Taxation of Economic Rents

Abstract

Economic rents have long been identified as an efficient tax base. In addition, the recent literature documents that rent income is highly concentrated and that rents are quickly increasing. Rent taxation thus seems attractive for reasons of both efficiency and equity. Nevertheless, rent taxation remains a marginal topic in research and policy making. In a systematic review of the neoclassical literature on different rent types, we find that some types of rents reflect inefficiencies and should thus be minimized, while others reward investments and should be supported in line with social welfare. What remains for taxation are land rents, one of the few true scarcity rents. Land rents have significant potential to improve the efficiency of the tax system. We then begin to develop a comprehensive theory of land rent taxation by identifying relevant efficiency and equity effects. The interaction of many of these effects remains unexplored, which might explain policymakers' hesitation in using land taxes to date.

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 this setting, growth will only be spurred if the land tax substitutes an existing distortionary tax. In a recent paper, Schwerhoff et al (2020) provided a survey on the taxation of economic rents and economic inequality. They provided reasoning as to why the taxation of rents is an appropriate policy measure to reduce inequality without creating deadweight losses.…”

Impact of Production Sharing Contract Price Sliding Royalty: The Case of Nigeria’s Deepwater Operation

“…Except for the PSC and SC that are forms of contractual systems, the other arrangements are forms of the concessionary systems. Regardless of the system in place, the crux is on how to recover costs and share the profit, which is the "Economic Rent": the difference between the value of production and the cost of extraction (Schwab and Werker, 2018;Schwerhoff et al, 2019).…”

Features and Prospects of the Economic Rent From Workforce and Social Conditions in Ukraine

“…Scope of practical use of research results: the research results can be used in developing strategies and programs of Ukrainian economy' innovative diversification in the process of its further competitive integration into the global economic space, that, among other things, requires the creation of conditions for improving the rent-generating properties of workforce and social environment, as well as increasing the level of its capitalization. example, to the rational selection of personnel and organization of its work, optimization of managerial, technological, financial and marketing processes, involvement of other factors related to the reproductive application of human intelligence [4][5][6][7], as well as to the use of various quasi-competitive advantages stimulating the growth in demand for the corresponding goods and services.…”