The welfare effects of housing taxation in a distorted economy: a general equilibrium analysis

Abstract

Abstract:Efficient capital taxation has been one of the most important objectives for large tax reforms implemented in several countries during the last decades. The Norwegian Tax reform of 1992 took a large step towards tax neutrality between the different capital types and uses. However, housing capital is still an exception. The marginal effective tax rate on housing is substantially lower than the marginal effective tax rates on other capital types and uses. In this paper the welfare effects of imposing a neutral system of housing taxation are analyzed by using an intertemporal disaggregated numerical model for the Norwegian economy. The tax reform implies a substantial increase in the tax revenue from housing taxation, and the welfare effects of different rebating alternatives for the additional tax revenue as lump sum rebating or reductions in other distortionary taxes, are considered.

The Engel Curve of Owner-Occupied Housing Consumption

“…3 Depending on where on the Engel curve the elasticities are computed. 4 While gross income increases from 271 to 870, the value of dwellings increases from 82,193 to 102,262. economic efficiency; see simulations on general equilibrium models by Nakagami and Pereira (1996) and Bye and Åvitsland (2003). However, such taxes are difficult to implement and reform, due to the contentious distribution of them.…”

Welfare effects of VAT reforms: a general equilibrium analysis

“…The risk-adjustment is implemented in both the baseline scenario and the policy scenarios, see Bye and Åvitsland (2003).…”

Growth and Distributional Impacts of Urban Housing Supply: An Application of Urban Land Use and a CGE Model For Seoul

“…The housing market was linked with the residential construction sector, the owner-occupied housing sector and the real estate market. Bye and Avitsland (2003) analyzed the welfare effect of imposing a neutral system of housing taxation between the housing capital and the financial capital (an increase in the marginal effective tax rate on housing capital), using an inter-temporal CGE model for the Norwegian economy. The housing investment was financed by loans, and the user cost of capital for housing was mainly determined by that of owner-occupied housing.…”