Relative consumption of housing: Marginal saving subsidies and income taxes as a second-best policy?

Aronsson, Thomas; Mannberg, Andréa

doi:10.1016/j.jebo.2015.05.011

Cited by 13 publications

(8 citation statements)

References 29 publications

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“…We shall also, in most cases, assume that information asymmetries prevent the government from lump-sum redistribution, meaning that the best achievable resource allocation is a second-best allocation. Although we focus on environmental externalities and their implications for tax policy, our study is thus closely connected to, and draws upon, a broad literature on optimal redistribution under consumption externalities, which includes environmental problems (e.g., Pirttilä and Tuomala, 1997;Cremer, Gahvari, and Ladoux, 1998;Cremer and Gahvari, 2001;Aronsson and Blomquist, 2003;Aronsson, Persson, and Sjögren, 2010), positional externalities (e.g., Oswald, 1983;Tuomala, 1990;Aronsson and Johansson-Stenman, 2008Aronsson and Mannberg, 2014), and altruism (e.g., Oswald, 1983).…”

Section: Introductionmentioning

confidence: 99%

Optimal Taxation, Redistribution, and Environmental Externalities

Aronsson

Sjögren

2018

IRERE

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This paper surveys research on optimal redistributive taxation in economies with environmental externalities. A major question is whether externality correction only motivates an adjustment of the tax policy rule for the externality-generating activity, or whether the marginal value of the externality directly enters the policy rules for other tax instruments as well. In a static benchmark model with an atmospheric consumption externality, where the government uses a mix of a nonlinear income tax and linear commodity taxes, we show that Sandmo's (1975) additivity property applies. This means that externality correction leads to an additional term (measuring the marginal value of the externality) in the commodity tax formula for the externality generating good, while the policy rules for commodity taxation of clean goods and marginal income taxation take the same form as in the absence of any externality. We also extend this benchmark model to capture a number of scenarios (such as non-atmospheric externalities, border trade in the externality generating good, and competition between governments in a multi-country framework), where the additivity property no longer applies. We end by examining an intertemporal model of optimal taxation with a stock-externality, allowing us to integrate the study of optimal redistributive taxation with literature on environmental economics and policy based on dynamic models.

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Section: Introductionmentioning

confidence: 99%

Optimal Taxation, Redistribution, and Environmental Externalities

Aronsson

Sjögren

2018

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Section: Specific Capital Taxes: Theoretical and Empirical Consideratmentioning

confidence: 99%

How Should Capital Be Taxed?

Bastani

Waldenström

2020

Journal of Economic Surveys

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This survey discusses how capital should be taxed in advanced economies. We review the theoretical optimal tax literature, survey empirical studies on the distribution of capital and the distortionary costs of capital taxation, and analyze the desirability of specific taxes on capital income, wealth, property, inheritances, and corporate profits. Our overall conclusion is that capital taxation plays an important role in an optimal tax system, but only certain ways of taxing capital are able to strike a balance between optimality and administrative feasibility.

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“…Some have argued that there are positive externalities if people take good care of their houses, as it provides a benefit to other people, and may result in better neighborhoods. Others argue that marginal quality improvements in housing produce negative externalities if individuals compare their housing consumption with others (that is, status-effects or envy, see Alpizar, Carlsson andJohansson-Stenman 2005, andAronsson andMannberg 2015). 58 Finally, if the value of a house mainly reflects the value of the land upon which it built, and the land value reflects economic rents, then additional taxation of housing beyond that to achieve uniformity with respect to other goods is warranted.…”

Section: Property Taxationmentioning

confidence: 99%