On the Political Economy of Housing's Tax Status
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Essi Eerola
Most households have most of their wealth in the form of housing. We analyze how this distributional feature shapes the political economy of housing taxation. We build a simple dynamic general equilibrium model where households vote over the tax treatment of housing and business capital. The model is calibrated so as to match the joint distribution of financial wealth and housing wealth among US households. The median voter has a large share of his wealth in the form of housing and most of his income is wage earnings. The key trade-off he faces is that lowering the tax burden on business capital while increasing the tax burden on housing leads to higher wages but also increases his own share of the overall tax burden.
©2011 Walter de Gruyter GmbH & Co. KG, Berlin/Boston
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Articles in the same Issue
- Topics Article
- Counter-Cyclical and Counter-Inflation Monetary Policy Rules and Comovement Properties of Money Growth
- Hicks Neutral Technical Change Revisited: CES Production Function and Information of General Order
- R&D Subsidies and the Surplus Appropriability Problem
- Literacy and Growth
- The Fed's Preference for Policy Rate Smoothing: Overestimation Due to Misspecification?
- Inflation Targeting in Western Europe
- On the Political Economy of Housing's Tax Status
- Rating Agencies and Sovereign Debt Rollover
- How Does the New Keynesian Monetary Model Fit in the U.S. and the Eurozone? An Indirect Inference Approach
- Fertility Choice and Semi-Endogenous Growth: Where Becker Meets Jones
- Equilibrium Wage Dispersion: An Example
- Exchange Rate Regimes, Specialization and Trade Volume
- A Refinement in the Specification of Empirical Macroeconomic Models as an Extension to the EBA Procedure
- Education, Growth, and Redistribution in the Presence of Capital Flight
- Measuring the Dissemination of Volatility across Levels of Development
