiness of production, the land rent taxation also provides a higher steady state consumption when old, resulting in higher social welfare, than the others. In the second part of the paper, we propose a period-by-period balanced budget policy, which includes land rent and capital income taxes with intergenerational transfers, to decentralize the socially optimal allocation during the transitional phase to the social planner's steady state. Terms of use: Documents inJEL-codes: H230, I310, Q500.

Taxation of Land and Economic Growth

“…Further, in Section 5, we analyzed the effects of three kinds of taxes and showed that the growth rate will increase even if the tax revenue is wasted. Particularly, these outcomes indicate that the government could use the tax revenue to finance other useful expenditures, such as environmental protection (Dao and Edenhofer 2018;, reduction in income and wealth inequality (Koethenbuerger and Poutvaara 2009;Schwerhoff et al 2020) or public infrastructure (Bosi and Pham 2016). Additionally, in our model, the whole tax incidence falls to the landowners because the marginal productivity of capital remains constant.…”

“…In what follows, we analyze if the main insights and results gained by others (c.f. Tirole 1985;Homburg 1991;Fane 1984;Chamley and Wright 1987;Grossman and Yanagawa 1993;Hashimoto and Sakuragawa 1998;Stauvermann 2002;Koethenbuerger and Poutvaara 2009;Edenhofer et al 2015;Dao and Edenhofer 2018) can be confirmed. The novelty of the paper is that it is the first study to consider, in an overlapping generations (OLG) framework, the possibility of using land for production purposes or housing purposes and the subsequent effect of different land taxes and the redistribution of the respective tax revenue to the young generation on economic growth.…”

“…Further, Edenhofer et al (2015) investigated the welfare effects of taxation of land in a continuous OLG model and concluded that a redistribution of the tax revenue to the newly born generation leads to an increase in aggregate welfare and the achievement of the social optimum. Dao and Edenhofer (2018) extended the analysis by considering environmental aspects. The study notes that if the revenue of the land tax is used to finance emission mitigation, higher capital intensity and consumption per capita will result.…”

Environmental Governance, Public Health Expenditure, and Economic Growth: Analysis in an OLG Model

“…As is standard in the literature [ 54 , 55 , 56 , 57 , 58 , 59 ], the pollution emissions per labor unit in period t + 1 (noted as ) are determined by the function below: …”

Review of Sharia Economic Law on Ijarah Practices Agricultural Land of the Mbojo Tribe Community In Indonesia

“…In Islam, leasing is called ijarah which has the meaning of services, rewards, rent, or wages [1]. Ijarah is one way to earn income by exchanging services owned or renting goods for a certain period to meet the needs of daily life [2].…”